Module 2

1.2 Getting Your E-commerce Business Ready

1.2 Navigation
1.3 Objectives

Video: https://www.youtube.com/watch?v=HV0UIwhVtM0&feature=emb_title
Video transcript:

Welcome to the second module of this course.

Developing an e-commerce business requires performing many of the same activities as starting any other business.
No matter how easy it might seem, building an online business takes time, energy, effort, and money. If you already
have a company and want to get involved in e-commerce, you will have to make your online operations into an
integral part of your activities, not just a side project. This is not to say that going online should be a goal in itself:
rather, it should be a part of your strategy to achieve your goal.
So, what do you need to go online? Well, essentially, you need a product and customers. You might also need some
funding to get your business going; but most importantly, you need to make sure that you are ready for e-commerce
by:
• Having business processes that accommodate online sales
• The capacity to handle a sudden increase in product demand
• Mastering logistical challenges; such as proper stock management, shipping, packaging materials, returns
management, etc.
Did you know that a simple problem can cause significant disruptions once orders start coming in?
The shortest road to failure is not adequately preparing. This - preparation - is what this module is about.

By the end of this module, you will be able to:

• Assess the different areas in which planning is necessary for e-commerce

• Determine the different online channels that are available for your business
• Identify the tasks that you will need to perform to set-up your e-commerce channel
1.4 Chapter 1: Planning For an E-commerce Venture

1.5 Answer the question

Which of the following are potential consequences of embarking on an e-commerce venture without proper
planning?

a. The majority of visitors will quickly leave your website.

 b. You will face unforeseen financial charges.
c. You will have a high product return rate.
d. You will receive many inquiries regarding your product quality and specifications.
e. Your will receive complaints from customers, potentially leading to the closure of your online marketplace
account.
f. You will face recurrent problems with your inventory management system.
g. Your website might have problems with mobile compatibility.
h. You could get into legal disputes, such as over the use of business names.
i. All of the above.

Feedback: All of the reasons mentioned above are the result of a lack of preparation. With proper planning, not only
will your chances of success increase, but it will also help your business avoid adverse outcomes while you are
building your online presence.

1.6 The importance and different areas of planning

Starting an e-commerce business can be fast, relatively easy, and inexpensive. Nevertheless, 80% of online
businesses fail in their first two years, often because of mistakes during the planning stage. This is why it is crucial for
you to sufficiently plan the various aspects of your e-commerce venture before you get started.

E-COMMERCE CHANNEL(S)
Will you sell through your own website, on an online marketplace, or both?
In the past few years, building an e-commerce store has become easy, whether
on your own website or on a pre-existing online marketplace. Companies such
as Shopify, Magento, and Prestashop provide well-constructed sites and hosting services for a reasonable monthly
fee. On the other hand, platforms such as Amazon, Etsy, Alibaba, etc. provide thriving online marketplaces that save
money and time for companies who do not want to create their website. What’s more, the line between social media
and e-commerce is beginning to disappear with the development of social commerce, or S-commerce. Before you get
started, make sure that you confirm which online sales channels are right for your business.

IDENTIFYING YOUR TARGET MARKET

Engaging in thorough market research before you launch your online store should be a key part of your planning. One
of the questions you need to answer is what market will you target? Having a well-defined target market will enable
you to focus your efforts on the customers who are most likely to buy from you, in the most cost-effective way. By
using market research techniques and tools, you can make more informed decisions regarding the selection of target
markets, or identify opportunities to introduce a new product or service.

MARKET RESEARCH
 Market research is an investment, rather than a cost
 Market research will help you make evidence-based decisions about the future
 Research trends, best practices, competitors, countries, customers, channels, products, and services one-by-one
 There are a lot of different types of market research that can help you piece together the e-commerce business that
you want to build
 Use a selection of reputable websites and digital tools to get relevant statistics, data, and information to avoid
guess-work

FULFILMENT AND LOGISTICS

How do you plan to manage your inventory? Do you plan to do it yourself, through a fulfilment centre, or through
drop-shipment with your suppliers? While managing your inventory yourself can provide a high level of control, it can
also tie up cash in the warehouse space and fulfilment staff. If you are using a third-party fulfilment service, you need
to make sure that you have integrated the service with your store before you launch. Before you start, make sure you
know what shipping solutions are available in your country, and make sure you optimize your costs and delivery
times for your target market. Otherwise, you will not be able to compete on the online space.

