A Typical Business Moving Online

We have built online properties of various types, including eCommerce Business Websites for a range of companies. But we can't write an article about them all, so in this article, we'll focus on one type of company , and refer to others as helpfully as we can. We'll doubtless write full articles on other types of business soon.

Welcome To Julie's Home Jewelry

Julie lives in Sydney. She's been  retailing and making beautiful home-crafted jewelry for a few years and selling through local stores and a network of friends.  In particular, her moonstone bracelets are selling well. She wants to grow her business without the expense of opening her own store and to take a greater profit than she does from local stores. She has a reliable supplier  and wants to increase sales - the capacity exists but the sales channels are not sufficient.

The latter point is important -

First Considerations for an eCommerce Business Website

Current Business Summary

Let's say that July is selling 50 of these moonstone bracelets per month, and has the capacity to supply another 150/month. This seems like a good opportunity. But is it? At those prices, she stands to gross an additional $5,250/month (Gross Profit before advertising costs) if she can sell all of them. Let's take a closer look at this.

What Julia wants to Sell Online

Julia is selling a Moonstone Bracelet as shown here:

Goals for Julia's eCommerce Business Website

Getting Business Started Online : The First Mistakes

"Do NOT Assume You Need an eCommerce Business Website - Do the Numbers First" - Keith Rowley

Things to Consider before an eCommerce Business Website

The only objective of a eCommerce Business Website is to get your product in front of customers. No matter which method you choose, you will face competition. Here are some methods of presenting your products online along with the main methods you can use to promote them. As you will see, we do NOT recommend all the options in the table, but they are there so that we can explain.

Online Sales Platforms and Promotion Methods

The Facebook Store

Here are the key points for selling products on Facebook:

So it's clear that you need an eCommerce platform (eCommerce Business Website or other options as noted below) to enable setting up a Facebook shop. We therefore consider that a Facebook shop is a great place to expand your shopping efforts to, but is not your first point of call to establish online sales. However, unless you live in the USA, you cannot accept payments on a Facebook shop, so even with a Facebook  shop, you need another platform. 

A Shopify Store Platform

This is a popular way to set up a eCommerce Business Website. We won't go into the technicalities here as our focus is on cost, save to say that we think that most people who are comfortable with computers should be able to set up a basic store without help.

The basic costs US$30 per month (AU$43/month). However, that is basic and as soon as you learn about other features needed to make your store more attractive and improve conversion, you start paying for plugins' that charge a monthly fee. We found that our monthly bill easily increased to around AU$75/month which is A$900 per annum.

Of course, there are other eCommerce  Business Websites stores like Shopify you can use, but for cost illustration purposes, we'll stop at that and move on. The key point is that Shopify will cost you around A$900 per annum - forever!

Selling on Amazon FBA and Self-Fulfillment

Selling on Amazon is a journey and requires considerable time to learn how to get products into the store, price them properly and advertise. A professional Amazon account costs US$40 or A$57 monthly - but that's just an admin fee so we need to take a closer look and at the FBA program and seller-fulfillment in particular.

The Amazon FBA Program means 'Fulfilled by Amazon' which means that once your items have been received into Amazon's warehouses, Amazon takes it from there and takes orders, delivers and so on. With 'Your Fulfillment' you sell on Amazon but ship yourself. 

However, Amazon also provides refunds to customers at the drop of a hat, and you have to factor in such losses. Here is a Amazon FBA and 'Your Fulfillment' calculation. The cost of the product to Julie is shown as $10 - the rest is self explanatory.

On the surface this looks great, either with or without FBA but here are the problems we found when selling on Amazon instead of of selling on our own eCommerce Business Website.:

Amazon Ad Costs

The key point to note in this example is that net profit is now around $23 - $26 per item depending on FBS or non FBA sales. The profit target that Julie has is $20 per item, and before advertising, she meets this. But she will certainly NOT meet this target when Amazon advertising costs are added.

