E-commerce and selling online: The fundamentals

E-commerce systems such as your website or online marketplaces can help your business become more profitable and offer greater flexibility for business owners and customers.

Guide

8 min read

1. What is ecommerce?

Ecommerce is simply buying and selling products or services online without requiring customers to visit you, in person, to complete the transaction.

It includes managing sales and transactions for:

  • micro businesses or huge corporates
  • products or services that are digital or physical - for example an online training course, a chef delivering meals from online orders or a visitor attraction taking ticket bookings and payments online
  • hand-crafted bespoke items or mass market goods
  • individual customers or business customers

Over the last ten years, ecommerce has become increasingly important for many businesses - even those that still have physical shops - as it offers greater flexibility for business owners and customers.

However, the pandemic led to a sudden increase in businesses including or even switching to an ecommerce model to continue trading with physical distancing. In spite of restrictions easing, many businesses will now consider growing their ecommerce capability for the long-term.

We expect many more new businesses will launch using ecommerce on its own to begin with.

2. Benefits of selling online

Selling online offers several advantages.

  • Reach. If people are able to buy from you without visiting your physical shop, it becomes possible to attract customers from outside your local area, city or even country. This is really useful for businesses selling niche products where there may not be enough people living locally who would be likely to buy them.
  • Flexibility. Rather than being restricted to staffing a shop counter for standard opening hours, you may have the opportunity to choose the hours you work, to manage and fulfil online orders.
  • Cost savings. You will have some costs involved in setting up online, but you can often get started with a much smaller financial commitment than taking a lease on physical premises.
  • Data. It can be easier to capture data on how customers behave online and what they buy to help you decide on your future business strategy.
  • Providing what customers want. Pre-COVID, some customer groups avoided using the internet for many reasons. However, COVID almost forced more customers to shop online and now confidence has built. Many have enjoyed the flexibility of being able to shop 24/7 and are likely to continue in future, and will expect many businesses to have an ecommerce option.

3. What can you sell online?

You can sell almost anything online, providing you have the means to deliver it and customers to buy it.

Tangible products

At its simplest form, ecommerce is an online shop, selling tangible physical products that are delivered to the customer. This includes businesses which are:

  • manufacturing their own brands (i.e. you have identified a gap in a specific market, and have had your own product designed and manufactured to fill this gap)
  • reselling the products of other brands (i.e. you sell a range of other brands’ products)
  • making and selling handcrafted products. (i.e. you handcraft a small run of bespoke products.

Digital products/services

As with physical products, you can also sell digital products or services online. This area has also grown significantly since the pandemic, with more people using ‘online’ meetings in place of in-person. Examples of digital products or services sold online include:

  • Online coaching and consultancy
  • Online training courses
  • Downloads of digital products (such as eBooks, online music, etc.)
  • Specialist expertise and platforms (such as selling access to online platforms, such as ‘FreeAgent’ or ‘Moz’).

Bespoke products

In the early days of ecommerce, sellers were generally restricted to providing products and services with fixed prices, short lead times and with minimal human involvement in the sales process.

While this is still generally the case, more businesses are now using ecommerce to sell bespoke items online. This could be as simple as adding personalisation such as engraving on an item, or even taking commissions for art, rugs, textiles etc., so businesses can reach a wider audience. They may have a website with standard items and then use digital channels to take a brief for a bespoke item and then complete the process of taking a deposit and outstanding balance online as well.

It is acceptable to offer goods with a longer lead time as long as the seller is upfront about that (or else you must deliver within 30 days) and commit to a maximum timescale for delivery.

It goes without saying that before you sell anything online, you must put in the time to carry out full research into your product - evaluate your product idea, carry out competitor research and crunch your numbers so you have a firm hand on your costs and profit margins.

4. What options do I have for selling online?

The good news is that if you’re setting up a small business, there are now many options to help you get started very quickly at a fairly low cost, and without having to have a lot of design and technical skills.

Selling on another platform

Some sellers make a start (or indeed run their entire business) without even having their own ecommerce store. Instead they have a presence on another online platform.

This is because, selling through another platform can give businesses access to the platforms existing audience - the large numbers of people who are already actively shopping in that marketplace and looking to make purchases.

Businesses can also benefit from the infrastructure that the other platform provides, for example managing payments and returns, tracking orders and templates for listing products. These platforms include:

  • Social media marketplaces - like Gumtree, Facebook marketplace and Instagram marketplace, which often suits businesses who sell almost entirely through social media, or for very small businesses with only a few items to sell.
  • Online marketplaces - like Etsy, Not on the High Street, eBay and Amazon. These online marketplaces boast huge volumes of traffic and have very sophisticated partner selling infrastructure. Find out more about these and whether they are right for your business in this introduction to online marketplaces.