PAYMENT OPTIONS
How will you collect payment from your customers? Before you start, you need to make sure that your customers can
buy from you using their preferred payment method. You should carefully plan how to accept online payments and
integrate the payment gateways into your store.

CUSTOMER SERVICE
How will you provide services to your customers? This is crucial to efficiently manage any issues that may arise and
also to retain customers. You could either use integrated customer relationship management (CRM) solutions offered
by e-commerce platforms or choose a third-party solution to help track orders and purchasing behaviour. The
support channels you choose will determine the customer service you can provide, as well as the level of automation
you can set up. You should also consider returns as an integral part of e-commerce transactions. Thus, make sure you
have a clear return policy and process for managing returns.

MARKETING STRATEGY
How will you make sure your target customers know about your products? These days, there are hundreds of ways to
go about digital marketing. You will need to study your target market to figure out which marketing channel mix gives
you the best return on investment.
1.7 Answer the question

Notes: Match the following scenarios with the area of planning in which the company in question failed:

Scenario Area of planning

The company is unable to ship the goods Inventory planning

within the stated time of delivery due to a stock
shortage.

The e-commerce website goes down regularly. Channel planning

Complaints are received from customers who Payments planning

are unable to pay with PayPal.

There are interruptions or delays in receiving Payments planning

payments.

The delivery time indicated during checkout is Shipping planning

different from the real delivery time.

The company’s e-Bay account was blocked Customer service planning

after receiving several customer complaints.

Feedback: Before you start your e-commerce activities, you need to make sure to plan appropriately in a range of
areas. Otherwise, you are likely to run into no end of problems!
1.8 Answer the question

In your mind, what might be some techniques that you could use to do research on your target market?
Try to name at least three.

Feedback: Thank you.

There are a variety of market research tools and techniques that you could use. Web searches, online questionnaires
and customer feedback forms are just some of the various techniques that can help you gather information about
your markets, your customers, and your pricing strategy.
1.9 Chapter 2: Choosing an Online Channel

1.10 Answer the question

What are the different channels that you can use to sell to customers online?

Feedback: There are three main ways in which you can sell to your customers online. You can sell through your own
website, marketplaces, or social commerce (s-commerce) sites.
Remember, choosing your channel is the most crucial decision you are going to make. Getting it right will enable you
to quickly sell to an increasing number of online customers. However, getting it wrong will provide you with little or
no return.

1.11 Online marketplaces

Online marketplaces are third party platforms for e-commerce on which vendors can make their products available to
customers. The marketplace’s operator processes consumer transactions and is responsible for receiving payment
for orders. Operators manage their platforms through a variety of business models, including:
1. - making vendors pay to list product

2. - charging transaction fees

3. - requiring monthly subscription fees

There are hundreds of online marketplaces in the world, but only seventy-five make-up 95% of the revenue.
The most popular online marketplaces for developing countries are:

1.12 The pros and cons of selling on an online marketplace

Pros (+) Cons (-)

➔ A steady stream of customers ➔ High competition

➔ Low barrier to entry, or relatively low start-
up cost
➔ A possibility to test products and markets at
a low cost
➔ Existing brands can generate greater
➔ A need to validate the brand positioning to
differentiate yourself from competitors
➔ Working by commission creates less margin
➔ An effort is required for inventory
management, pricing, orders and inquiries
 confidence than an unknown brand
➔ The platforms can enhance
internationalization
➔ The means of payment are provided by the
marketplace, though you may need a way to
receive payments
➔ Traffic generation efforts will be (e.g., SEO,
SEM) addressed to other platforms rather
than your e-commerce website
➔ Risk of cannibalizing your n e-commerce as
the marketplace will compete with your e-
commerce site
➔ The sales database will be stored in the
marketplace, so you will not own customer
data
➔ If you do not abide by the rules, the
marketplace can close your account, and
you will lose an important sales channel