Those figures are critical. A click does not mean a sale. Let's say you get 10% conversion from clicks to sales (which is very good), then each sale will be costing you $13.80. Julies's net profit has now dropped to $6.20. If the conversion rate is 5% (which we think is normal for most products) then Julie is running at a loss.

We've been through this with a $10k branded product investment and despite working the numbers quite assiduously, we lost money.

The Upside of Amazon vs an eCommerce Business Website

The Downside of Amazon

On our first attempt at selling a branded product from China, we invested around $10k and lost about 25%. We were novices and we could have done better. We also entered the most competitive niche on the whole site - Essential Oils and Diffusers.  Try it with a slow start if you go this route! We suggest an initial investment no greater than $500 for newbies - and write that off as school fees just in case!

Your Own eCommerce Business Website

This is often, and quite naturally, the first port of call for those starting off their eCommerce adventure.  We're going to start by referring you to our article on what an eCommerce Business Website is so that we don't repeat ourselves here. Just click on the image to catch up if you need to:

eCommerce Business Website Cost

So you have your website up, and the running costs are known. What are the other expenses and how do you make a profit? These tables will help and should be  self-explanatory. First though, some typical data if we advertise on Facebook:

This gives us 2.0 sales for our $50 daily budget. At a pre-advertising GP   of $35 per product we have a profit of $70-$50 = $20. 

The important thing about this result is that you have an ad that is at least profitable and as such it can be scaled up. A good Ad with lots of comments and likes will drop the CPM a lot - maybe down as low as $8 when it really gets going. 

Free Ads Profit Calculator (Use for Facebook or Similar CPM Ad Platform)

This should be useful for you. Just enter data as you would for any calculator - it's live and it works.

So let's see where we are with Julie now and enter the following numbers into the calculator above:

Done it? What the numbers show is that at these performance levels, Julie is selling one product a day at a cost of $20 in advertising.  So her net profit is now $15 reduced from $35 and she's only selling one per day.

Reducing the Ad CPM and Increasing the Budget

Now let's assume the ad gets better and better over a few days and the algorithm learns, and keep the budget the same but drop the CPM cost to $15.

What we now see is that sales are two per day, with a net profit each of $26.75 or $53 per day.

Your eCommerce Business Website profitability is hugely dependent on the quality of your ads and the resultant CPM on Facebook!

But Julie needs to sell 5 per day, so we need to increase the advertising budget - now that we know the ad is profitable - not before!  Using the calculator with the  daily budget set to $50/day.

We now see the following:

NOTE: IF YOU USE FACEBOK ADS ONLY INCREASE THE DAILY AD BUDGET ON AN AD THAT PEFFROMS WELL BY ABOUT 10% - 15% PER DAY. IF YOU INCREASE TOO MUCH TOO SOON, THE AD WILL START IT LEARNING PHASE ALL OVER AGAIN AND SALES WILL DROP - ANFD MAYBE NOT RECOVER.

That's enough on Facebook!

Using SEO Profitably on an eCommerce Business Website

SEO profitability calculations are a bit more involved but still essentially simple. We use arithmetic not mathematics! Here is the starting sequence of activities before Julie or you should spend anything at all. bear in mind that SEO campaigns take 2 to 3 months to show results - just the first movements in your ranking.

Let's look at some examples.

Example SEO Calculations for Profitability on an eCommerce Business Website

What we have here is a very competitive, very low volume keyword. It's competitive because it's a definite product that people search for and it has no geographical anchor for the seller, so the competition is nation-wide. Furthermore, the search results page are an absolute nightmare for a seller using normal SEO. look at this:

The whole top of the page is dominated by ADS. After that, the top ranking site is etsy -  a major player that's very, very hard to beat - and simply not worth the effort with this product. 

In a nutshell, this product will simply not make money from SEO investment and it's hard to see how the advertised products do either! Remember - those search numbers are monthly nationwide for Australia!

