16.08.2021

From brick-and-mortar to the online store

Are you planning to expand your business to ecommerce? In this article, we’ve put together advice on how you can set up an online store alongside your brick-and-mortar store and what things to consider when setting up.
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The number of purchases made in e-commerce is growing rapidly worldwide. For example, although China is already the world's largest e-commerce market, online shopping is forecast to grow by more than 70% from current levels in the next few years. In Finland, too, the number of online purchases made by consumers has increased sharply. According to a study conducted by the Finnish Trade Union Confederation, Finns bought 6% more online stores in 2020 than in the previous year.

Online business is therefore a growth sector. But this, by no means, mean that moving to an online store is no automation for success. In the world of e-commerce, the competitive position of companies is completely changing. Former local player competes there globally. Although e-commerce really increases the number of potential customers significantly, you have to invest considerably more in marketing and sales promotion than, for example, what the company has done in its brick-and-mortar business.

Due to these reasons, starting a e-commerce business needs a good plan. At least the following questions should be considered before building an online store: What products are worth going online for? Are we looking for customers from the surrounding area, Finland, or are we aiming for foreign markets? How can your business idea and competitive factors be transferred to the digital operating environment? What skills do you need to operate in an online store and with what resources do you do business? How is marketing and sales organized and how much and where is marketing done?

Switching to an e-commerce business is a strategic decision for the company. For this reason, it is recommended that a separate digital strategy will be developed for the business. Strategy work can both streamline the construction process, save costs and better achieve business goals.

The e-commerce business is dominated by a discussion of the platform used, the e-commerce site. It is true that a platform solution is one key factor in an online business, but by no means the only one. The e-commerce platform should be equated with the company's premises. What kind of environment does the business need and what kind of needs does the growth and development of the business place for the e-commerce environment?

When considering an e-commerce platform, a company can choose whether to initially use ready-made marketplaces or its own e-commerce platform. If the choice is your own online store from the beginning, you should also think about which marketplaces the online store should link to or integrate.

It makes sense to utilize ready-made marketplaces in the start-up phase of a business. The company can test the demand for the product without significant cost. At the same time, clarity is gained on how the e-commerce business processes can be organized in the company in practice. By ready-made marketplaces, I mean existing e-commerce environments that already have existing customers and business. Today, such marketplaces can be found in several different markets. The most well-known marketplaces are certainly Amazon and eBay, which work well in Finland as well. Utilizing marketplaces is especially recommended when targeting international markets and even if a company uses its own online store. Marketplaces are customer-favored and trusted environments where products get a lot of visibility and customers dare to buy. Read more about international marketplaces in this study conducted by Business Finland 

When building your own online store, the future must be kept in mind. What kind of development needs will e-commerce face as the business expands? Several platform solution providers offer a variety of solutions, choosing the right one is a strategic business decision.

The absolute benefit of an e-commerce business is that the company can reach customers internationally and from a much wider area than a brick-and-mortar business can ever do. Therefore, the choice of language versions of the e-commerce is important. For Finnish companies, for example, Russia is a very attractive and rapidly growing market. When heading to Russia, building an online store in Russian is important for the visibility, attractiveness and reliability of the store in the Russian market.

In the context of an e-commerce business, there is often talk of the conversion rate of the store. Conversion rate refers to the efficiency of a trade. A sales conversion of 2% means that, on average, two out of every 100 visitors who come to the store make a purchase in the store. Conversion is influenced by many factors from the products, their marketing and technical solution, but the payment methods used and the delivery solutions of the products are also influential factors. The e-commerce should choose payment methods that are suitable for its target customer groups. The price, speed and returnability of product deliveries also strongly influence customers' purchasing decisions.

It must be borne in mind that e-commerce is a service. Customers will buy if they get a positive customer experience. Even a good product and price will be avoided if the service experience is weak and distrustful. Therefore, the structure, content, layout and customer service tools of e-commerce together form a crucial whole. If the strength of your brick-and-mortar business is the friendly and knowledgeable service, you must be able to transfer this same to the e-commerce side as well.

Thus, an e-commerce business can be agilely started with a small number of products and, for example, by utilizing ready-made marketplaces without large investments. However, as the business grows, issues arise that need to be resolved, for example, with regard to the warehousing and cash register systems used. These things need to be anticipated when choosing an ecommerce platform. Complex solutions bring extra work and eat away at the profitability of e-commerce.

Finally, perhaps the most important thing to keep in mind when setting up an ecommerce site. Although setting up an online store is a big effort for a company, the actual work only starts when the store is open. E-commerce itself does not guarantee business and sales growth, but how it is utilized. Therefore, already at the planning stage, there must be plans in place for e-commerce marketing, and sufficient money and resources must be budgeted for marketing in particular. New online store is always strange to customers, and the company must invest in ensuring that customers find the store and receive good service from it, in addition to excellent products.

Mika
Tonder
Founder, Strategist