Electronic retailers are online businesses that sell their goods and services through the internet.
As there aren’t any expensive overheads involved, such as renting a shop space, the day-to-day running costs of online retailers are considerably lower than those of bricks and mortar stores. That’s why you’ll often find huge discounts offered online.
E-retailers, or e-tailers, can be split into business-to-business (B2B) and business-to-consumer (B2C) sellers of products and services.
Through e-commerce, retailers can track consumers’ shopping behaviour, gaining valuable insights into their spending habits, and tailor offers to give people a more personalised shopping experience. Customers benefit because they can shop from the comfort of their own homes at any time rather than being physically present in a store during specific opening hours.
Online retail sales have rocketed in recent years, causing more traditional physical stores to focus more on their web presence.
Anyone can set up an e-retail business as long as they’ve got a computer and a product or service to sell. Indeed, many start-up shops are launched from the kitchen table or bedroom of someone’s home. To get started, you’ll need a domain name, website, credit card processing system and data analytics software to learn more about who your customers are.
There are plenty of e-commerce platforms available that enable you to build an online shop yourself, or you could hire a professional web designer. An eye-catching and efficient website is vital.
Taking a course in e-commerce or financial management is a good idea. You’ll also need a good knowledge of social media, marketing and search engine optimisation.
Being a member of a trade body like the IMRG, the UK’s online retail association, could be helpful in moving your business forward and giving you access to expert advice.
There are also key laws you’ll need to adhere to, including:
• Electronic Commerce (EC Directive) Regulations 2002
• Data Protection Act 1998
• Consumer Contracts Regulations
• ICO Cookie Law
Although e-retailers can reach a global audience, online shops face a number of challenges.
With the rise in cyber-crime, e-retailers have to make sure they’re watertight as a hacking episode can spell disaster for a business’s reputation. Consumers can be very wary of providing credit card information online as they’re worried about identity theft, especially with a company that isn’t well-established.
Also, e-tailing doesn’t give consumers the emotional shopping experience of a bricks and mortar store. They can’t smell, feel or try products before they buy, and they don’t get the personal service they may be used to when shopping.
There’s also the thorny issue of how Brexit is going to affect online retailers. With currency fluctuations and the possibility of tariffs and taxes, many e-tailers are concerned that leaving the EU will be extremely costly for their business.
Running an e-retail business can be tough. With a growing international customer base, you could find yourself having to work long hours to meet demand.
Although it’s easy to set up an online retail business, making it profitable is a different prospect. It’s a highly competitive sector – you’re up against millions of other online retailers out there so you have to make yourself stand out from the crowd.
You’ll have to update your website regularly to promote special offers and stay relevant, and send out frequent social media posts to your followers. Customers can be very demanding, so you may have a lot of emails, queries and even complaints to respond to.
And you’ll need to keep up with the latest technologies, apps and industry developments. That means you and your staff undergoing regular training sessions.
• The UK is the leading e-commerce market in the EU.
• In 2017, UK retail e-commerce sales are expected to reach £70.75 billion.
• Online sales increased by 21.3% in the UK during 2016, according to data from the Office for National Statistics.
• The most common purchases made online are for electronics and digital media, including smartphones, computers, video games and music downloads.
• Around 53% of reported fraud in the retail industry is cyber-enabled, representing a cost of around £100 million, according to the British Retail Consortium’s Annual Retail Crime Survey.
• Western European markets account for more than 50% of the export market for online businesses, Volo says.
Case study: Interior design made affordable – Swoon Editions
In 2012, Debbie Williamson left the corporate world behind to co-found online furniture retailer Swoon Editions with former colleague Brian Harrison. The e-commerce platform specialises in handcrafted, low-cost furniture. Designs are produced in limited quantities so demand for the products can be tested very quickly. Only the most popular ones are then put into regular production.
In just three years, the company received more than £5 million in investments from venture capitalists including Index Ventures and Octopus Investments. It also achieved 300% growth, and now employs around 60 staff across offices in London, Vietnam, India and China.
Williamson won the Women in Business category at the Startups Awards in 2015. She says one of the biggest challenges is letting go of the day-to-day running of the business as it scales up.
If her story has inspired you, you might want to take the plunge and set up your own e-retail business.