Getting into Ecommerce

On May 14th, 2020, an analysis by Comparisun stated that Amazon’s founder and CEO Jeff Bezos was in line to become the world’s first trillionaire by 2026 if his wealth kept growing. Jeff Bezos is currently one of the richest men on earth, with a net worth of over US$114.5 billion (as of November 2022).

How did he get here? Amazon begun in 1994 as little more than a simple online bookstore. From those humble beginnings, Amazon has become the largest online ecommerce retailer, and one of the most powerful and recognizable brands in the world.

Not only is Amazon the most valuable internet retailer in the world, it is the most valuable retailer period, having surpassed Walmart back in 2015. It is also the third most valuable company in the world, topped only by Apple and Microsoft.

Bezos realized early on that ecommerce was a powerful business model and capitalized on it swiftly. Now the cat’s out of the bag and businesses around the world are recognizing that ecommerce has revolutionized retail. In fact, online shopping is one of the most popular online activities, with online sales projected to increase from US$1.3 trillion in 2014 to US$4.5 trillion in 2021 (Statista, 2019). And the impact of COVID-19 has only served to boost the impact of ecommerce. Ecommerce penetration rates, which are currently at 15%, are expected to increase to 25% by 2025 (MarketWatch, 2020).

Furthermore, experts predict that the impact of the coronavirus will not just be a short-term boost to ecommerce but one that’s here to stay, even after COVID-19. This is because people will get comfortable with the comfort and convenience it offers and the benefits of contactless payments, both of which are likely to cause a permanent behavioural shift towards digital purchases.

But What Exactly Is Ecommerce?

Ecommerce, also known as electronic commerce or internet commerce, refers to the buying and selling of goods or services using the internet, and the transfer of money and data to execute these transactions.

Given that the consumer dynamic globally is shifting towards online retail, there are increasing benefits for small and medium-sized enterprises (SMEs) who get into ecommerce.

Your business doesn’t have to be retail giant in order to capitalize on ecommerce.

“When you grow up, you tend to get told that the world is the way it is and your life is just to live your life inside the world. Try not to bash into the walls too much. Try to have a nice family life, have fun, save a little money. That's a very limited life. Life can be much broader once you discover one simple fact: Everything around you that you call life was made up by people that were no smarter than you. And you can change it, you can influence it… Once you learn that, you'll never be the same again.”- Steve Jobs, founder of Apple

And believe it or not, you have more in common with the late billionaire than you may think – Jobs never wrote any code for Apple. He did not know technology, he was not an engineer or software developer – he was more renowned for his business savvy and strategic, creative mindset. He was merely a man with a vision, so if you have a vision of how your ecommerce venture will be, you’re already halfway there!

“He did not know technology. He’d never designed anything as a hardware engineer, and he didn’t know software. He wanted to be important, and the important people are always the business people.?So that’s what he wanted to do.” – Steve Wozniak, co-founder of Apple on Steve Jobs.

Okay I’m Inspired! I’m a Small Business Owner in the Caribbean, How Do I Get Into Ecommerce?

Taking a page out of Steve Jobs’ book, you get other people who are professionals in their field to handle the technological stuff, so you can focus on doing what you do best – running and managing your business.

Philip Colthrust of Sightfactory Ltd and Christopher Burns of First Atlantic Commerce (FAC) are two such persons who can help your ecommerce dreams come true.

Sightfactory

Sightfactory is?a leading website and web application development studio based in Trinidad and Tobago. Sightfactory provides a complete set of services to deliver the greatest user experience through a mix of visually stimulating design, intuitive layout, user-friendly functionalities and interactive components. In terms of ecommerce, Sighfactory can create the website for your business so you can sell your products online.

Sightfactory’s client portfolio includes:

·????????The Trinidad and Tobago Ferry Service – whose website they designed so that you can now purchase tickets online using your credit card.

The Port Authority of Trinidad and Tobago turned to Sightfactory to develop a custom-built real-time online ticket booking application that worked seamlessly with their front office sales system and back office sailings and ticket management system. The result? Easy ferry ticket booking.

·????????Destination Trinidad and Tobago – a tour website where you can book trips and tours in Trinidad and Tobago and pay online via credit card.

First Atlantic Commerce (FAC)

FAC provides online payment solutions and international credit card processing for merchants, banks, and partners all over the world. They are a payment gateway that enables merchants to accept and process credit and debit card payments online.

