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This is one of the most common e-commerce questions. Most e-commerce businesses get e-commerce funding to cover their typical expenses, which include:
- Inventory (for online retailers)
- Shipping and storage
- Promotion/user acquisition
- Operations/business tools
Generally, online retailers need funding more than online service providers, as their costs are usually higher due to stock expenses. Inventory could comprise 25%-50% of an e-tailer’s revenue, depending on whether it’s a direct seller or a wholesaler. This is very burdensome on the average online retailer.
The second biggest expense is logistics costs - shipping and storage. With the exception of dropshipping companies, e-commerce sellers need somewhere to store their inventory and to provide free or low-cost shipping, a standard set by Amazon that’s difficult to compete with.
E-commerce businesses typically don’t have the cash flow to pay their expenses before generating revenue. This is where funding comes in handy. For example, if an online retailer needs new inventory to grow its business, a line of credit or e-commerce business loan can help finance the inventory purchase.
There are a number of funding options available to e-commerce business owners.
1. E-commerce business funding
You can use an e-commerce business loan for many business purposes including:
- Online marketing campaigns to increase traffic
- Purchase inventory
- Develop your technology
Pros of E-commerce loans:
- Quick approvals and funding
- Customized for e-commerce businesses
- Usually don’t require collateral
A popular loan option for e-commerce businesses is an e-commerce business line of credit.
Bootstrapping means funding a business with little or no external funding, in other words, relying on your own resources and funds from initial sales to keep the business running. This involves keeping costs at the minimum initially until enough revenue comes in to support business growth.
Pros of bootstrapping:
- Retain full control without outside investors
- No interest repayments required
There are many fundraising options for e-commerce business owners, including angel investors, venture capitalists and even crowdfunding.
- Angel investors are private wealthy individuals that invest personal funds in exchange for equity or convertible debt.
- Venture capitalists are similar to angel investors, however are generally corporations that invest capital instead of individuals.
- Crowdfunding is a popular social sharing funding option whereby a large group of individuals, including friends, family, acquaintances and so on, are asked to contribute money to the business.
Click here to read more about all the e-commerce funding options available to online sellers.
This e-commerce question is frequently asked by business owners so we're tackling it in detail in this ecommerce q&a. The right e-commerce platform is crucial for online store success and choosing one is no easy feat. It all depends on what type of e-commerce store you have and what your specific needs are. These are the top 5 e-commerce platforms:
Shopify has become one of the leading e-commerce platforms with over 1 million users globally. It offers a complete package with tools ranging from design to marketing to online selling and more. The platform is extremely user-friendly and customizable, with no coding or design skills required.
Shopify e-commerce pros:
- Tiered pricing plans catering to all business sizes
- Ready-to-use templates that are customizable
- Sale of both physical & digital goods are possible
- No separate web hosting fee required
Shopify e-commerce cons:
- Requires download of Shopify app to enable certain key functionalities
- Third-party gateways incur transaction fees
- Higher pricing plan required to unlock full features
Who is Shopify e-commerce best for?
Shopify is ideal for small businesses that need a full online store as its lowest pricing plan includes a broader feature range compared to that of its competitors.
Wix’s competitive advantage is its wide focus as a website builder, which includes e-commerce. This gives businesses the ability to create not only a beautiful website but also a fully functional e-commerce store.
Wix e-commerce pros:
- Drag-and-drop functionality
- Huge range of templates
- Wix App Market with many add-ons
- Customization for mobile
Wix e-commerce cons:
- Unable to change templates in a live site
- Sites cannot be transferred
- Loading speed is slower than others
Who is Wix e-commerce best for?
Wix is good for e-commerce businesses that want to set up their store quickly and easily. best for small businesses that are looking for a quick solution to get online. There’s no coding required and there’s the option to integrate social media marketing channels.
Squarespace is one of the simplest e-commerce platforms as well as being one of the most affordable options. On the downside, it has fewer features and functionality.
Squarespace e-commerce pros:
- Mobile-friendly premium templates
- HTML and CSS customizability
Squarespace e-commerce cons:
- Lacking an app store
- Just 3 payment types
– PayPal, Stripe, Apple Pay
Who is Squarespace e-commerce best for?
Squarespace is best for e-commerce store owners that place more emphasis on design than features, and that have a more limited budget.
BigCommerce is more costly than other platforms but provides excellent value. It is lacking somewhat with regards to design customization as design options are relatively limited, however, changes can still be made using HTML and CSS.
BigCommerce e-commerce pros:
- Good value for money
- All plans provide unlimited employee accounts
- Zero transaction fees
- Sales tracking tools
BigCommerce e-commerce cons:
- Limited design functionality
- Doesn’t include abandoned cart recovery
- Standard plan limits annual sales to $50,000
Who is BigCommerce e-commerce best for?
BigCommerce is the right choice for e-commerce owners that are more concerned about cost management than design functionality and that have the ability to outsource or do their own coding.
Weebly, acquired by Square, is one of the most intuitive, simplest e-commerce builders on the market, as users can easily drag and drop files into templates. They are also attractive on the cost front, with very affordable pricing plans.
Weebly e-commerce pros:
- Simplistic user interface
- Easy payments through Square integration
- Useful tools including automatic tax calculator
- Automated marketing tools
Weebly e-commerce cons:
- Abandoned cart emails included only in top-tier plan
- No Amazon integration for order fulfillment
- Expensive to optimize dropshipping
Who is Weebly e-commerce best for?
