Many online businesses rely entirely on the ability of the website to attract visitors and to convert them into some form of contact. This is especially true of ecommerce websites. These businesses invariably deliver niche products or services to a wide geographic area, typically the entire UK.
Last year, the UK had the largest ecommerce market in the world, when measured by the amount spent per capita, even higher than in the USA. Despite the on-going downturn, the UK internet economy is expected to grow by 10% over the next few years.
Get off the high street
Many of our customers have migrated from the high street retail sector, but in doing so they have also moved into selling products and services that differ from those of their previous businesses. Most of these customers are very successfully reselling imported products into the UK market through their individual ecommerce websites.
Other customer, who have attempted to extent an existing retail business with online sales have in general been less successful. These so called “brick and click” businesses are all too often constrained by their existing businesses, both in practical terms and in their outlook.
Return on your investment
The return on the investment made in an ecommerce website is very easy to measure. Take a small home-based reseller of imported product selling £200k per annum at retail. Typically £3k per month might need to be allocated to pay-per-click advertising in order to achieve this return.
The development cost for a suitable website capable of generating this level of turnover is in the region of £10k. Most websites have an average life of about five years, but taking a more prudent view and writing the initial invest off over three years equates to £3.5k per annum. To this has to be added an annual cost for hosting, support and on-going improvements of about £2k per annum.
On this basis, the total annual outgoings on the website, including its development, on-going work and the pay-per-click campaign comes to about £40k per annum, or 20% of sales. Most businesses of this type operate with a gross margin of about 70%, which leaves £100k per annum as net income before tax.
This profile is typical of many small businesses that rely solely on the internet as their sales outlet. Being home-based, they carry none of the overheads, staffing and franchise costs associated with a retail outlet, and don’t even pay business rates or incur any travelling costs.
As one customer has observed, they can sell more in one evening on the internet than they could in a week through a retail outlet, and without all of the extra expense and responsibility.
Do you want to move away from your template based website?
Many of our customers’ first ventures into internet selling have been via template based ecommerce websites. They are relatively cheap and offer a good entry point into online selling, at least enough for their owners to become familiar with this method of trading.
Invariably, these templates websites tend to be abandoned. Many are abandoned because the online business fails, which is due in no small part to the use of a template based website.
Those selling more common or garden products tend to migrate towards an eBay shop. Others upgrade to a more bespoke and individualised website, in which we specialise. These enable their owners to exercise much more control in terms of the styling, the operation and the content, and to develop the website in response to market feedback and the evolving natures of their businesses.
Behind the scenes, these websites are invariably integrated with back-office systems, which may be pre-existing in the customer’s organisation, supplied by a third party, or developed by us to meet the customer’s specific needs. In doing so, we are able to draw on technologies such as electronic funds transfer, supply chain management, internet marketing, online transaction processing, electronic data interchange, inventory management systems, and automated data collection systems.
Do you want an ecommerce business that sells your products?
Please contact us today to discuss your ecommerce plans. We can help you discover if there is a market online and how best to promote you business online. Call us today on 07799 893 613 or email info@net4orce.co.uk