Building your own website

Depending on your business model and audience, online marketplaces may not be a fit for your business. Whilst online marketplaces have vast volumes of traffic to their websites, they also can have huge amounts of sellers all competing on the same thing. Furthermore, the cost of selling or infrastructure restrictions may not fit with your business. In this case, you may opt to create your own online store.

  • Web builder platforms: These include Shopify, Squarespace, Wix, Weebo. If you don’t have a lot of design or technical experience, website building platforms can often be the ideal solution to help you design and build your own online store.
  • Custom-build website: Some businesses - particularly large ecommerce shops, big brands or those with complex offerings - may find that they require the flexibility and scope of their own custom-built online shop and will need to employ a specialist web design and build agency to support with this.

Multi-channel selling

Many businesses find they eventually want to combine a variety of approaches to ecommerce, perhaps having their own website as well as a presence on one or more online marketplaces.

And of course, they may also do this alongside a physical store.

5. Fulfillment

If you are selling tangible products, fulfillment is a key element of your ecommerce business - it places your products in your customers’ hands. There are many things to consider, including how and where you store your products, inventory management, your shipping options and costs, and your product packaging. Some things to consider are highlighted below.

You have two main options. You can either:

  • Fulfil orders yourself. Generally, a popular option for new businesses, small businesses, businesses with unique packaging requirements or those with low cashflow or tight margins, this is when you or your team store, pack and send out products yourselves.
  • Use a third-party fulfilment partner. If your business is growing or if you are constrained by space or time, using a third-party logistics partner to manage your warehousing, inventory and fulfilment can be a viable option. There are a number of companies offering this service, and if you sell on Amazon you can use their Fulfilled By Amazon service.

Shipping

You also need to consider what shipping options you will offer your customers. This includes:

  • Shipping costs - calculating your shipping costs, researching partners and determining what shipping rates your customers will pay
  • Shipping times - can you offer next day delivery?
  • Packaging options - how much protection do your products require during shipping (do they need boxed, cushioned envelopes, poly mailers for clothes, etc.) and what presentation/marketing materials do you want to include?

Returns

You’ll also need to be able to process returns and offer customer service support. Make sure that you research and create a solid returns policy and develop a clear process that customers can follow.

Note, if you are using a third-party fulfilment partner, this may be a service they offer.

6. Legal requirements

When you are selling online there are laws and regulations everyone must comply with as a minimum. This is not an exhaustive list - different types of business, sectors or products may require compliance with additional legislation.

Disclosing the identity of your business

Your customers need to know who you are and that your business is a legitimate organisation.

Under the Companies Act 2006, if you are a limited liability company or limited liability partnership, you must make this information easy for customers to see and where they would expect to see it - probably on one or more of your contact page, about us page or your web page footers. It should include:

  • your company name
  • addresses - including your registered office address and postal address (sometimes these are different)
  • main email address and offline contact details e.g. phone number
  • company registered number and place of registration (e.g. Scotland) and VAT number if you’re VAT registered
  • details of your business membership of any relevant professional or trade bodies.

Data protection policies and procedures

Business must comply with UK General Data Protection Regulation (UK GDPR), tailored by the Data Protection Act 2018.

This is a complex area and it is worth you taking time for further reading around this and obtaining professional advice for your business to ensure you comply. The best source of information is the Information Commissioner’s Office.

Even the smallest businesses usually need:

  • Registration with the Information Commissioner’s Office. Pay an annual fee of £40 to register if you store any personal data at all. This will apply to almost every business as it is virtually impossible to operate without storing some data even temporarily.
  • Cookie acceptance: A message that appears when users arrive at your website telling them if you set cookies, explaining what the cookies do ( often linking to your privacy policy) and giving them the option to accept these cookies. For example, cookies might include the code that enables you to gather data on how people use your site and you must get the user’s consent. However, some cookies are essential to use a service, e.g. keep track of what is in their basket, and in this case, consent is implied if the user continues to use the service, as long as the user is informed they are essential cookies.
  • User-consent embedded in all data capture: This means people must proactively give their permission for you to capture, use and store their data, rather than you assuming you can keep their data and them having to make the effort to opt out. You should make the purpose of using their data very clear and they should consent for each separate purpose - e.g. receiving a newsletter and/or receiving promotions, and for each separate channel - e.g. email, phone calls, post. It should be easy for people to change their mind and opt out of communications in future and this type of information should be included in your privacy policy.
  • Privacy policy: Usually you will need a specific web page with details of how you use and store data - the Information Commissioner’s Office website has sample templates if you search for ‘privacy policy’.

Cyber security

If you have physical premises, you will take the steps to ensure that staff and customers are safe from dangers such as physical assault, fire and other health and safety risks.

