Setting up an e-store

Setting up an e-store Setting up a store used to be easy – all you needed was a shop or a market stall. Now there is the internet to think about.

It may be more cost effective and reach a wider audience but should a would-be e-trader be worried? No, says Chris Barling, chief executive and co-founder of e-commerce specialists, Actinic.

Is it easy to set up an e-commerce site?

Nowadays it’s pretty easy and cheap to set up a basic e-commerce website. There is one technical skill that you need to master, which is the ability to load images onto your computer, re-size them and then convert to web format. You can do this using any one of a number of packages, starting with free software, Paint.net. Anyone used to manipulating home photos on their PC should be fine. Other aspects of setting up a basic store are about entering product information and selecting various options. It’s not rocket science - a reasonable level of computer and business literacy is all that is needed. For starters chose an online package for selling that has a wizard and templates for you to walk through. These are paid for on a monthly basis, so there’s no big commitment either.

How much would it cost to get someone to create it?

Costs vary but a web designer can build a professional website unique to your spec from as little as £1,000. So there is a cost saving by acquiring the skills yourself. However, the biggest challenge is getting people to visit your online store, which is a whole skill set in itself. The top techniques are search engine optimisation and pay per click advertising. There is a huge range of resources available online and it’s quite practical to learn the techniques, although it will probably need an investment of hundreds of hours in learning.

What about hosting? And will I be able to make changes myself?

Online, “all in one” solutions come with hosting bundled in. For more complex stores, you need to buy your own hosting. The cost for this ranges from a hundred or so pounds a year up to hundreds of thousands. The key driver is the success of your business. The more successful, the more traffic, and the more down-time (when the shop is unavailable) would cost. So as you succeed, you need to invest in quality hosting.

I’m going to need a way to take online card payments. How’s that work (and what will it cost me?)

The best way to take payments is using PayPal, where it will initially take around 3.5% of your sales. If you’re a more substantial company, or once you have got established, you can obtain merchant status with a bank. You can then take payments through a payment service provider linked to your merchant account. The cost will be 2.5% of sales (or lower), plus 10p per transaction (or lower), both depending on volume.

Do I need to worry about security and data protection?

The key thing is to make sure that card details are captured at PayPal or a payment service provider. It then deals with the biggest security threats and issues and is compliant with the latest financial regulations. If your sales in any year exceed the VAT threshold (currently £67,000) then you must register for, and charge VAT. You also need to register under the Data Protection Act, which is relatively painless, and details can be found at www.ico.gov.uk. You must also obey the Distance Selling Regulations, of which the most important is to offer a full refund if goods are returned for any reason within seven days of the sale. These are the major areas, but if you sell dangerous goods or pharmaceuticals, there is a plethora of additional rules and regulations.

If it all seems so simple and cheap, why don’t more people do it? What are the risks?

A lot of people are doing it. The real challenge is sourcing products that people want to buy and making them available at a cost that makes you money. Then you need to get people to visit your store. The risks are around time and money, and the lower your investment, the lower the potential loss. However, our research has also shown that the more you put in, the more likely you are to succeed. The skill is in finding the right balance. One of our customers recently went out of business after their bank pulled the plug. They had taken a loan to help expand a very successful business, guaranteeing it with the security of their own house and that of their father. That illustrates the risk.

Should I start by selling only via eBay?

Starting off on eBay is great way to get going. eBay provides the technical platform, a payment method and visitors. The downside is that you are on a very level playing field with many others, so it’s extremely price competitive. There are always new players arriving, sometimes selling below cost. So you swap one set of challenges for another. But it’s a fantastic way to learn at low risk.

By Chris Barling
Chief executive and co-founder of e-commerce specialists, Actinic.
www.actinic.co.uk