Weebly is best for local businesses that wish to offer online purchasing in addition to in-store. It is not ideal for pure e-commerce store owners as it is more limited than other platforms.
To grow your e-commerce business, you’ll want to increase your quality traffic and improve your conversion rate.
To increase your quality traffic:
1. Optimize your SEO - Search Engine Optimization entails improving your ranking in search engines, particularly Google.
2. Effectively use content marketing
3. Implement email marketing
4. Create targeted online ads - Facebook and Google
5. Create profiles on online retail marketplaces such as Shoptiques or Etsy
6. Affiliate marketing
To improve your conversion rate:
1. Offer Live Chat on your website
2. Use the Facebook Messenger Bot
3. Conduct frequent A/B testing to optimize your user experience
4. Create a customer loyalty program
5. Offer free shipping
E-commerce trends for 2020 indicate extreme innovation with user-friendly technology, making it easier for business owners to run their online stores as well as simplifying the online shopping experience for consumers.
Ideal for small businesses and startups, the dropshipping business model makes e-commerce more accessible to entrepreneurs by saving time and money. With dropshipping, there’s no need for holding inventory, managing storage space, logistics, and shipping.
How does this business model work? As the dropshipper, you earn the difference between your supplier price and your sale price.
eWallets, such as Google Pay and Apple Pay, are becoming increasingly utilized since more and more consumers are paying with mobile payments.
3. Voice commerce and chatbots
Artificial intelligence is the way of the future, fast, accurate, relevant responses. Chatbots are used by e-commerce companies, such as Etsy, to provide instant, 24/7 customer support to resolve standard issues such as order delays, payment and account issues.
4. Augmented and virtual reality
The ideal for online shopping is being able to know exactly how the item would look or fit. Augmented and virtual reality makes this possible, for example, allowing customers to ‘try’ on clothes, or see how furniture would look in their home
5. Shoppable socials
Through social network apps, such as Instagram Checkout for example, e-commerce websites can get more traffic, potential leads and even sales directly through the social app.
There are three main ways you can increase traffic to an e-commerce website:
1. Paid traffic
There are two sources of paid traffic:
- Search engines: Pay per click (PPC) ads via search engines such as Google and Bing
- Affiliates: this entails forming an agreement with other websites whereby they link to your products or services on their site and you pay them a commission for any sales made through that link.
2. Social media marketing
There are two sources of traffic through social media: paid and organic:
- Paid traffic: you can increase traffic through PPC ad campaigns on popular social media platforms such as Facebook, LinkedIn, Twitter and Instagram to name a few. You can decide which social media channels to advertise through based on your target audience.
- Organic social media traffic: through social media posting, such as Facebook page posts, tweets through twitter and so on.
3. Organic (free) traffic
This is traffic gained through Search Engine Optimization (SEO) and is often the best source of traffic, as it can attract high-intent customers at no cost. However, SEO is a long-term strategy requiring patience and know-how, unless you want to outsource to a professional.
The real challenge is not just attracting traffic, but attracting quality traffic that converts into paying customers. This is every e-commerce business’s ultimate goal. Once you’ve attracted the right type of traffic with high intent, your goal needs to be to convert them into leads or customers, to reduce cart abandonment and encourage repeat purchase.
Once you have the traffic you need to be able to convert visitors into paying customers. Even if you have hundreds of unique visitors, it doesn't do you any good if none of them convert into sales. But if you have even just 20 unique visitors that convert into just 4-6 sales, then that’s a good return on investment. On average, your desired conversion rate should be 1-2%, but you should aim for closer to 2%.
There are a number of ways to achieve your desired conversion rate:
1. Make sure you’re attracting the right, high-intent target audience - define your target audience and market where they are already. You can use Google Analytics to analyze your traffic metrics. A high bounce rate (above 90%) indicates that you’re not targeting the correct audience.
2. Analyze user behavior using a tool such as Plerdy Click Map. This will give you insight into where users are navigating to on your website so you can assess the user journey, what buttons they are clicking on, as well as identifying any design or usability issues.
3. Reassure your audience - consumers generally feel safe purchasing from secure sites. Ensure your site has an SSL certificate (https), as well as other security protocols in place, especially when it comes to date storage and payments. Prominently display all security certifications on your site. Also provide information about your partners, which adds credibility. Perhaps most importantly, add customer testimonials to your website. Offering an easy return policy is another surefire way to increase your conversion rate.
4. Provide in-depth product descriptions with visuals and videos - don’t simply sell products, use multi-media content to inform, educate and add value to consumers
5. Get visitors to stay on your site - use offers, pop-ups and incentives to get your visitors to add items to their baskets and complete the purchase right then.
6. Use an engaging Call To Action - your CTA should be consistent throughout your site, and should be clear, concise, and in the right place.
7. Encourage customer reviews or feedback - bear in mind that not all reviews will be positive, but that’s ok. Negative reviews can help you improve your product or service.
8. Optimize your product positioning - make sure products you want to sell faster are listed first, describe delivery terms, guarantees, any promotions and describe the goods fully. Prominently displaying customer reviews of each product and well as usage videos and photos can also improve the purchase rate.
9. Encourage cross-selling by having a ‘Suggested for You’, ‘Similar Items’ section or ‘Customers who bought product x also bought product y’.
10. Simplify and optimize the technical aspects - site navigation, product sorting and filters, checkout process, site loading speed and site SEO, and optimize your site for mobile.