Online Retail Tools.
Shopping the world wide web
Online retail has become an integral part of the shopping experience for most people currently. For over 20 years we’ve been able to order things online and through online retail, sellers and buyers have gotten access to more products and more markets then ever before. Where most brick-and-mortar stores historically would have only access to the market of their town or district you can effectively have a store of any size with any product and achieve a measurement of success through the internet, at a very attractive cost of entry as well. Naturally that means now there are a wide range of options and tools to use when you go online to sell your products and making the right choice of tools and markets is critical for a business that is looking to sell online.
This is why we have taken the time to review a range of online vendors and tools and analyze what they are offering, at what cost and what benefits they provide to see which of these provide the best option for you as a small business.
The outline of our Analysis methodology has become its own article that you will find here. We’ve spun off the method from this article to keep the length manageable and those that want to understand our method can review the second part article at their leisure.
What to choose, when?
There are hundreds of possible ecommerce vendors and knowing which avenue to choose as well as what level of effort it will take is a big step into the online retail space and one that shouldn’t be chosen lightly or uninformed. Our review of thirteen different vendors showed clear differences in costs, resources, approach, and branding that will have a big impact on your choice. Depending on what your brand does and how you work the choice may be very different, so simply selecting the first e-commerce option off google may not work for you, or your brand.
Should we be selecting an E-commerce vendor that gives us the greatest range of control of our message and product, while also putting much more work on our hands as we need to build up the site and maintain the costs and work to keep it running. Or should we look at marketplaces to sell our products, where we can leverage the large brand name recognition that comes with some of the biggest sites on the internet, along with the ease of use and often cheaper barrier to entry at the cost of the prominence of our brand and control of our message. Identifying the best channels, as well as mix of channels will be important for small businesses, where workload and effort are already high and choosing the wrong one early on can be a significant setback in costs, time, and effort.
To best illustrate, we’ve outlined the choice for three hypothetical brands that are each making their decision start their own online retail journey and need to select the best tools for them and their brand. These three brands will be based on scenarios that we have seen ourselves and hopefully will be relevant to you and your situation.
The Producer
The producer as well call them is brand that creates most of their own products, a crafts person that makes our sources their own products, decides on their own collections and has complete control over what they sell, the volume of product they have. Working from a studio or home they may have some physical retail, but they don’t have a brick and mortar. They have a brand that they identify with and it’s a very big part of their identity and product. They share a lot of their process on social media and find that now they want to expand into online selling to increase their sales with the goal of online becoming a major source of sales.
With a strong brand and being the primary creator of their products control of the messaging as well as the outline of the store front online will be very important. Making sure that the brands products are in focus with no distractions by rival products or random page layouts, keeping this manner of vendor from the larger marketplace clients, eBay, Etsy, and Amazon. Controlling the narrative messaging will be delivered using an E-Commerce provider. They allow for the infrastructure to support online retail while leaving the framework and messaging up to the brand itself. The entire control of the website design, product delivery, and SKU. The costs of E-commerce in our research can be gotten at a comparatively low cost, with a manageable transaction fee per sale. This gives a very predictable cost base that allows for controlled spending and at any scale. The volume of SKU’s and range both being unlimited.
Critical in our opinion is also the features that are often provided in these eCommerce sites by default, Many have features that are included in the base subscription layer but more that unlock as you commit to a higher monthly cost. These however can be if used potentially game changing. These include SEO support, data, and reporting analytics, and more features that can be enablers, while still having a great entry point of features and tools.
The downside of the e-commerce model lies in the work of creating, maintaining, and developing a website. The E-commerce sites provide strong tools, guides, and support to enable very quick and rudimentary website creation, it is still a body of work that is needed to start up the site as well as maintaining it, to ensure that the website remains relevant fresh and inviting. This can be a comparatively significant piece of work on the hands of small business which few time resources. Using templates and online assistance can simplify this task, as can outsourcing the creative work which is a common feature that can be bought in. We recommend the e-commerce solution for producers as it gives brand control, and the most freedom to scale.
A worth side note here is Faire.com, this is a whole sales marketplace, so think of eBay but for wholesale orders. This connects producers, to vender sides for B2B sales. Allowing producers to get in touch with often smaller stores, and marketplaces connecting with the purpose of wholesale orders. Faire allows for many of the same inventory and SKU management settings as e-commerce sites do, but also allows you to set volume and minimum cost guidelines for orders ensuring that only orders that are worth your time come through. This can be a great way to open for business-to-business orders while maintaining a separate store front from your own branded site.
A mix of strategic sales channels allows for a customer facing e-commerce store along with the open door for wholesale orders through Faire.com, ensuring brand value.
The Handmade.
