Is the Internet a Good Sales Channel for Your Business?

When you can literally reach the world with a simple web site for about $10 per month, and with the existence of powerful, user-friendly web sites like eBay and Amazon.com available for both buyers and sellers, it's only logical that virtually every business should be researching if and how it might make additional sales through the internet. Here are some things to consider that I've encountered with other businesses:

What is the cost of shipping your product? Most buyers are fine with spending $2 to have a $20

DVD shipped to them, but less likely to want to spend $50 to have a $100 item shipped. As a rule of thumb, shipping costs should be no more than 10% of the sale price of the item. Related to this, is the total price of your product still competitive with locally available alternatives once shipping is figured into the price? Remember also that shipping is not just the postage cost, but also packaging (and possibly postal insurance) costs.

Is this an item that a customer will buy "sight unseen?" For relatively generic or well-known

items (e.g. a pair of Ray Ban sunglasses or a replacement part for your iPod), most customers will buy online, but less so for more costly and personalized items (e.g. a guitar, compound bow, etc.). Some items the buyer wants to physically handle, test out, etc.

This point also raises the issue of how your product is presented online. A clear, compelling, well-written description is a must, as are professional-quality product photos (or in some cases, videos). Snapping a picture of your product sitting on your coffee table with your digital camera simply won't cut it.

Is this an item that the customer is willing to wait for? If your product isn't available locally,

such as a rare replacement part for a vintage auto or a custom silk-screened novelty T-shirt online sales can work. Conversely, why would the customer wait 3+ days for a box of Bic pens when they can be purchased at a comparable price locally?

Next, what is the best way to sell online? Your own eCommerce site? eBay? Both?

eBay's main advantage is that it attracts an enormous number of shoppers and advertises itself very aggressively, so it's a fast, easy way to get your product listed and attract customers to it. However, eBay is also an increasingly expensive place to list and sell goods, and it does somewhat limit how you can display your products.

Having your own eCommerce site saves you the cost of paying eBay, but does require you to do your own advertising and to maintain your own site. Many customers have had good success with listing some of their products on eBay, and then shipping those products with a flyer or catalog directing customers to their own eCommerce site for furure purchases.

One advantage of having your own site is the ability to create your own order forms. This is handy if your products come with a large variety of options for personalization.
Another issue to consider when selling online is how payment will be recieved. With eBay, Paypal is the method of choice, and it's a relatively inexpensive and convenient option. For an eCommerce site, you'll need to accept credit card payment. For small businesses, most credit card companies will charge at least $50/month to use their services through your business. Does the volume of business you do online warrant this expense, especially if you need to accept more than one type of credit card? Visa + Matercard + Amex + Discover = $200+ each month...it adds up quickly.

A final issue to consider is how you will handle product returns and exchanges for online transactions. Who pays for shipping? What must the customer do to properly package the product for return?

Does your business offer products or services that can be efficiently sold via the internet?