Hosting an online store is an expansion every retail business owner should seriously consider. An e-commerce store won’t work for every good or service, but e-commerce is becoming the expectation for the rising generation of buyers. According to Dotcom Distribution’s recent study, 32 percent of consumers prefer buying online vs. in-store. You could be missing out on a large percentage of the market by only providing a brick-and-mortar operation. If you’re not using e-commerce to expand your business, you could be overlooking thousands of dollars in potential sales.
If you don’t have an online store yet, now’s the time to think about it. You aren’t too late: according to this 2018 survey, only 64 percent of small business owners have a website. To help you decide, we’ve compiled three questions to help you determine if opening an online store will benefit your business.
1. Is your business ready for expansion?
Expanding your business to include an online store will take a lot of time, research, hard work, and capital. Regardless if it’s the right decision for the future of your business, current circumstances might make the expansion difficult or even impossible. Push your business too soon and you may push it over the edge.
Many of the most prevalent e-commerce platforms make opening a successful online store appear deceptively simple. Although they may tout that making loads of money online is as easy as signing up and getting started, the process is much more complicated. For starters, you’ll need the know-how to build a website. For those who’ve been raised on the internet, that might seem ridiculously simple, but according to SurePayroll’s monthly Small Business Scorecard, just 11 percent of small business owners created their site themselves.
Building an e-commerce site is only the first step. Next, you’ll have to manage all its elements: updating product pages, fulfilling orders, communicating with customers, making sure information is timely and relevant, and more. Unlike your physical building, your digital store never closes (for better or worse). If you’re struggling to meet the demands of your local customers, then you may not be in the best position to open up another location online.
Yes, e-commerce is growing at an alarming pace, but don’t get caught up in the hype and put your business in a precarious situation. However, if your business is experiencing any strong signals that it’s ready to evolve, then an online store may be the most viable area for growth. Take a step back, look at the big picture, and judge if your business is ready to expand.
2. Do you have a product you can sell online?
The answer to this question might seem obvious at first, but you’ll need to think outside the box a little bit to give it a fair chance. For inspiration, consider this example from the third season of the popular Netflix show, Queer Eye. Sisters Mary and Deborah Jones owned and operated their Kansas City restaurant Jones Bar-B-Q for more than three decades, selling beautifully smoked barbecue to the lucky locals. With some help from the Fab Five, the ladies got their secret sauce bottled and up for sale on their website, leading to 11,000 bottles sold in a single weekend and plans to expand sales internationally.
Yes, the Jones Bar-B-Q sisters’ example is far from ordinary, but it illustrates an important lesson: you need to think creatively about your products. To get your creative juices flowing, start simple. Would your customers be interested in buying a cool branded t-shirt? Do you have a “secret sauce” you could sell? What do your customers want that you could easily provide online?
Don’t sell something online just for the sake of reaching a larger digital market. Make sure the product is relevant to your business and there’s sufficient demand to warrant an online shopping option. Test the product in-store first and see how it performs. If customers don’t purchase it at your brick-and-mortar, there’s a good chance it won’t perform well online, either. The Jones sisters tested demand for their sauce by first selling it at the restaurant before expanding sales to an online store. Now that it’s performing well online with their domestic market, they’re considering selling to international customers. Take the same staged approach to your marketing evolution to ensure you don’t get too far ahead of yourself.
3. Will your budget allow for the investment?
Selling online isn’t free. You’ll need to consider the costs of website hosting, domain fees, shipping, security, maintenance, development, ads, and more. If you don’t already have a website with frequent visitors, it’s going to take time to generate healthy traffic that will yield a positive ROI, so you’ll need a sufficient budget for the investment.
Building an online store can get expensive fast. Manageable solutions for small businesses could cost less than $1,000 or more than $10,000 annually, depending on the complexity of the design and features. If you go with the DIY approach, you could get by on less than a $1,000 a year, but that doesn’t take into account the hours spent building and maintaining the online store—which could be hundreds (seriously) if you’re coming in with little to no experience.
When considering a website, according to a survey from Clutch, small businesses cite cost (26 percent), irrelevance to industry (27 percent), and social media (21 percent) as the chief motives behind their decision not to have a website. Despite these costs, 58 percent of small businesses without a website planned to build one last year.
Get out your calculator and do the math to see if this investment will be worth it for you in the long run. Do you believe you can generate enough online sales to make a profit while also taking into account the cost of acquisition, shipping, and overhead?
For many small businesses, opening a digital store does make sense, but it’s not the right solution for everyone. The big question is, would an online business benefit you? If you answered “yes” to these three questions, then there’s a chance the answer might be “yes”.