Have you ever tried setting up a fully fledged online shop? It looks like a cheap and easy business solution but its not.
Most people simply transpose the idea of a brick & mortar shop but without all the overheads, to an internet shop and hence it becomes the most familiar business model for people to try. It is however probably the most difficult e-commerce operation to get up and running.
Step one – The idea.
The great thing about an online shop is that it doesn’t have to be an outstanding original idea to work. As time has shown, almost anything can be sold over the net and it’s basically a case of supply and demand of anything.
Step two – Sourcing a product
Whatever you decide to sell, check how easy it actually is to get a hold of a supplier. Sourcing products globally is now easier with the likes of wholesalers and manufacturers at a buttons touch but just because their based abroad, doesn’t mean their actually any cheaper if you’re a small start-up business. Most wholesalers and Manufacturers still sell in bulk. They may be cheap if you buy 1000 of a single product but anything less may not even be considered. If you find a supplier who can accommodate your buying requests then don’t forget:
Delivery costs which may be as much as the stock itself
VAT as it will get charged upon arrival to the UK
This may well bring you and your budget back to the UK to find a local supplier which can be harder than finding an international one. Local suppliers may not even exist and if they do they may well hold the same MOQ ideaology, cost more and only sell to brick & mortar shops with trading addresses and licences.
After doing all the above you may find that you’ve been stopped in your tracks before you’ve even begun. It’s a good idea to setup your suppliers before going ahead and opening an online shop.
The website
The website itself is a core factor in thinking that an online shop is easy. Many people think it’s just a “website.” An online shop is much more then that with layers of pages, systems and functions to make it all operate like a shop and it takes a lot of effort to get it to work properly.
An online shop can be made easy with the use of boxed up online solutions or you can go for a more bespoke touch. Either way it will cost you money to get set up.
Boxed up packages: Are nice, neat and quick solutions giving you everything you need to get your shop up and running but they do come with an overhead of monthly fees. Boxed up solutions also have a drawback of being restricted in design and functionality; your shop has to contend within the service providers rules and it may show some limits when it comes to developing an online store that caters for your own needs. The last drawback is that the shop is not completely yours, you only own the right to operate within it, not own it.
Bespoke solutions: Nothing online is absolutely bespoke these days with systems being built upon pre-existing systems to minimise costs but something a little more bespoke does give you a greater freedom to customise the look and functionality of your shop to suit your needs. Usually comes with at a one off cost in which case the shop after completion is yours. A more bespoke solution does require a bigger responsibility from you the shop owner to ensure that everything is maintained and updated to work.
With either case an online shop is never a lifetime solution or one off cost. You should keep in mind that each route will require constant maintenance and updates to keep it running smoothly. These are overheads on an online shop.
As well as this don’t forget design and graphics. Online shops require constantly changing graphics from product photos to sales banners and design tweaks. When opening an online shop most people forget about this area of work but really want and need it. It’s an idea to get friendly with your designer/developer 
as you’ll need them on an on-going basis.
Payment gateways: I’m surprised that many people look to open online shops but do not research payments. A Payment gateway will be an essential factor for your shop, allowing you to process online payments. This will also be an overhead as each PSP (payment service provider) will charge you an on-going fee or percentage or both for the privilege of processing your payments. Each one will charge differently so it’s key to research a solution that works for you. Also remember that your choice of PSP has to fit into your choice of shopping system.
Marketing!
In my opinion most people forget about marketing when opening any business. Again because the shop is online most people think they’ll naturally just start selling immediately. That’s a mistake. No one will find your shop so it’s up to you to promote it.
Keep a budget aside to promote your shop both on and offline. The bigger the better.
Setting up an online shop is fuelled with hidden costs so here’s a checklist so you know what you may need to spend on when starting up an online shop:
1.) Products
2.) Product delivery
3.) VAT (taxes)
4.) Branding
5.) Web design & Development
6.) PSP Fees and setup charges
7.) PSP integration
8.) Product photography & editing
9.) Populating site
10.) Delivery Packaging for products (envelops/bags/boxes)
11.) Delivery Equipment ( Scales)
12.) Delivery costs (stamps/franking/courier contract)
13.) Marketing offline
14.) Marketing online
15.) Email distributer
16.) Email design
17.) Mailing lists
18.) Hosting
19.) Domain names
20.) Something else (because there will be something else).
