Getting Started with eCommerce in New Zealand

If you run a business in New Zealand, you probably either have a website, or are thinking about getting one.

There's a good chance you're also considering extending your web presence to setting up an eCommerce store. After all, there's a lot to be said for being able to sell your stuff online. Your store is always open, meaning you can make sales 24 hours a day, 7 days a week. You also don't have to worry about paying sales commission - or sales people.

Sounds great, right? But where do you start?

This article is the first in a series on getting started with eCommerce that is designed to help you pick your way through the minefield of setting up an eCommerce store. This article provides you with a quick checklist of the major things you need to consider. Future articles will focus on each point in the checklist in more detail.

Here is a list of the things you'll need in order to set up an eCommerce store.

1. Get a website

Saying that you need a website might seem like an obvious statement, but you do need to establish whether you want a standalone eCommerce website, or an online store that augments your current (or planned) website. This decision could have a significant impact on decisions you make later on.

If you have a static website today, then your options are limited. Static websites are made up of page that are individually edited then loaded via FTP to a web server. Integration of a static website will probably be limited to providing a link to a separate website that is powered by some shopping cart software.

On the other hand, if you have a content management system (CMS), you may well find that there is an eCommerce plugin available for it. If this is the case, then your store can be tightly integrated into your website.

A third scenario is that you launch a website that is based purely on an ecommerce package. This is good if you only want a store, but can be limiting if you want to add other features to the website.

My preference is the second option - CMS plus eCommerce plugin. All the major CMS's have a plugin; we normally use a CMS called Drupal with a plugin called Ubercart.

2. Shopping cart software

Getting the right shopping cart software is critical. If you make the wrong decision, your whole ecommerce strategy could fall apart - or worse, it could cost you money that you'll never recoup.

The list of criteria that a shopping cart should meet is potentially long and deserves a lot more space than it will get here. But here is a brief list of things to consider:

  • Ease of setup and ongoing maintenance
  • Good catalog and product management
  • Potential for integration with your existing stock or POS system (essential for inventory management when you have a lot of products)
  • Support for a New Zealand-based payment processor.
  • Support for NZ tax (i.e. GST)
  • Support for multiple currencies (if you are planning to sell outside New Zealand)
  • Cost

I strongly recommend you make a list of all of your criteria - and search the web for more lists like this - before starting to even think about shopping cart options.

I'd also suggest that "free" should not be high on the list of criteria. I'm not saying that you won't be able to find a free shopping cart that meets your needs, but make sure your other criteria are met first. If you make the wrong choice of cart, then the money you save on a license cost for the software may end up being dwarfed by the cost of implementing the wrong shopping cart.

3. Detailed product information

When you build your online store, you will basically be creating an online product catalogue. Think about what that means in terms of the information you'll need to pull together:

  • Product titles
  • Product descriptions
  • Retail price information
  • Photographs
  • Feature options (e.g. size, colour, etc)

Do you have access to this information today? How quickly can you pull it together? Where or who will you get it from?

You should be thinking about the answers to these questions well in advance of building your ecommerce store. One of the biggest issues we face when setting up eCommerce sites for our customers is getting this information in a format we can use. This causes delays and, often, extra cost while we wait for, or create, a usable product list that we can import into the store.

4. Product loading

Another major question is how you will get the product information into the store - and how will you keep it updated?

If you are planning to sell fewer than 20 products, you can probably use the tools supplied with the shopping cart software for loading product information into the store.

If you are looking at more than 20 products and anticipate regular change to the information or range of products you are selling, you should be thinking about a more automated process of loading and updating product information. The solution you opt for will probably depend on the importance of integrating the product information on your store with other systems.

For example, you may have an inventory system that you use to manage all of your products; in this case you'd like to ensure that the information in the online store reflects the information in the inventory system, including latest prices, descriptions and stock levels. If you're in this scenario, you should start by looking at your inventory system to see if there is an eCommerce module that integrates with it. If there isn't, check to see whether you can at least export product information to another format such as a spreadsheet.

Another scenario is where you don't have a central system with all the product information you need, but have too many products to be able to manage them through the store administration tools. In this case, you may find there is a way to import data from a spreadsheet into the store, and then upload changes the same way (watch out - many systems will allow to you do the initial product load via an import, but then won't allow updates via import).