1.13 5 tips for selling on online marketplaces

5 tips for selling on online marketplaces:

• Before creating an account, consider the costs and margins very carefully to ensure that you can achieve
profitability on that marketplace.
• Select a balanced portfolio by choosing products that will sell well on a marketplace, and consider listing on
more than one marketplace.
• Check the registration requirements, fees, and payment methods needed – sometimes it is very difficult or
expensive to list products, and you may have restrictions based on your country of origin.
• Determine if you will be able to fully comply with the marketplace’s requirements.
• Make sure that you have excellent product or service descriptions and photos.
Resources:
For more information on the global state of e-commerce marketplaces, click here:
https://www.shopify.com/enterprise/global-ecommerce-marketplace
For more information on how to sign up as a vendor on Amazon, one of the world’s most popular online marketplaces,
click here: https://startupbros.com/how-to-sell-on-amazon-fba/

1.14 E-commerce websites

An e-commerce website is a website used by a business to sell its products or services online. E-commerce websites
are equipped with e-commerce functionalities that allow customers to make online purchases.

There are different types of e-commerce websites:

1.15 Pros and cons of selling on your own e-commerce website
Pros (+)
➔ Total control of how your visitors see your
business and products
➔ Full control of how you treat your customers
➔ Control of most costs
➔ Full control of the design
➔ Easy integration within your existing
systems
➔ Better, more precise data for future sales
forecasting
Cons (-)
➔ Time consuming, especially in B2B e-
commerce
➔ It can be expensive (e.g., you could
potentially pay tens of thousands of dollars
to develop a B2B e-commerce website)
➔ Need to market your website or no one will
see it
➔ Potential for fraud, data privacy issues, etc.
1.16 5 tips for selling on an e-commerce website

1. Ensure that the website can correctly handle multiple currencies, languages, and local content.
2. Consider the costs and margins very carefully to make sure that you can make your website profitable in a
reasonable amount of time.
3. Determine if you are going to be able to fully cater for international customers with, for example, a
payment option that is recognised by international customers.
4. Make sure you have put together good quality content such as detailed descriptions of your product or
services, as well as a strong brand story.
5. Ensure your website contains all the regulatory information needed for an international customer base
such as terms and conditions and a privacy policy.
1.17 S-commerce

S-commerce is a way for buyers and sellers to connect, interact, and get advice. It usually involves conducting e-
commerce transactions on a social media platform or a chat app using its payment method.
Social and chat stores are still a minor part of worldwide e-commerce, but they are growing quickly. In fact, while
social commerce only accounts for 2% of all worldwide retail e-commerce sales in 2018, it is set to grow rapidly at a
rate of over 34% per annum.

This said, there are also barriers to s-commerce. For example:

• When they are on social media, people are in “social” mode, not “buying” mode.
• It may be challenging for vendors to gain visibility on a social media platform.
• Customers are not always aware that you can buy products through social media stores or chat apps.
• They are not available in all countries and cannot yet handle cross-border e-commerce.

There are different models of social media stores. For instance:

1.18 S-commerce

There are a limited number of widely used social and chat stores:

6 factors to consider when it comes to using s-commerce

• The registration is much simpler than for online marketplaces

• Experiment is easy, as most social and chat stores do not charge vendors anything
• You can sell on a wide variety of social and chat stores simultaneously, no need to limit yourself to one
• Be ready to invest time and team members to answer inquiries.
• Ensure that you have excellent product or service descriptions and photos, as branding is critical on social
media.
• Keep in mind that you may need your own e-commerce website to complete transactions.
Resource: Click here for more information on the history of s-commerce: https://www.bigcommerce.com/blog/social-
commerce/#the-history-of-social-commerce

