Should you sell online?


I read an article in The Telegraph recently in which it stated that online sales were up 19.2% in December 2013 compared to December 2012, and that a British Retail Consortium survey revealed that non-food online purchases had risen from 16.5% to 18.6%, meaning that almost one in five non-food purchases is made online.  This backs up the obvious; that online selling is and will continue to be a growing market.

I specialise in helping start-ups and young businesses to grow and succeed, and have a great deal of experience in helping fledgling companies establish themselves and grow into successful enterprises, both online and offline. I thought I'd try and answer two of the most common questions I'm regularly asked with a few questions to get you thinking; “Should I sell online?” and “What should I sell?”.

Selling online is clearly an attractive route especially given the above statistics.  As for what to sell, that is a very difficult question, so below are some areas to consider when thinking of a product to sell online.  The more of these you can say your idea fits then the more chance you have of making a success of online selling.

How big is the market? – There needs to be a market big enough to support your investment. If you have a niche product then you can afford a smaller market as targeting customers may prove less expensive per sale.

Is the market validated?  – If you can see that there is already a market for your product then this can be good for you, you will however have to do something beneficial to your customers better than others to gain the market share. Simply being cheaper is not the answer, unless of course you have a competitive advantage giving you better margins.

Is the market growing? – In a growing market you have the opportunity to establish yourself.  Coffee for example has continued to be a growing market in the UK despite the rise in raw materials.

What level are the IT skills of my customers likely to be? – If your product is aimed at the over 70’s market then you may be limited in the number of customers that can successfully use the internet to buy your product.

What's the mark up on my product? – Selling low margin products can be difficult online due to the numerous costs of selling, including lost parcels, damaged goods, merchant service charges, fulfilment costs etc.

What price range am I targeting? The price range between £40-£90 is considered the sweet spot of online selling prices as it is enough to give a good profit per sale but not high enough to require a greater deal of qualification questions from the purchaser.

Is it subscription based? – If your product can form part of a repeat selling opportunity where your customers are willing to sign to a subscription this will allow a great opportunity for you to invest in your site knowing you will have future income coming in.

Is it light and easy to post? – In a world where everybody expects free postage, selling a product that is cheap to post is a great advantage. For international sales you may wish to consider a fulfilment service.

Is it fragile? – Selling a product that is fragile will lead to greater risk of returned goods due to damage in transit.

Is it seasonal? – All year round demand is great so that you can smooth out your income to match your overheads and won’t struggle to pay wages during quite periods.

Will it solve a problem or relieve a pain? – If you product does either of these then you are likely to spend less on advertising as consumers will search for you more than a standard product.

Is it a vogue product? – You don’t want to invest money into a vogue product, yes there may be a market now, but will it still be there tomorrow?

Is it consumable/disposable? – These are great as your customers are likely to come back time and time again to buy your product.

How scalable is it? – Your product needs to be scalable if you want to grow your sales. Consider if you make the product yourself, will you be able to make thousands to meet potential demand?

The more of the above your product achieves, the more chance there is of the business model being a success. Like all businesses it is important you have a strong team around you, including a good ecommerce team to help build a website worthy of your product and a good accountant to advise you in decisions on how to maximise the amount of money you retain from your venture.

If you are interested in selling online or developing your existing online business please do get in touch to see how we can help with our team within Armstrong Watson and our experienced contacts.

Grant Smith, Partner