Handmade and custom creations characterize the artisanal brand we are looking at. They make handmade crafts that are in small volumes with great variety. Customization is frequent. They have a brand they sell under. Online sales may be a part time or side hustle activity to complement the in person markets they current do. They commonly have a range of products but not many of each.
Etsy is the elephant in the room, for these categories of vendors, the creatives, and artists, have for many years been drawn too and used by the biggest name in handmade goods. Etsy uses its position to good effect and has become the default go to place for all manner of curious, creative, wonderful, and whimsical. The range of products and creativity on display in any given single store is worthy of a review all on its own. However, Etsy also knowns it’s strength. In our review, we noticed that Etsy had the largest transaction fees, and costs. Having both costs to even post an Item, on a time limited listing, goes against effectively every other site. No one else charges per item to host, except for Olx.pt. (Olx.pt, only charges to post, there are no other costs with Olx.pt) where with etsy, they charge you when you post €0.17 per item, which is only listed for 4 months, even if you don’t sell. They charge you when you sell, the highest commission 6.5% and transaction fees 4% + €0.30. Also, if you find your items have been relisted on other sites through Etsy ads, they will take another 15% in commission.
Etsy is the beast that’s hard to avoid, as their brand draws in so many clients as the go too for whimsy and artistic, but they take a heavy toll in coin for it.
E-commerce may be a lot to suggest for our handmade creatives, there is a lot of work in building and maintaining a site. Additionally in marketing and drawing users to your site, can make it a cost with not sales. However, with the constant cost of etsy regardless of sales, if you have many items or a wide range of SKU’s then having your own site can quickly pay itself simply in fees. The cost perspective is then additionally boosted by the control of brand and message that with the marketplace sites you give up to them. Your brand, and esthetics matter a lot in this space and being in control of that I feel is important.
Our strategy suggestion therefore would be mix etsy and ecommerce. To maintain a light but clear presence on etsy. Have your products, as much brand message as you can there, however do not push all products or SKU listings to the site. Use Etsy to expose your brand to a massive audience and then having a full E-commerce website under your complete control be the place that shows the full range of your products creativity brand and vibe. You’ll use etsy to bait the customers, to then visit your website for the full experience. Leaning on the control and limiting the costs that etsy will drive up quickly if you are very successful.
The Vendor
Our Vendor brand is a brick-and-mortar store that sells both their own items as well as other brands. They have a good revenue in their physical location and want to expand to more opportunities online with both their own branded products as well as the brands they buy in wholesale. Their brand is well established locally but online they don’t have much of a presence yet and this is part of a push to expand their reach.
The Brick-and-mortar store is still where most of the shopping is done with some estimates being that over 60-70% of revenue come from physical location, we therefore expect most of our work to be found in the store, however as retail continues to find balance in online and physical sales, having both options is still imperative. Many customers prefer using physical stores [1], but many also use the internet to research products both for options as to what to buy but also to check availability, be it in features and selection as well as shopping options. So having an online presence not only gives the option to directly buy the product and have it shipped it also allows for virtual showroom to then give the buyer a reason to come into the store. Knowing what’s in the store can save a trip for many times limited shoppers, and drawing customers to the location is an opportunity for upselling and impulse shopping.
We therefore recommend the strong e-commerce store front. Clearly branded and as best possible having a strong representation of the stores inventory and availability. Several of the e-commerce solutions allow for an inventory management through both point of sale (POS) and online, meaning that you can keep a single inventory live for both avenues of sale. This keeps your records aligned and the same visibility of products online and in the store. Along with the brand control we’ve mentioned before we can ensure that the client has a seamless experience. While this will be a lot of work to set up with creation, having a good process to maintain products in both environments, will ensure meeting both markets, online and physical.
Summary
Our analysis shows that generally everyone should have their own e-commerce site. The control of brand, visuals, SKU management, and overall flexibility and features on offer, give the most value vs. a relatively manageable subscription fee. These costs scale with features and effort and once built the website management is limited to SKU and inventory control. The overall brand control comes out to be a critical positive of the e-commerce vs, the Marketplaces ease of use, low cost of entry and client market share.
We recommend however to keep an eye out for opportunities to mix these approaches with your e-commerce site and potentially relevant marketplace usage. Using the right marketplace to leverage or compliment, your own e-commerce site allows for an opportunity to get the best of both worlds while pushing most orders through your own site to leverage increased control and lower costs provided by e-commerce.
If you want to see more about our analysis and how we created it along with details on our method, then please click the link to our Method Article.
Otherwise if you’re wondering what the best specific go to market strategy should be for your small business, and want some help to establish what your options are then don’t hesitate to reach out to us on email (timh@department45.eu) or via DM on Instagram. We will be thrilled to schedule a free one-hour consultation chat, where we can discuss your business and what we may be able to help you with.
Thank you for your time,
Tim H.
Lead consultant.