1.19 Answer the question

Video: https://www.youtube.com/watch?v=31Vg6-Sx2nk&feature=emb_title

Video translation: You have now learned the main characteristics of e-commerce channels that you can use to sell
online.
What’s more, you have probably made some decision about the best path to follow for your business. But are you
sure that your conclusions are right? Working out the best channel for you will take some serious consideration.
This process is less about choosing “one over the other” than it is about prioritization. In fact, over the coming years,
your business will probably end up trading both via its own website and one or more marketplaces, so working out
the order in which you should tackle them is really important.
So, here, take a few moments to think: what process would you follow to work out which channel your business
should prioritize to sell online? Write your own 3-step process in bullet points in the text box, then click on “submit.”
1.20 Creating a checklist from your objectives

Throughout this course you’ve been considering both what e-commerce could do for your business, and how ready
your business is for it.
Now, it’s time to work out how much effort you are ready to put into this project, and what your business would need
an e-commerce project to achieve to make these efforts worthwhile.
That means it’s time to identify:
• Your objectives
• Your budget
• The people, time and skills that you can invest in your e-commerce venture

Turn this information into a checklist against which you can measure each channel option.
If you find out that your checklist is very long, you might find it useful to divide the items on it into “must-have” and
“nice-to-have” categories.

Make sure to include the following in your checklist:

• The geographic areas you want to target
• The legal restrictions for your e-commerce venture
• Compliance restrictions
• Integrations with your existing systems
• Payment methods
• Languages that your target customers use
• Delivery methods
1.21 Evaluating and choosing your E-commerce channel options

Only you can work out whether your own website, s-commerce or a marketplace is going to be the right way for your
business to meet your objectives.
Evaluating against your checklist
Evaluate each of your channel options against the checklist that you created in the previous slide.
If there are things you don’t know about one of your channel options, do more research to find out the answers.
This extra research might include making some phone calls or speaking to others who are already using the channel
you are considering to find out more about their experiences.
If you find more channel options while you’re doing this, then evaluate them against your checklist too.

Making your choice

Once you’ve fully evaluated each channel option against your checklist, there will probably be one or two that clearly
stand out as priority choices for your business.
If it’s just one, then great - it’s time to get on with building that.
However, if there are more than one that look like they would be good at meeting your objectives, you need to decide
which one you should start with.
Working on launching more than one channel at a time is a lot of work. We strongly recommend starting with a single
channel, and only moving on to a second one once you have mastered it. The channel that you pick to start with
should ideally be the easier one, or the one that will allow you to market your product/services faster.
1.22 Answer the question

Do some research on the e-commerce channels that could be most suitable for your company, take some time to
create the checklist that you will use to evaluate each channel here. Your checklist will be outputted in PDF format
and saved for you to review later.

Make sure to include the following in your checklist:

 The geographic areas you want to target

 The legal restrictions for your e-commerce venture
 Compliance restrictions
 Integrations with your existing systems
 Payment methods
 Languages that your target customers use
 Delivery methods
1.23 Answer the question

1. Please match the following business scenarios with the best e-commerce channel.

Scenario Best e-commerce channel

A jewelry seller in Kenya who would like to test Online marketplace

the potential of her products in the German
market.

A well-established handicraft cooperative in E-commerce website

Senegal that produces quality products. It aims
to sell online while maintaining control of
branding and marketing.

A US-based handicraft producer with more S-commerce

than 50,000 likes on Facebook.
1.24 Answer the question

List at least three advantages of selling on an online marketplace, particularly when compared to selling on your
website.

Feedback: The main benefits of selling on online marketplaces are that they perform many of the required activities
for you. For example, the marketplace will take care of site security, hosting, as well as some marketing. The more
substantial marketplaces already have many businesses that use their sites to make purchases, and once you
become a seller, your offering will start appearing in front of these customers without doing anything else.

