An increasingly popular option when starting a business is to ignore the traditional brick and mortar shop in favour of selling online. This strategy is in many ways sensible as, while the rest of the retail sector is in the doldrums, online sales are still experiencing double-digit year on year growth. Buying online has great advantages for parents in terms of convenience and increased product availability. In addition, the barriers to entry online are much lower than traditional retail. So how easy is it to set up an online shop? This post looks at the pros and cons of this business opportunity.
Easy to start
Sites such as eBay and Amazon make it easy to start selling online. These marketplaces have a huge, international user bases which allow sellers to get off to a flying start. Very limited technical knowledge is required, although a basic understanding of HTML can help to make listings more visually attractive. There are also no set up costs to sell on eBay or Amazon.
For people with more technical know-how, setting up a transactional website is also not as difficult as it used to be and there are lots of solutions available off the shelf at a very low-cost or even for free. OS commerce and Magento are popular open source solutions for creating an online shop.
An online retailing business can be started on a very limited budget. All that is required is some stock and an online presence on eBay or Amazon or your own website. This is all easily achievable for around £2000-5000.
Sales 24-7, worldwide
Unlike a high street shop, sales on the Internet can be made 24-7. The Internet also opens up a business to an international audience. Around 20% of eBay sales are international and the current strength of the Euro makes UK prices attractive to people in the Eurozone, even when additional postage is considered.
Not limited by geography
An online retailing business can be run from any location and an expensive high street location is not required. Many sellers work from home, although this may become difficult as sales grow.
Running an online shop is hard work. Creating product listings are time-consuming and maintaining the product catalogue is a never-ending job. The proposed VAT increase, for example, will mean the retailers must reprice all their products. In addition all sales should be packed and dispatched on a daily basis.
There is no getting away from it, customers can be a pain. Being a retailer involves dealing with the general public and so it is important to be patient.
Running an online retailing business involves very little face to face customer contact and so can be a little lonely.
High competition, low margins
Let’s face it, the web is where people go to get bargains and consequently competition is fierce. Margins in online retail tend of be lower than on the high street and so retailers need to compensate by selling more.