What's the true cost of owning an ecommerce website?

The other day I was speaking to a website owner about their disillusionment with their current ecommerce website and supplier. Don’t get me wrong it was doing the job and selling products over the internet, but now that business was growing they were uncovering the true cost of going with a sizeable agency. As a small business they had recognised the need for an ecommerce website but on reflection they hadn’t asked the right questions.

As a small business you know you need an ecommerce website to keep and attract customers and grow revenue. The problem is with no previous experience of owning a website what questions do you ask. It would seem fair that with no experience going to a large agency would solve these issues. However the sales people at an agency are focused on the sale and may not cover the implications of some of their costs. As a client you may well be focused on their current client list and the lure of emulating some of those existing clients.

Here are a few questions that you may want to consider asking. The following provides more eCommerce supplier questions.

1. What is the cost per hour of future work? Ok you may have paid £15k for the market leading website, but what happens when your business grows and you need to add a best seller list to the category page. What if the cost of this addition is £1000 or it may stretch to £2000 depending on your requested functionality and the hourly rate of the agency. The big one, and it will hit all businesses that grow, is the integration with other back office systems this could be anywhere from £3000 upwards and can cost nearly as much as the original site. Consider how much this will eat into your profits for the year. The link above will show some typical pieces of functionality and services that you may want to enquire about.
2. Is the cost of hosting fixed or does it rise with an increase in usage? If it does rise with usage what is the cost per Gb. Sadly with many hosting solutions there is a quantity included in a base price but once you go over that there is a charge per Gb. Now consider that as sales go up, so will the number of users browsing the site. This variable cost based on sales can feel like the agency is taking a percentage of your sales. It therefore pays to work out what it will cost you per month as sales rise or worse what happens if sales don’t rise in proportion to the numbers browsing the site.
3. How many clients will my account manager be dealing with? The main reason for going to a large agency is that you feel you will be reaping the benefits of their experience and you would hope to get some advice for free. What happens if you account manager has 20 clients that they need to deal with? That’s less than a day a month, take into account holidays, admin, sickness and you are probably down to half a day and if that is spent selling you a £2000 best seller list then you aren’t maybe getting the value you had hoped for.
4. Can I access my customer data? Ok you may get orders sent to you, but what other questions might you have about your customers. What have customers added to their basket but not purchased? Where do my registered customers live? How many people have registered but not ordered? What products have customers viewed but not purchased? What do people search for on the site? All of these are very valid questions and can provide valuable information that will become critical if you want to grow your business, but can you get it? Or will it cost you?

I hope this has given you some insight into the sorts of questions that you need to ask. What you need is an agency that can understand you marketing issues and provide solutions, not one that sells you an website. After all you can buy an ecommerce site for £99 a month over the internet.

Site User Tracking

A recent experience of pay per click advertising has shown the benefits of tracking customer activity from a number of sources.

If you take out some online advertising you will get built in tracking to show you clicks, cost per click and impressions, plus more stats than I have time to mention here. However what happens after users have clicked through to your site is your responsibility. Therefore as a minimum it is advisable to have a free tracking tool like Google Analytics (GA) on your site and where possible ensure that server logs are switched on and are available to you as required.

I had set up some advertising and allowed "content match", as you would assume that large companies are on the ball with who is displaying their adverts and you would hope that they are getting the best for their customers. I was wrong as it turns out.

There were several distribution partners that display adverts in directory style websites and if you actually look at these sites they have very little in common with some of the adverts they display.

The adverts I had produced were carefully worded to target specific customers including a price that should keep those looking at the lower end of the market out of the site in question.

Luckily Google Analytics clearly shows where people have come from how long they were on the site and which pages they navigate through (Document on how to find this out to follow). With an average time on the site of less than ... well zero seconds it was obvious that someone was taking advantage.

Having referred this to the advertising company, they then asked for server logs. If you are unfamiliar with these they involve thousands of line of code and look like something out of the Matrix films, but buried deep with in them is confirmation about pages opened and the time on the site.

The issue has now been referred to a fraud team. A couple of points have come out of this:

1. Make sure you have a form of site tracking on your site, even if it is an information site.
2. Review the data, especially if you have PPC advertising on the go.
3. If you think something looks suspicious do check it out and do report it to your PPC company.

eMail Marketing

My recent experience of this with one of our partner companies has shown that as well as customising the offering in the email to segments of your customer base, you also need to be playing with other aspects of the mail to see what works. Don't expect instant success either building familiarity with customers takes time.

Here are a few examples

• Alter the subject of the email to find what works best, different calls to action work for different customers. Consider using product names in the subject line as these can be of more interest than another sale.
• Typically the email offers similar links into a site as might be seen on site menu system, however with limited space this cannot be identical. Therefore make sure the menus maximise the opportunity for that segment, if you are promoting jeans in the email replace the jeans link with another sales opportunity.
• The best time for sending an email campaign needs to be established over time. Don't believe what you read on the web that Tuesday's are the best or Wednesday's or ... if you look hard enough you will find every time is best.

eCommerce During a Recession

eCommerce sites provide an excellent form of marketing during economic downturn. When the high street is starting to feel the pinch it is guaranteed that shoppers will be heading online looking for greater value.

The internet also offers a wider source of customers than you might receive from your other channels, obviously the market is virtually world wide.

However simply having a site isn't going to be sufficient, it is now that extra work is required in order to capture market share at a time when others might be starting to cut back. Investment in search engine optimisation and pay per click advertising will prove money well spent when you start to build your customer base.

eBusiness also offers a cheaper alternative for keeping in touch with your customers. Email marketing is a very cheap method for keeping in contact with your customers and shouldn't be ignored. It does need to be combined with data from other sources to gain the most value though. Providing personalised and segmented emails to your customers is a great way of showing them that you care. Similar to the mail that comes through the door people pay more attention to mail that is relevant to them.

Many view marketing as an expense that can be cut to save money. I have personally witnessed the implications of such a mistake, a company I worked for previously saw a drop in sales for 6 months, due to reduced marketing activity.

Simple ebusiness tools add value

Some recent work with a business has shown that even the simplest of ebusiness tools can help to cut costs in the long run.

A maternity company work working with MSI Commerce had wanted to include catalogue requests from its ecommerce website in an email marketing campaign. The data was sent from the site in a standard format to the company’s inbox.

Up until this point the company hadn't used the data which meant a significant backlog of processing had built up. Initially this looked like a manual copy and paste job, but this wasn't sustainable over the long term, especially as the site grows.

A search of the internet revealed a number of useful tools for dealing with such occurrences. At £99 to purchase email2db provided a simple long term solution to the problem. As well as managing the extraction of data from emails into a database, it can also be used to send automated responses to email signup requests.

The tool was relatively easy to set up and for those with programming experience can provide more powerful features. Other simple ebusiness solutions such as this can provide powerful cost savings to small businesses. Plus without access to the internet it is unlikely that such a software solution would have been found.