As an example, we have a website, www.computershopper.co.nz that carries over 25,000 products. Each day we get a spreadsheet from our suppliers that we then use to update the product information on the store. Based on this we can add new products, remove old products and change prices and stock levels on existing products. The import process takes a while to run - but the time we actually spend on it each day is about 15 minutes.

Whatever you do - make sure you have a product management solution that you feel comfortable with and which minimises the amount of manual data entry. Of all the choices you make when setting up an ecommerce store, this could be the one that has the longest-lasting effect on the amount of time you have to put into managing the store.

5. A payment processor

Put simply, you need a payment processor to securely handle credit card transactions and ensure the money gets into your bank account. And if you're thinking of not accepting credit card payments on your website, think again. It may cost more than the alternatives, but you will sell less if you don't accept credit card payments.

The payment processing stage consists of two components:

  1. Processing the credit card transaction, in a secure fashion (payment gateway). This is the component that your shopping cart software must support.
  2. Handling the transfer of funds to your bank account (merchant account).

There are many options here.

  • Some providers have a single offering that combines these components into a single service. PayPal is a well known example. It's easy to set up, and most shopping carts support it. But the costs can be higher compared to other options.
  • Others provide just one or the other. For example, DPS is a major payment payment gateway that typically hands off the funds transfer to a merchant account with one of the major banks. Transaction fees may turn out to be lower, but setup can be a complex process (especially if your shopping cart doesn't support it) and will almost certainly require professional assistance. Not only that, but you'll probably have to sign up for a three year contract.

6. Order Processing

Strictly speaking, this is a component of your shopping cart software and should be considered as part of your evaluation of different shopping cart software. However, it is something that is easily forgotten until you come to process the first order when you suddenly realise that you haven't considered how you'll handle this part of your online store.

The main thing to focus on is how your shopping cart software handles order notification, confirmation and invoicing. This is the part where you fulfill your promise to your customers; a poor experience here can mean that you'll never see some customers again.

7. Reporting

How will you report on the sales that your store makes? How about the "nearly sales", i.e. those transactions that didn't complete, where someone added something to their shopping cart but didn't follow through and actually purchase anything. And - very importantly - what about reporting for tax purposes? If your store doesn't provide you with a clear breakdown of your sales and the amount of GST charged, you may well find yourself on the wrong side of both your accountant and the Inland Revenue - never a comfortable place to be.

8. Traffic

I started with a self-evident statement and I'll finish one:

Just because you have an online store, doesn't mean you'll sell anything. You need to generate traffic, and then convert that traffic.

At this point I'll refer back to earlier points in this article relating to the format of your website and the shopping cart software you chose. If these aren't designed to be search engine friendly, then your chances of ranking well in the search engines will be limited.

One thing to note with eCommerce stores is that unlike most "brochure" websites, the front page is often not the page that most visitors enter the site through. Instead, they tend to enter through individual product pages. So if your product descriptions are not, well, descriptive enough (i.e. 300-400 words with some obvious and relevant keywords) then your chance of bringing search traffic to your product pages will also be limited.

Once you've got traffic, have you got what it takes to convert that traffic.

  • What is your pricing structure like? Are you discounting from the retail price? Some online stores don't discount at all - by the time you add shipping it's often cheaper to buy from a retail store.
  • How do your prices compare with the competition? Price is not the only factor people consider when making an online purchasing decision, but it's a big one. And if they find two online stores they trust equally, price will almost certainly swing it.

Conclusion

This article has barely scratched the surface of the things you need to consider in setting up an eCommerce store in New Zealand. Hopefully it has provided you with some pointers on what to research. Look out for more articles coming soon in which we'll drill into some of the detail you'll need to consider when setting up your eCommerce store.

And finally ....

Did we get it right? Maybe we missed something?

Share your experiences of setting up an eCommerce website in New Zealand by adding a comment below. I'll be reading all comments and updating this post to ensure that it is as accurate and current as possible. In the meantime, I'm off to write the next instalment!

Oh, and you can find out more about our eCommerce services here.

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