E-commerce and online selling for the small producer

Page last updated: Thursday, 17 May 2018 - 1:43pm

Please note: This content may be out of date and is currently under review.

The internet has revolutionised the way in which business is conducted, impacting every aspect of a business, from record and account keeping to marketing and promotion, banking, communication and product or service research. 

It has also given small business operators the ability to reach potential customers from further away than ever before.

The introduction of the internet and the widespread use of credit cards have meant that a business has the ability to effectively be open 24 hours a day.

It has also made shopping for goods more competitive, as the need to have showroom floor staff for some businesses has been reduced and/or eliminated, bringing overall operating costs down.

If you are in business or thinking of starting, then you may need to consider some form of online or e-commerce presence in order to be visible and competitive in the marketplace.

What is e-commerce?

The definition of electronic commerce (e-commerce) is to enact a transaction for goods or services via the internet.

For those who have a goods based business (e.g. retailing), this may mean considering an online store. For others it may just mean providing customers with an easier way to book a service, make reservations or simply pay online.

There are many platforms which support e-commerce e.g. website, social media platforms.

Benefits and opportunities for e-commerce

The availability of e-commerce means that as a business owner, you are enabling a customer to make a purchase decision and then take action more quickly and conveniently.

An e-commerce option for small businesses is an attractive and very cost effective way to offer customers multiple ways to purchase your goods or services either on the spot or at their leisure in the home, office or on the go.

Offering your goods via the internet will also give you the ability to reach more potential customers. E-commerce can be used very effectively in conjunction with electronic marketing campaigns such as email, e-newsletter or social media.

E-commerce is most often set-up so that funds are either instant or utilise a globally trusted payment gateway, where funds are insured, offering protection for business owners and consumers alike.

Using e-commerce via a mobile device or smartphone gives your customer instant access to your goods or services.

You could have an online Facebook store, utilise a smartphone app to sell products, or offer a fast, easy and secure way of offering non cash payments for your product. And best of all, they can be offered almost anywhere, anytime!

How to get set up for e-commerce

Like any part of your business, you should start with a plan or strategy so you can understand what you need to do, consider the impact (positive or negative) on your business, your opportunities, potential limitations, costs and legal obligations before you start selling online.

Remember, online selling opens up the world to potential sales so you need to know how to handle orders and the process involved.

Start by asking yourself the following questions:

  • Would customers buy my type of product or service online?
  • What online avenues will I use (e-commerce website, smartphone app, social media, e-payment gateway etc.)?
  • Where am I willing to freight my products (local, state, national or international)?
  • How will I promote that my business offers online sales?
  • What procedure should I implement to manage online orders or payments?
  • How will I monitor my capacity to fill orders?
  • How will I accept payment?
  • What procedure will I need to implement in order to get orders shipped quickly and efficiently?
  • What are the set-up and maintenance costs?

Setting up an e-commerce shop doesn’t need to be a daunting process as long as you have done your research and make informed decisions.

Below are some tips for setting up your online store:

  • Think about what products or services you wish to offer online. There can be a fine balance between having too little or too many products. Too little and you do not come across as a serious player in the online space. Too many and you may need to dedicate many hours to updating and maintaining your site.
  • Write down a description of your product in layman’s terms. Just because you know what you are talking about doesn’t mean your customer does. Describe each product or service in the following manner:
    • Feature – what the product is?
    • Benefit – what the product does?
    • Advantage – why is this product or service a great choice for your customer?
  • A picture tells a thousand words - take quality photos of all of your products.
  • Decide on your e-commerce platform. If you already have a website, talk to your developer about the costs and procedure for adding an online store to your existing site. Alternatively use website templates that can be tailored to suit. If you have a larger number of products, or e-commerce is going to be a major component of your business, speak to a website developer for advice and costs.
  • Use the power of social media. Some platforms such as Facebook offer e-commerce options for business pages. However if you don’t wish to manage multiple online selling platforms, use social media to connect with customers and drive traffic to your website.
  • Arrange your preferred payment gateway. You will need to have a payment gateway in order for customers to make their purchase.
  • Implement an inventory system. You will need to keep track of both your online sales and your stock levels. If you run out of a particular item, you need to remove the item until you have new stock or at the very least change the product status. Inventory systems can be as simple as a manual workbook or Excel spreadsheet right through to an online inventory system that is integrated to your online store.
  • Implement a shipping procedure. What is the most efficient method of shipping in terms of suitability, cost and timeframe for you? Speak to Australia Post about their range of options. If you will be sending a large number of items, consider speaking to a specialist logistics company. You will also need to manage the flow of orders to make sure they are dispatched in a timely manner.