1.25 Chapter 3: Setting up Your E-commerce Channel

1.26 Answer the question

What are the four most important factors to evaluate if your business is ready for e-commerce? And why?

Feedback: Every area of your business should be evaluated to see if it’s ready to make the shift, but there are 4 factors
that you should investigate very thoroughly.

Your team. Your team holds the key to the success of any e-commerce project. Not only will they be working on it,
they’ll also be the ones responsible for launching it. You need them to love the idea and be completely behind it.
Your product data. If the information the customer needs to decide whether or not to buy from you isn’t available to
them, then they won’t make a purchase.
Your payments. Using adapted electronic payments solutions gives vendors an easier way to receive payments.
Businesses can receive payment directly from most marketplaces and clients, wherever they are in the world.
Your systems, including logistics. If your systems aren’t ready to receive an order from a website or marketplace,
process it, and get it to the right customer at the right time then your e-commerce channel won’t be a success.
1.27 Choosing the right online marketplace

Part of the attraction of selling via e-commerce is that systems can do a lot of administrative tasks. To take advantage
of these time savings, you need to make sure that your existing systems are ready to integrate with your selected e-
commerce channel in order to handle your orders.
Product information system
All your existing product information needs to be communicated to your channel to ensure that the same product
information is available on all your company’s systems.
Stock information
Whichever system you store stock information in will need to update the channel with the number you have in stock,
for each product. Otherwise, you will risk selling products that you do not have in stock, and possibly fail to sell
merchandise that is in stock. That means that stock data must be accurate as well.
Order processing and logistics
The systems that you use to manage your order processing and logistics will need to be able to accept orders from the
e-commerce platforms on which you launch. You will also need to have a logistics system in place to ship orders to
the customers and inform them of where their order is.
1.28 Preparing your product content

Usually, the most time-consuming part of launching an e-commerce channel is gathering the product information to
populate the website or marketplace. To launch an online channel, you will need the following for each product:

• The product name: the name of the product, often including the package size
• A descriptive copy: explaining what the product is
• A unique product reference code: usually known as an SKU or EAN. This is important to help customers find
the products they want quickly and to enable your systems to talk to each other.
• Picture: more than one is often beneficial
• Technical specifications: if customers need to know the dimensions, package sizes, or maintenance
requirements to make sure they are buying the right product, this information needs to be put on your
channel.
If you think you have all of this information ready, you should double-check it for accuracy and completeness.
Preparing the information for your e-commerce channel is a long and time-consuming process that usually
consists of adding all of the product information to a master spreadsheet and resizing all of the product
images to 1000x1000 pixels. The exact details of what you need to have and the format in which it needs to be
will be defined by the website or marketplace you use to sell.
1.29 Selecting and integrating payment solutions

Did you know that 46% of abandoned carts occur at the payment page?
The payment options that you choose will depend on your business, the amount of integration and security you are
willing to implement on your e-commerce channel, and your customers’ preferences. The popularity of payment
methods may vary from one country to another; while some countries prefer card payments, others prefer cash on
delivery or mobile payments. To accept one or more of online payment options, you will need to open an account
with a payment gateway or a payment service provider.
Payment processing integration allows for payment transaction data that is derived from a credit or debit card, or
other electronic payments (e.g., those made over the internet or on mobile devices) to automatically flow into a
business’ accounting or ERP system when a sale is made. It does away with the need to manually enter payment
transaction data and reconcile accounts, saving valuable time, reducing labour costs, and eliminating the possibility
of human error. With payment processing integration, the data for each sale seamlessly posts into the accounting
software, similar to how the money from a transaction is directly deposited into a business bank account.
Preferred payment option worldwide

1.30 Selecting and integrating payment solutions

Europe: The popularity of payment methods varies greatly in different European countries. Some countries prefer
card payments, while others prefer alternative payment methods. For example, in France, the Carte Bancaire
dominates the payments landscape, and cards are usually co-branded with Visa or MasterCard. In Germany, non-
credit card payment methods such as SEPA Direct Debit, SOFORT, and Giropay account for the majority of online
transactions.
North America: Credit cards dominate the US. Almost half of US consumers prefer to use credit cards when making
purchases online.
South America: In South America, trust is a big issue so bank transfers and cash vouchers are usually preferred to
credit cards.
Africa: Most digital buyers from countries like Nigeria or Kenya favour cash-on-delivery over other payment methods.
Southeast Asia and the Pacific: Credit cards are the preferred payment method in Southeast Asia and the Pacific.
MENA region: Cash is still the preferred method of payment for e-commerce goods in MENA region.

