Conversion Competition: Should Small Businesses Set Up an Online Store?
Those selling products or services online, through e-commerce and small business stores, saw an unprecedented spike in sales during the Covid-19 pandemic following the government’s decision to close non-essential, brick-and-mortar stores.
An increase in sales throughout the lockdown led to more small and large businesses offering their products or services online – as that was the best way to make money and reach customers, with over 80% of the UK population making e-commerce purchases.
Following the pandemic and the return to high-street shopping, there is still a large amount of competition within the sector, with fashion being the largest business-to-consumer (B2C) e-commerce segment.
(Image Source: Office for National Statistics)
Additionally, global retail e-commerce sales are predicted to exceed $7.5 trillion (£5.8 trillion) by 2026.
We are also set to see the continued growth of social commerce, where everything from product research to checkout happens within a social media platform such as Facebook, Instagram or TikTok. There were 5.5 million more social buyers in 2022 than in 2019 before the pandemic.
Using social commerce to make your e-commerce businesses available on social media platforms will widen your audience and reach customers more likely to buy your products or services, thanks to the artificial intelligence application of machine learning.
So, if you run a small business, it’s safe to say having an online store to sell your products or services is essential.
Advantages of an online store
Fast set-up time
Unlike a brick-and-mortar store, a small and basic online store can be ready for customers with just a few clicks.
E-commerce platforms like Shopify and WooCommerce use templates to create your online store. They also handle hosting, payment card industry (PCI) compliances and other maintenance, so you don’t need IT or e-commerce knowledge.
Time to grow
You can monitor your online store’s success for a while before considering hiring a digital agency to take your site to the next level through marketing and promotions.
However, you are one step ahead if you’ve already created word of mouth or a social following for your small business.
Open 24/7
Most online stores allow automated order and payment processing, so customers can browse and buy whenever it suits them.
Once an order has been placed, the small business owner doesn’t have to process and package purchases immediately, as they’d have to do with a customer in-store.
Monday sees the highest amount of online sales than any other day of the week, but luckily, neither the small business owner nor the customers are committed or restricted by set opening days or hours. The peak hours for online shopping are 10am and 8pm.
Shoppers start online
Shoppers often research a product to compare prices, compare brands and read customer reviews before buying, and over 60% of shoppers say they begin their search for a product or service through a digital channel such as Amazon, social media, a search engine, a brands website or a reviews website.
Meanwhile, 59% of shoppers say that being able to shop on their mobile is important when deciding where to buy from. This statistic is why social commerce is essential, as small businesses can reach a broader demographic through social media and mobile phones.
A consumer is also more likely to purchase something online if the process is simple, with 17% of shoppers abandoning their cart due to a complicated checkout process. So, social commerce is preferred as shoppers can find and pay for a product all without leaving their social media account or setting up a store account.
(Image Source: Baymard)
You can sell anything, including niche products
You can sell almost anything online. Whether you sell products such as clothing and sweet treats or you sell services such as learning courses, there’s a way you can process orders and payments electronically.
If you sell online services, such as courses or ebooks, then it can be digitally delivered to the customer with minimal effort from yourself.
If your product is unconventional or niche, selling online may be the most effective option for your business, as people looking for something unusual or specific are more likely to search online than on the high street.
Not limited geographically
Unlike a brick-and-mortar store, an online store doesn’t limit who views and purchases your products or services.
No matter how desirable a product is or how large a business’s marketing product is, a shop that doesn’t sell products online will only attract people within a specific geographical radius.
An online store can help you reach international shoppers as long as your online store complies with international tax and import/export rules.
If you notice a demand for your products in other countries, you target your marketing towards them by offering your website in a different language or including their local public holidays in your content.
Less overhead costs
An online store costs far less to set up than brick-and-mortar stores, as you can avoid expensive, upfront payments that occur when renting or buying a retail premise, hiring staff, setting up payroll and ordering inventory.
However, costs are still involved if you want to create an online store, including paying a web hosting provider to host and maintain your site, domain name registration, marketing your products, and creating a physical space to store inventory and process your orders.
Flexible updates and offers
You can update an online store, add new product lines, reorganise your catalogue or start a flash sale as and when you like.
Meanwhile, someone running a brick-and-mortar store would likely have to plan in advance for events and new product releases so they can make room on the shop floor, have extra staff working, source materials and advertise.
No customer-facing issues
Whilst you may still have to speak to customers online, be welcoming, and address their issues with your products or services, you will not have to prepare for the potential vandalism, shoplifting or violence that can occur in brick-and-mortar stores.
You also avoid having to learn any health and safety procedures or pay for any insurance that is needed if you are welcoming guests into a brick-and-mortar store.
Disadvantages of an online store
Despite a plethora of advantages, it is crucial to consider some disadvantages of setting up an online store.
Security and fraud
The increase in online stores has attracted the unwanted attention of sophisticated criminals and fraudsters, leading to security and privacy issues.
Businesses must invest in the latest security systems to protect their website and customers’ bank details, as cyber-attacks could damage a business’s reputation.
Customers will be put off ordering if they think they will pay for a product that will never arrive or arrive differently than described, so customer reviews are essential. Consider incentivising your new customers to leave you a review after ordering.
Legal issues
Getting to grips with e-commerce laws and the additional customer rights attached to online sales will be crucial.
However, some e-commerce platforms and hosting providers will deal with legal issues for your business.
Customer trust
Establishing a brand name and earning customers’ trust can be challenging when there is no face-to-face interaction between them and your staff.
Consider setting up a good customer service system for your online store.
Delivery times
Delivery times can take anywhere between three days and three weeks. Longer deliveries can frustrate customers and prevent them from buying from your online store.
It would help if you remained on top of inventory management to avoid delays in the shipment time your customer was given at checkout.
Conclusion
Online shopping helped businesses survive through the pandemic as they could continue selling their goods and services without breaking government restrictions.
As the relaxation of restrictions and the reopening of brick-and-mortar stores began, inflation rapidly increased, and in June 2023, it sat at 7.9%. This has led to the costs associated with e-commerce, such as shipping, fulfilment and labour, remaining higher than pre-pandemic levels.
(Image Source: Office of National Statistics)
However, the few disadvantages of having an online store will not hinder its growth as the e-commerce industry continues to be ever-evolving.
In the near future, we expect to see the continued growth of subscription services, ethical shopping practices, and social commerce. Currently, social media channels with built-in social commerce features are Instagram, Facebook, Pinterest and TikTok, but we expect more to join the trend.
We can also expect to see more businesses integrating with augmented reality (AR) and virtual reality (VR) technologies, like eyewear retailers who offer an at-home try-on service and furniture companies that allow customers to use their cameras to visualise furnishings in their own space.