What Should Julia Invest her SEO Spend in then?

Unless she has a highly profitable product with high search volumes, Julia needs to go both local and generic. She should not be spending money on SEO for this product, but rather using advertising to profit from impulse buyers. If she wants to benefit from SEO she needs to define:

Having done these things, Julie should plan an initial six month SEO exercise, using the methods shown above, planning costs and profit every month. 

Conclusions

Never 'jump' into an eCommerce adventure without a full-on business plan that includes investigation into the sales channels available. It's that simple - and that hard. Have fun.

eCommerce Solution - Online Shop Development - for Sydney Company Weigh-More

eCommerce Solution - eCommerce Website Development - a Live Case Study at Sydney Business Web

This article is a case study on development of an eCommerce Solution - Online Shop for an established and successful company, Weigh-More Solutions. The article  illustrates some of the engineering methods I have learned over the course of my engineering and and business careers. This is how we develop eCommerce Solutions  at Sydney Business Web.

The Essence of an eCommerce Solution - Developing an Online Shop for a Technology Products Supplier

Benefits of Doing the Systems Work Up Front

Negotiating a business website development contract requires mature judgement because the market has been muddied by low price operators with cookie-cutter designs and very little business or technology experience. This always results in missing functions  and / or cost escalation for the unfortunate buyer.

Thus, a truly professional approach to an eCommerce Solution requires a systems approach - because an eCommerce website is a system for generating revenue when all is said and done. We break this down into steps as shown below.

The Top-Down Design Process for an eCommerce Website

Defining products is part of a Systems Engineering process.  This is what we did for the Weigh-More Systems account:

1. Consult with Weigh-More management about what the business needs online - what is the vision for the website and what functions must it fulfill?
2. Write a User Requirements Specification for the eCommerce Solution based on the discussion.
3. Turn that user User Requirement into a Technical Specification. This is where we decide which website technologies to use, how to best host the website, determine security, payment gateways, membership systems etc.
4. Write an (developer)  test document for the eCommerce website
5. Develop the eCommerce website 
6. Test the eCommerce website and fix any problems
7. Hand the eCommerce website over to the customer and on acceptance, start the 90 day warranty against defect.

Everything Starts with the Customer Requirement and the Business Requirement

The Business Requirement for the Weigh-More eCommerce Website 

Weigh-More needs both of these options and the managers responsible knew exactly what was needed.

The B2C Weigh-More eCommerce Website Requirement

Weigh-More needs to reach  householders and individual buyers  in the retail, medical, veterinary practice, restaurant businesses and many more,. This is a national and local requirement and requires Weigh-More to appear in specified regions of Australia as a local company. 

The B2B Weigh-More eCommerce Website Requirement

Weigh-More needs to reach the B2B transport sector where advanced weighbridges and weighbridge software and technology are in demand to support trade and transport infrastructure. This is also a national and local requirement and requires Weigh-More to appear as experts in their subject matter on the search engine - which s quite different to the local SEO needs of a small business. 

Two SEO Strategies are Needed Running Side by Side

For National reach: The Weigh-More 'Experts Blog'

National reach is achieved in two ways:

1) Establishment of web pages for each specific region. This is what we have done for own website.

2) Establishment of a 'center of expertise' area on the website with blog posts rich in keywords for the business' area of expertise. Over time, such articles can bring buyers to your business website globally regardless of your location.

As an example, several years ago, we were promoting the sale of Essential oils in the United States. We published a post called 'Essential Oils for Autoimmune disease' and pushed it to the top of Google. It brought in many sales that we could not have made without a large ad-spend. Even today, that article appears on page 1 of Google in the US - 4 years and more later!

