Online shopping involves over 1.8 billion people buying over $2.8 trillion worth of product each year.¹ But the online retail world can be intimidating to newcomers, replete with its own jargon (what’s “funnel hacking,” or “keystone pricing?”) and potential pitfalls.
In this article, we’ll show you how to sell online like you’ve done it for years. And we’ll describe how using Transferwise technology can save you money and effort throughout the process.
Before diving in, there are a few key items every potential online retailer needs to consider.
First, you need to pick your marketplace. Every online store faces a choice of whether to use an existing platform (like Amazon, Ebay, or Etsy), or build their own site. Marketplaces should have healthy flows of relevant traffic, affordable fees, and ideally provide tools to help with things like order fulfillment (shipping), tax compliance, and customer service (refunds and returns.)
You also need to think about your product; this includes things like picking a price point, identifying a trustworthy supplier, and deciding how much inventory you’re willing to hold.
Potentially most important for online stores is honing a customer acquisition strategy. You should imagine the representative customer, estimate the size of the target population, figure out how to best market to them, and make sure the space isn’t already oversaturated.
Finally, on a personal note, all online retailers need to determine up-front what their capacity is to build the business. This includes things like how much time and money you’re willing to invest, what acceptable annual revenues are, and how long you’re willing to wait for the store to turn a profit.
As mentioned above, there is a dizzyingly large number of ways to run your online store. Here, we list the top 5, and summarize their strengths and weaknesses.
1. Amazon is probably the most well-known online retailer. It comes with robust customer traffic, advanced technology (such as the AI-powered Amazon Customer Insights)
2. eBay allows a more diverse range of products (and product quality), its shoppers tend to be more budget-conscious, and sellers retain more profit on average as compared to Amazon. However, eBay is much more hands-off, and key responsibilities like shipping fall on the seller.
3. Etsy is a relative newcomer to the marketplace club, mainly aimed at the market for craft and artisanal goods. In keeping with their design focus, they allow more customization of the look and feel of your online store.
4. Shopify lets you build an entirely original online store, using your own domain name. Start-up costs tend to be much higher (as you’re responsible for generating traffic and building the store), but the fees are also lower.
5. Facebook offers a Facebook Store service to online retailers. Their value proposition is advertising; ads can be laser-targeted at your desired customers. You can also link an external site, like a Shopify marketplace, to a Facebook Store page.
Regardless of what your platform or product is, every successful online store needs a few essential ingredients.
First, make sure you have all licenses and permits you need. The UK has a list of legal requirements for British online retailers. Note that there are some extra steps for selling to the EU (notably getting a VAT number.)²
Next, you need a payment processor and a bank account. Payment processors handle the receipt of customer funds (for ex., from credit cards), and popular ones include Stripe and Amazon. These feed money into your bank account (like a Transferwise e-Commerce Account )
You also need a product, and some sort of order fulfilment system. This can be as simple as making something at home, and shipping it using the postal service. Or it can be as complicated as sourcing a product overseas and having it feed into Amazon’s distribution network.
Don’t forget to have a robust customer service system in place, to handle complaints and process refunds and returns.
The last thing you need is an actual website, ideally with a clean and intuitive interface. Check the UK Government link above when designing yours, so that you don’t miss a requirement.
In this section, we distill the information above into a concise guide that you can follow when building your online store.
Pick a Product: Identify a need that you can fill, and find a trustworthy supplier at a reasonable price point.
Pick a Marketplace: Decide whether you want to sell on an established marketplace (like Amazon, Etsy, or eBay), or build your own site using technology like Shopify.
Build a Website: Build your storefront, making sure that you obey any applicable legal requirements and present a clean and intuitive interface.
Handle Logistics: This includes things like a payment processor and bank account, and also decisions about responsibilities like shipping and customer service.
Acquire Customers: Imagine your target customer, and reach them using any means at your disposal (SEO, in-marketplace advertising, social media, influencer marketing, etc.)
Go Live! At this stage, you’re ready to turn on your site and open for business.
One of the best features of online retailers is that they’re easy to scale: serving your site to another country is much simpler than building a new shop overseas. International markets can increase your brand visibility, multiply your sales numbers, and help you evade competition.
Transferwise’s Multi-Currency Account makes this process painless. By letting you send and receive money in over 50 currencies (and convert between them without paying banks an exchange-rate markup), your online store can capture all of the value of international markets.
When building an online store, Transferwise can help you maintain your profit margin at every step of the sales pipeline:
Receiving Money: TransferWise provides local account details in EUR, USD, GBP, AUD and NZD which allow you to receive payments for free and convert them to your local currency without any exchange rate mark-up. Using the multi-currency account, you can withdraw money in different currencies from your merchant account and take advantage of a good exchange rate when converting them.
Business Expenses: Payments to vendors and suppliers in over 40 currencies for a small, transparent fee and exchange rate without mark-up.
Multi-currency debit card: This makes international payments fast and convenient.
This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.
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