Trading online comes with different risks and it is your responsibility - but also in your interests - to do all you can to ensure your ecommerce site and your business is cyber secure to protect your customers and your business and staff.

Just imagine trying to operate if you no longer have access to your data and emails. Think how your customers would feel if their data was released into the public domain because your business did not have the right controls in place.

Many people automatically look for the green lock icon and “HTTPS” status instead of “HTTP” in front of your web address when checking out, which means that SSL encryption is in place. This secures the information like credit card details as they are transferred from your customer’s web browser to your web server. Online retailers need this in place as standard and most web-builder platforms will put this in place for you.

But there’s much more to consider. The Scottish Business Resilience Centre (SBRC) has been working in partnership with the Scottish Government and the National Cyber Security Centre (NCRB) to promote the government-backed Cyber Essentials scheme to help protect businesses against the most common cyber-attacks.

There are two levels of certification and it is sensible to consider this for your business:

  • Cyber Essentials - a basic self-assessment certification
  • Cyber Essentials Plus - where your cyber-security is verified by independent professionals

The scheme defines five technical controls which all organisations should have in place:

  • Using a firewall to secure your internet connection
  • Choosing the most secure settings for your devices and software
  • Controlling who has access to your data and services
  • Protecting yourself from viruses and other malware
  • Keeping your devices and software up to date

Sometimes grants are available to support your business to achieve certification.

Accessibility for all users

Web content accessibility guidelines (WCAG)

If you have physical premises you will consider how your shop or office is accessible by people who use a wheelchair or other mobility aid.

When you operate online, you also need to give thought for how your website is accessible. Disabilities including blindness and low vision, deafness and hearing loss, learning disabilities, cognitive limitations, limited movement, speech disabilities, photosensitivity and combinations of these can make websites harder to access and understand.

There are four main principles to consider:

  • Perceivable - so people can accurately perceive the content that is there - for example, sufficient colour contrast and text-alternatives for the likes of image content, so it can be changed into other forms like large print, braille, speech etc.
  • Operable - ensure that all functionality is available from a keyboard and not designing content in a way that is known to cause seizures
  • Understandable - making sure that web pages appear and operate in predictable ways (something to consider when implementing innovative or creative approaches)
  • Robust - ensuring the website is compatible with the likes of assistive technologies which present content in alternative formats to suit the needs of the user

As a small business owner with minimal technical experience, this may seem a bit daunting.

If you are using a web builder platform as mentioned previously, some of these elements will be taken care of within the templates they provide.

If you are commissioning a bespoke website through a website developer, then they should be staying up to date with the latest developments in this area. When you are briefing your developer, you need to ask: “What will you do to make sure the site aligns with Web Content Accessibility Guidelines and I meet my obligations under the Equality Act 2010?”

Most of the WCAG guidelines are very complex to follow unless you are a web developer. But it is worth having some basic understanding of this area, and the following links are helpful:

Online and distance selling for businesses

As customers cannot see goods remotely, regulations are in place to protect customers in this context. Most of them are common sense and avoid the risk of misunderstandings which is equally helpful for the seller.

The UK Government provides clear information on what’s involved on these links, such as the customer’s 14 day right to cancel for a standard product purchase:

https://www.gov.uk/online-and-distance-selling-for-businesses

https://www.gov.uk/online-and-distance-selling-for-businesses/online-selling

In summary, these pages explain what you must do:

    • Before a customer makes a purchase - provide clear product information, pricing, delivery information, terms and conditions, contact details.
    • Following a purchase - confirm the contract as soon as possible, usually with an automated email.
    • Fulfilling the order - you must deliver the goods within 30 days unless otherwise agreed.

    The government highlights the extra rules for selling digital services where customers download or stream content such as books, games, apps, films.

    For example, you need to make customers aware that they lose their 14 day right to cancel once they’ve downloaded or streamed the content.

Quality standards

Under the Consumer Rights Act, all products - both physical and digital must be:

  • of satisfactory quality
  • fit for purpose
  • and as described in your text and images and video on your website.

The consumer organisation provides a useful summary of this

Copyright and trademark notice

As long as the content and images on your website are original to your business, you are normally automatically protected by copyright, so you don’t need to take any special steps. The HTML and CSS, if original, is also protected from copying on a significant scale.

However, some people like to add a footer with:

  • the copyright symbol
  • the owner of the copyright (the business name)
  • and the year the website was created (usually the current year as most websites are updated regularly)

You could also add an intellectual property clause in your terms and conditions if the content on your website is a key asset for you, explaining what people can use your site content for and when they need to ask for permission, and provide content details for them to do that.

If you have trademarked your business name and logo you may want to add information about that.

7. More help

Now you understand the basics of setting up ecommerce for your business, it is worth reading the following articles to help you progress to launch:

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