For Local Reach: General eCommerce Website Structure

Key points from the Weigh-More eCommerce website user Requirement

We sat with Weigh-More management and discussed the possibilities for their new eCommerce website. In this case, our customer was very well informed and knew exactly what they wanted,

Notice that the above requirements state 'WHAT' the customer wants - not 'how' It is the job of the systems engineer or systems designer to turn that 'what' into the 'how' by writing a eCommerce Solution Functional Requirement.

Deriving the eCommerce Solution Functional Specification from the Customer Requirement

In military development where I worked for many years , all specifications were very complex and expensive to develop. We never use the full process in commercial products because it would cause a huge price escalation. But a user requirements specification, no matter how simplified is absolutely  essential to the development of an eCommerce Website as a technical specification to translate what the user wants into a technical specification.

Writing the Technical Specification for an eCommerce Website

 In this specification we have to decide, on the basis of the customer requirement, how   the website will be implemented. In this article, we cannot discuss the implementation for WEIGH-MORE because that is confidential, but we can describe the process. 

Step 1: Define Maximim Loading Speed

Decide on maximum loading speed for every website page. This will determine many aspects of site implementation such a whether videos can be included, hosting quality, number of images, which CMS etc. (We don't ever recommend writing in basic HTML, JS, CSS as development time would be too long and the expense of design and support would be prohibitive).

We build most websites with WordPress, but if we could see that we could not meet a customer's needs with this CMS then we would either use another technology or refer the customer to a  suitable supplier. 

Please see our extensive note below on website speed as approached for Weigh-More Solutions.

Define Every Contributing Technology and Plugin

This is quite a task. For instance, what is the best technology /software / plugin to provide shipping calculation, dealer-only prices, product upload, payment gateway and so on. These solutions have to be matched for compatibility with all the other technologies on the site. We go through every user function and allocate it to a software module or plugin.

Define the Maintainability of the Website

eCommerce websites require regular updating with products, prices and content. This always means that a Content Management System must be used - updating and adding code is really not an option because it requires technical skills, it's slow and it's expensive. 

When Weigh-More specified that the site must be easily maintainable, this was a determining factor in the selection of a Content Management Sydtem for their new eCommerce website.

Define the Visitor Search and Buy Flow of the Website (Ui and Ux)

When a visitor finds Weigh-More. we need to make the journey from finding the right product through to purchase pleasurable, quick and interesting. 

We achieved this by:

1. Using the product and category topology given to us by Weigh-More
2. Using a search facility. We did not deem a voice-search to be an advantage on this website but it was considered.  Instead we used a superbly clear and easy to use text search:

Search facility on Weigh-More

Search Result on Weigh-More

3. We allocate the 'Buy' Buttons for the fastest possible customer journey.

4. We place 'confidence' symbols strategically  to reassure the buyer (see below)

5. We design-in good website speed (see guidelines below)

Define Website Security According to Best Practice and Customer Requirements

An eCommerce website must have security or it simply will not be permitted to operate interfaces to payment channels - that's why our websites have an SSL (Secure Socket Layer) certificate. But we needed more than that for Weigh-More, so in addition, included additional protection against hacking, brute force attacks and malicious log-ins. In addition, we added daily malware scans at the host as well as daily backups. 

An eCommerce solution, professionally implemented, creates a revenue stream for business and any down-time is simply unacceptable because it costs money. 

Note on Confidentiality

As a matter of course, in the interests of our clients in a competitive environment, we have started using measure to hide the technical data underlying the design from 'snoop tools'.   In addition to confidentiality, this also provides some protection against hackers. Nothing is ever foolproof in software, but every designer should take protective measures. For Weigh-More,  we adopted security measures on the server as well as on the website.

Define Pages and Content and Products  for Your Online Business Website and build!

Once all of the technology issues were defined and settled, we began to build the new website, using the old website in place until we were finished.

Test and Handover the Website to the Customer

A Website is like any other piece of software and must be tested thoroughly before it is released. Bugs and minor irritations are inevitable, but a solid test regime will sort most of them out. A test document is important - it is based on the user requirement and so not too onerous to write but still very important. And finally - turn the key and handover to your customer and start the warranty clock.