By doing some research into what will work best for you, you will be well and truly on your way to having a successful online component of your business.

Payment gateways – what are they and how do they work?

To operate an e-commerce component of your business, you will need a way for customers to make payment. Electronic methods of taking payments are referred to as ‘gateways’.

The most common forms are EFTPOS and credit card merchant facilities at a store, but these can be expensive to run and payments need to be entered manually.

Internet based payment gateways offer the convenience of being available 24 hours a day and can be a far more cost effective and easier option for many small business operators.

Usually, payment gateways are embedded into a website by way of a ‘widget or button’ which links to your account. Customers fill in billing, delivery details and other key information before making payment with a debit or credit card.

The system then emails a sales receipt to the customer and an order notification to you. Funds are held in your business holding account, ready for you to ‘draw down’ into your regular business bank account at any time.

Fees and charges are payable and depend on which plan you choose. You will need to weigh up the benefits versus the costs to see if it is right for your business.

There are many online based payment gateways so make sure you do your research.

Another payment gateway that is becoming more popular in Australia is payments made instantly via a smartphone. A business using this type of system will be issued with a card reader and can accept EFTPOS or credit card payments by using an ‘App’ anywhere, just as long as they have internet or mobile phone coverage.

These sorts of systems are cheap and easy to set up and are perfect for those who may be selling at markets or have a mobile based business.

Costs

Like any merchant facility there are costs that will be incurred. Usually fees are broken down into a flat fee for each transaction along with a separate percentage based fee.

Typically fees start at around 0.30c per transaction and 2.4% of the value of each transaction. Fees are taken out before funds are transferred into your gateway holding account.

Whilst the individual transaction fees are higher than those offered by standard merchant facilities, they do not require a person to be present to take payment, nor do you need to lease the actual machine, so they do offer excellent value for money for those wanting mobility, flexibility and a range of payment options.

Other costs associated with selling products or services will be increased website hosting due to the larger amount of space and speed your website will require than information only based sites.

There will also be costs associated with the shipping or freight of your products. Some or all of these shipping costs may be passed on to the consumer, but be wary that this does not make you expensive compared to your competition.

Security

Security for both you and your customer must always be paramount. Reputable payment gateways offer the same type of security as a major bank.

Your account is subject to both seller and buyer protection systems and policies and is monitored on a regular basis for unauthorised or strange activity. Plus, funds paid via credit card are insured by a consumer’s bank under fraud protection.

Before you sign-up to an online payment gateway, read the conditions and security information before proceeding.

Delivery of products or services sold via the internet

Depending on the type of product you are selling, there will be many different options available to you in order to get your product delivered to your customer.

The most common method of shipping products to consumers is by Australia Post using a pre-set package based on size or weight.

You may choose to send items more quickly using express post as an option. This method is not only cost effective, it is Australia-wide and international, meaning you can deliver your product just about anywhere!

For larger items or higher volumes, consider an arrangement with a logistics company who specialise in freight delivery. Make sure you ask about their ability to deliver within your preferred timeframe and to any destination you wish.

If you wish to sell fresh produce such as meats, dairy products, seafood or fruit and vegetables, there are a number of health and quarantine regulations that will need to be observed.

Compare other providers of fresh produce to see what methods others are using.

Arrange to speak to your local government authorities’ health standards officer to ensure your product is stored and moved in accordance with law.

Enquire with Australia Post or industry bodies to see if there are packaging and freight solutions suited to your type of produce.

If this seems too great a challenge, there are a number of online national farmers’ markets that you may be able to join as a vendor.

There will be membership fees and other associated costs, however they can be a great platform to use as they have national exposure and they will be able to provide advice regarding packaging and shipping for your product.

Consumer obligations for online selling

Whether you sell your goods or services face to face, by telephone, at markets or events or via the internet, you must abide by all fair trading and consumer laws.

When selling online, you should clearly state your exchange/refund policy on your website or provide a link to a policy document where possible.

You are responsible for providing a good or service that does what it has been designed to do.

You will also need a policy to handle any matters that arise from damage to items whilst in transit.

Final Considerations

Utilising the internet to sell your products or services is challenging but can be extremely rewarding when done well.

By doing some research as to what is happening in your given industry you can look to establish new channels to access your consumer.

The internet has made its way into nearly every aspect of life, so to be successful, be innovative, make your product available to all potential customers and back it up with excellent before and after sales service.

People will always buy on experience, not just price so you need to make sure your customer has a great experience every time.