1.31 5 facts about e-commerce payments

 The five main types of payment options are credit cards, bank transfers, e-bank transfers, digital wallets, and
cryptocurrencies.
 When choosing which one to use, you should consider the fees, length of the contract, the reputation of the
provider, settlement time frame, security, and preferences of your customers.
 There is a strict regulatory framework surrounding payment systems for online vendors.
 Make sure you are aware of any chargebacks and account limitations that might apply once you start trading.
 If you are selling internationally, be mindful of how your payment provider will manage currencies
1.32 Getting your team ready

Adding an e-commerce channel is a massive change for your business - it is going to affect every department and
everything that you do.

Not only do you need your team to buy into the idea because they will be the ones making it a reality, they are also
the ones who are going to make it a success during the launch, and beyond. Usually, a key part of launching an e-
commerce channel is to convince your team that moving into e-commerce is going to be suitable for everyone.

For example:
Sales teams often feel that moving to e-commerce will be a threat to their commissions or jobs, so you need to sell
the idea to them. There may also be training and systems improvements that you need to make to help your team
become ready. Does your marketing team have the skills to manage digital marketing? Customers will be able to
place orders 27/4… how will your warehouse and customer service team handle that?

Involving your team in the transition

From the very start, you should involve your team - tell them what is being planned, ask them for their input, explain
why you are taking this step, and what benefits it will create for the business. Meet with them individually and listen
to their concerns. Stress that very few businesses cut their headcount as a result of adding e-commerce because the
time that is saved on administration is redeployed into higher-value tasks.

As the project progresses, keep them updated and ask their opinion on how it can be improved and how best to
launch. Keeping them involved and addressing their concerns will make a significant impact on the potential success
of your project. Once it is live, your team will be essential to get customers to use the new e-commerce channel - you
may want to offer incentives for getting customers to place orders online.
1.33 Answer the question

Why is it important to make sure your team is ready for e-commerce?

1. Because they will handle customer service

2. Because they will help build the channel
3. Because they will be launching the channel
4. All of the above

Feedback: Your team is essential to the success of your e-commerce project. They will handle customer service, build
the project, and launch the channel.
1.34 Answer the question

Why is good quality content so important in e-commerce?

1. Your customer cannot see or touch your products.
2. It is important to establish trust in your business.
3. It can save time with unnecessary calls to your customer service.
4. Any inaccurate information will likely cause problems in the future.
5. All of the above.

Feedback: The quality of your product content is essential to the success of your e-commerce project. Your product
description and photo is the only thing the customer will be seeing before deciding whether to buy from you. Getting
it wrong will likely result in an unhappy customer and greater costs for you. Any additional information that you can
provide on your business reinforces confidence and trust which will increase the chance of converting a visitor into a
customer.
1.35 Answer the question

What are the benefits of integrating your systems with the selected e-commerce channel?

1. Saving time
2. Productivity gains
3. The same product information is available on all systems
4. Stock data is accurate

Feedback: Integrating your systems with the selected e-commerce channel can be motivated by all the reasons
mentioned above.
1.36 Answer the question

What are the benefits of accepting customers’ preferred payment solutions?

1. It increases customer trust in your business
2. It reduces cart abandonment at the payment page
3. It helps your business attract new customers
4. All of the above

Feedback: Accepting customers’ preferred payment solutions can be motivated

by all the reasons mentioned above.
1.38 Exit course