If he/she wants to do his/her own maintenance and updates then a training session will be needed. It's far preferable for all concerned though for them to have a support contract in place. this allows the customer to focus on his/her business and the developer to have a reasonable revenue stream for long-term support - everyone's happy.

Notes: Critical Website Performance Parameters

Note 1: Page Loading Speed

Website Loading Speed is Nor Always What it Seems

A good deal of caution is needed when discussing website speed. Why? Because owners of small and medium businesses must operate on the basis of 'what's good enough?' For large scale operators, a tenth of a second may be a lot because there are thousands of people making purchasing decisions at any given moment. For a smaller company, spending $20,000 on saving half a second will probably not reap a worthwhile return.

Our experience shows us that as long as a website page is viewable inside 2s - 4s, that's good enough for the vast majority of visitors. There may still be scripts to load and external resources to fetch, but usually, this will not matter to the visitor because as far as he/she is concerned, the page has loaded already.

Finally - even the big websites often do not load so fast! See the real-world measurements below.

Website Speed Measurements

Below, you can see two page speed measurements for a single product. the first is a scale on Weigh-More's website and the second is a scale on Amazon.com. 

*Technical note: The Weigh More measurement was made using a Sydney server and the Amazon measurement was made using a US server, so that the measurement is fair. Both measurements were made twice.

Weigh-More product Page loading vs Amazon

As far as the visitor is concerned, both websites look a lot faster than the numbers show, because these measurements give final load times that are based on complete loading and 'ready for action'.

In fact, if we strip away the geek-speak, what we want is an eCommerce Solution  page that visibly loads within 2s and is ready for action within around 6s - because that's really around the shortest time for most people to want to press a 'buy' button. There are technical terms for the various phases of page-loading - but who cares? Open your browser and check it out.

As a general rule, we make our product pages fully visible inside 2s and fully loaded, ready to rock inside 6s.  Amazon don't seem to suffer from being a lot slower!

eBay Speed Performance

eBay is a fascinating study in speed eCommerce Solution performance that supports our viewpoint. The site loads visually very, very quickly, but scripts are still being loaded once the page looks visually great - but the speed performance measurement is superficially very poor.  

Note 2: eCommerce Solutions - Gaining Trust on the Weigh-More Website

Weigh-More is a highly reputable company with an exemplary record of fair and ethical dealing. Like every business though, it has to gain confidence online  before people will type in their credit card details. The best way to do this is to use trusted payment methods and to make the customer very aware of the security employed on the website.

We did this by:

• Installing a Secure Socket Layer Certificate on the site.
• Installing PayPal which is universally trusted
• Installing images of the credit cards accepted

The website NEVER HOLDS CREDIT CARD DETAILS.  and NEVER has access to them. All of the financial data entered by a customer is encrypted and transmitted to the financial institutions concerned. 

Communicating with Customers / Buyers

Customers who have paid for a product on an eCommerce Website require immediate notification of their purchase and the vendor also requires notification automatically. We installed an eCommerce Solution that achieves this.  There is potential for further augmentation of this facility as may be required.

Note 3: Confidential Dealer pricing in an eCommerce Solution Business Website

Many B2B businesses who also serve the B2C markets need to keep their product dealer prices confidential. We achieved this for Weigh-More with a eCommerce Website membership system that allows them to vet all applications for membership and then grant login rights.

 The membership area for dealers records their purchases and account details. Having a membership list also allows Weigh-More to keep their dealers and customers aware of the latest developments and products in the highly technological area of weight measurement. 

Note 4: Downloading Product Data Sheets on an eCommerce Website

For technical products, this is a must-have feature. Most of the Weigh-More products have once-click downloadable PDF sheets to help customers. This could also be made subject to a membership login should that be required.

Thank you for visiting us - we hope you found our article useful.