Just like starting a bricks-and-mortar business, establishing an ecommerce business requires hard work and diligence. But if you do it well, your online stores can grow to become a profitable sales channel.
Not only are the overhead costs much lower for online businesses, as an ecommerce entrepreneur, you also have more freedom in terms of how much inventory to keep on hand, since you’re not trying to fill up a physical store.
If you’re just getting started with ecommerce, or you’re thinking about launching an online store to complement your physical business, read on. In this guide we’ll help you determine which ecommerce software solution and shipping strategy are best for your needs.
How to Choose the Right Ecommerce Solution
Arguably the most fundamental part of setting up an online shop is establishing the right platform and payment system. Common solutions, such as integrating a shopping cart into an existing site, setting up a site through an ecommerce software solution, or selling through an existing marketplace, come with advantages and disadvantages.
Integrated Shopping Carts
Adding a shopping cart to your business’s existing website is a good option if you don’t want to start a new online store from scratch. You can integrate a shopping cart such as PayPal right into your current website.
- Many of these shopping cart options are affordable for small businesses new to the world of ecommerce. PayPal, one of the most popular choices, doesn’t charge setup or monthly fees. Instead, they charge 30 cents per transaction, and 2.9 percent of the total, for each transaction processed
- Fees vary between providers, but PayPal’s prices are fairly low
- Shopping carts will calculate the applicable sales tax for the purchase
- Off-the-shelf shopping cart options often need customization to fit with specific business needs
- Customizing shopping cart software can be an expensive and time-consuming endeavour
Full Service Ecommerce Solutions
These days, building a business website is as easy as a few clicks (and credit card payments). Full service solutions like Shopify or Volusion offer powerful tools that help you build and manage an ecommerce business.
- This option is relatively simple to use on your own. You don’t need to be a professional to create a functional and beautiful shop
- These solutions really are full-service, offering many useful features. For instance, Shopify will automatically calculate sales tax based on zip code
- This option can be expensive in the long run
- Shopify, for example, charges $29/month for the basic package, as well as 2.9% + 30 cents per credit card sale
Existing Online Marketplaces
- With this option, most of the heavy lifting is done for you. These marketplaces are very easy to use, and allow you to focus on other parts of your business. For example, Etsy’s sales tax calculator will add sales tax based on locations
- There are fairly affordable fees for sales. Amazon charges 99 cents for each item sold. Etsy charges 3.5% of the sale price, plus 20 cents to list the item originally
- With these selling platforms, the amount of storefront branding you can do is limited to banners and profile images
- This is much less customizable than the other options
How to Choose the Right Shipping Strategy
To succeed in ecommerce, you’ll need to develop a shipping strategy that works for you, and for your customers. Let’s take a deeper look at some of common shipping strategies used by ecommerce entrerpreneurs.
Depending on your industry and your competitor’s offerings, opting for free shipping can be a smart choice. There are benefits to free shipping, such as reduced shopping cart abandonment, but you need to determine if you can afford to offer this perk. You could also consider offering free shipping on orders over a certain price. This can increase your average order size, which could make footing the shipping bill beneficial for the business.
Charge a Flat Rate
If you have a fairly standard product line of similar size and weight then charging a flat rate for shipping could be a convenient option. Charging a flat rate (when it makes sense) can reduce the work on your end in determining shipping costs, and there’s less surprise for customers when they reach the checkout.
Real Time Carrier Rates
Major shipping carriers will calculate the costs and allow you to integrate the feature into your checkout section. This way the customer can choose and pay for the service that they want and compare prices themselves.
Once you’ve selected the strategy that works best for your needs, read our guide How to Reduce Shipping Costs, and keep your business’s postage expenses to a minimum.
Getting started with the right ecommerce solution and shipping strategy is integral to building a successful online business. Finding the right tools to help you set up and run your online store will support you on your path to success as an ecommerce entrepreneur.