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10 Things to consider before trading online: part 1

Oct 7th 2010

With online shopping becoming more and more popular, building an online shop can be an excellent way to generate additional revenue. Many businesses fail or struggle to make an impact online. We look at part 1 of how you can avoid the most common mistakes.

1) Build Costs
Many businesses looking to start trading online under-estimate the amount of work and preparation that is involved in setting up a good quality online shop. In some respects the building of the website is the easy part, it’s setting up the content including products and images that takes the real time.

Having a clear idea of exactly what functionality and pages you need, will always help.
Preparation of product images, descriptions, stock codes and pricing will go a long way, and potentially reduce costs. Online shop projects often break down and fail where product entry has been poorly thought through and data has been supplied far too late and in a poor quality format.

The more detailed the brief, the better the result and often cheaper.

2) Potential Market
Too many new businesses believe that once a website is built, people will automatically find the website and buy your products. This unfortunately couldn’t be further from the truth. Assume no-one knows of you and can’t find you and you won’t go far wrong. High street shops have the advantage of passing foot-fall, online shops don’t!

Investigate links to your sites from partners, suppliers, affiliates, friends, customers and most importantly shopping sites. Advertising such as Google AdWords may also be an option. One of the busiest market places on the internet is eBay.

With any new business and finding your market, it’s as important to find out what doesn’t work, as well as what does. With this in mind, don’t be afraid to test your product and market on eBay first before investing in a new online shop venture.

3) Taking Payment
More often than not Stripe or PayPal comes up as the easiest solution, but not always the cheapest. It’s cheap to install and easy to set up, but the charges are higher than most other methods and not everybody likes or wants to use PayPal. PayPal is fine for an initial venture at low cost, but is better suited as an alternative method of payment, not the only method of payment.

To take payment online you need a service called a Payment Gateway, these include Stripe, SagePay and WorldPay to name a few. In order to use Payment Gateway you need a merchant bank account and an Internet Merchant ID. These are obtained from your bank, and can take several weeks to acquire.

Also be aware of how you handle credit card information in your business both online and offline. There are standards in place such as Payment Card Industry/Data Security Standard (PCI/DSS). Falling foul of these standards could land you with fines in six figures and end up putting you out of business.

For more details, check our article on Payment Gateways