So You Want To Sell On-Line

What does it take to start selling products online? Julian Josem from Dowling Consulting has the story.

Putting your business on-line is a journey that is becoming more and more popular with small to medium business owners. Like a holiday journey, once you start to enjoy the trip, you realise there are so many more destinations that you can visit and explore.

Once you place your business inside this virtual world you realise that there are no limiting factors except for your vision. The problem is, like everything else with such big rewards, it doesn’t happen all at once.

First steps

The web is best referred to as one more channel on top of your established channels like your store or your phone line. Start by finding out about the on-line preferences of your customers. How would they like to interact with your business? How do they interact with other businesses? Like most retailers you will have a number of customer segments, each with a different set of preferences. If you then divide your business into a series of categories you’ll find different areas with varying characteristics that make it more or less sensible to sell over an on-line channel.

You want to connect groups of customers (segments) with groups of products (categories) in various ways through various means (channels). Our research tells us that customers who interact over two channels are on average 114 percent more profitable than those who transact over a single channel, while those who transact over three channels are on average 40 percent more profitable than those who transact over two.

Customers will use various channels to conduct the pre-sale research. They might then choose another channel to buy the item. They may also need a third channel if they need some help using the product after purchase or if something goes wrong. As a hardware retailer you should take an overall view, not a channel by channel view. You need your channels to work together to help make a contribution to overall business performance.

Once you have this information you can begin planning the introduction of your on-line channel by ensuring it supplements your existing channels. Your plans might undergo various stages.

First stop – “Look at me!”

An informational web site that publishes your business to the world is your on-line shop window. It needs to support your physical shop window.

Update your management culture to regularly change the shop windows for all your channels so they support each other at all times and use your site to drive traffic to your store. You might for example consider using vouchers that are redeemable in-store. Be sure to keep track of what works and what doesn’t.

It is important that your on-line shop window has interesting information that is relevant to your customer segments that browse on-line. By now you will have realised that you need software to keep track of customer details – their names, addresses, categories of interest, impending projects, their footy team and (most vital of all) their email addresses.

Sending interesting information via email is surprisingly easy to do. Since you probably budget for catalogues you could divert a proportion of those funds to an electronic version. Your buying groups and suppliers should be able to help you with this by providing you with appropriate material (if you ask).

Second stop – “eCommerce – Show me the money!”

Our research also tells us that multi-channel customers are very adept at buying from various competing retailers. This means it’s easier to steal market share so evolve your virtual shop window to make it convenient for customers to spend money with you.

It is not difficult to establish an on-line shop. The key is to not treat it like an entirely different new shop. When you decide to carry a new line, your systems need to make it easy for you to decide whether you will sell it on-line.

Your suppliers have to provide you with more information than if you were not trading on-line. As a minimum, you will need pictures in an electronic form for the items that you want to sell. This means that your Customer Relationship Management software, your Point Of Sale system and your on-line systems must all be setup to minimise duplication of data entry. They should help you serve your customers efficiently.

The key to getting this right is making sure you understand the business processes and how the introduction of new systems might affect your multi-channel business.

If your previous technology decisions have not considered multiple channels, then you might have some technology refresh hurdles to overcome. There are lots of alternatives in this space and you might need some guidance from external sources. Our experience at Dowling is that POS software vendors are at first less adapt at helping with the overall strategy when it comes to websites. However, they are fine once both parties communicate what they want from their systems and how they can interact effectively.

Third stop – Extending your reach

The final step depends on your vision. After gaining further insight into your customers you may be in a position to extend your other channels. This could mean establishing a more comprehensive call centre that provides advice and also transacts in cooperation with on-line and physical channels.

Another alternative could be in the form of activity that complement another local trader’s strategy. This could involve work with a furniture retailer, a local tradie, an importer, a community group or even a local council. Who knows where the journey will lead?

Regardless, no matter what direction it takes you have to start with a plan.

Julian Josem is the Practice Manager, Retail & Channels, at Dowling Consulting. Call 0418 103 468 or email Julian.Josem@nulldowlingconsulting.biz for more information.

Case study: Hardware Delivered

Hardware Delivered was founded by Cooper’s Home Timber & Hardware Managing Director Steve Cooper. Customers can place orders directly through the Hardware Delivered site which acts as a centralised node between Cooper’s and other stores with the appropriate arrangements.

The site currently lists 12,000 items and plans are underway to increase this to 100,000 by mid 2009. Distribution bases are present in every State and almost any store with the appropriate agreements can link to it and provide a virtual online shop front. Delivery is available from most locations in the network with postage rated according to size and volume using normal freight scales.

What is interesting is the way that the software running the site determines the despatch location of each individual order by analysing its size, whether it is in stock and where the order is to be delivered. The site itself draws on the Danks suppliers base as well as independent suppliers who have either an agreement or a trading base. Hardware Delivered is promoted on EBay, Google and other mediums to ensure maximum exposure. An interesting further application is its ability to offer demonstration videos by linking to external video hosting sites like youtube.

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