So together, Sightfactory can set up your website and FAC can facilitate the online payments part. And voila! You’re now utilizing ecommerce.

The Ecommerce Process

In order to dive into ecommerce you need to do 4 main things:

1.????Formulate a strategy and plan of your online business model.

2.????Apply for an ecommerce merchant account with your local bank (this is different from a standard business account).

3.????Have a website developer like Sightfactory set up a functioning website for your business.

4.????Have a gateway company like FAC provide the connection between your website and your ecommerce merchant account (takes 1-2 weeks).

I already have a business account at my bank and can accept credit card payments, can I connect this account to my website??

An ecommerce account is different from a regular business account, so even if you have a business account and point of sales machines that accept credit card payments for your business, you still need to open an ecommerce account to do business online.

It’s important that you apply for an ecommerce account so that your bank can provide you with a Merchant ID that you can give to FAC. FAC uses your unique Merchant ID to link the online transactions on your website to your bank account. You will need a gateway company like FAC to facilitate this link for you on your website.

Getting approval for an ecommerce account is not a short process because you need to undergo the same “know your customer” (KYC) procedure as an applicant for a regular business account would. That means you have to be able to provide your bank with a viable business plan, financials and maybe even a beta website (an example of what your website would look like). Your bank’s website would have what requirements they need for opening an ecommerce account.

For this reason, Christopher Burns, CEO of FAC, recommends that you apply for your Merchant ID in conjunction with meeting website developers and FAC. FAC offers a checklist for their clients to ensure best practices on their website like Terms & Conditions, Refund Policies, Logos and more, so they help to hold your hand through the process.

Do everything in parallel but don’t leave the banking part for last as it takes a while to get approval for your ecommerce account, so you need to set a realistic timeline.

Your Ecommerce Business Plan

Whether you’re approaching a website developer to design your website, or your bank to open your ecommerce account – you need to provide a viable business plan.

This involves really thinking through the process:

Transportation and Delivery: Once someone purchases your product, how will you deliver it to them?

Pricing: How will you set your prices so that they are both competitive, but also deliver enough sales revenue to cover your overhead costs?

Marketing: How will you market your website to ensure you reach a wide customer base? After all, success depends on people knowing that your business is online and can accept online payments, so advertising is important (and it’s also an expense to consider).

Speaking of expenses…

Be Aware of Ecommerce Transaction Fees

Taking your business online allows you to reach a wider target base and increase your revenues – but this is business after all, and everything comes with a price.

Depending on your bank, you may have monthly fees and/or per transaction fees which can eat up a small percentage of your earnings, so you have to account for this when setting your prices and establishing what volume of transactions you will need for your online business to be economically viable.

Is Ecommerce Viable in the Caribbean?

Consumer culture varies by geography, so always keep in mind that what works for the USA or Europe won’t necessarily work in the Caribbean.

Right now, FAC has a lot of telecommunications, travel and government clients in the Caribbean, and retail clients are growing.

However, this can actually be to your advantage – remember that Jeff Bezos started an ecommerce business long before it became mainstream. And more and more people in the Caribbean are using credit cards and shopping online – Amazon is actually one of the top 5 websites visited in the Caribbean. So there is a demand for online retailers in the niche ecommerce market of the Caribbean.

Furthermore, local banks are looking into rolling out new debit cards that can facilitate online payments – meaning the customer base of people who can shop online in the Caribbean is about to get bigger.

Will your business be ready to supply them?

Currently, small business online retail in Trinidad consists mainly of the “click and collect” model – where customers order online and pay in person when they pick up the product. By having an ecommerce account and facilitating online payments, you incentivize customers to use your website for its convenience.

And that’s not all – online retailers like Amazon actually use online payments as a business strategy. This is because a quick and easy online payment incentivizes impulse buying among consumers. And various studies have shown that people spend more – up to 83% more – when they use their credit cards than when they have to use cash. This is due to many reasons including the rewards programs credit cards have that incentivize making purchases, and the psychology aspect whereby people think less of the money they spend on an item if they’re not seeing physical cash leave their hands in exchange for it. So if your website allows people to make easy purchases 24/7 online – expect an increase in revenue.

Ecommerce for Public Sector Companies

Ecommerce can improve the ease of doing business for government services as well. Because online payments are so easy to make, they reduce accounts receivables that public sector companies often have with physical payments.

Example; it is much easier for people to pay parking tickets online than to go in person to pay them. Online payments would thus reduce outstanding parking ticket payments.

However, it isn’t a silver bullet for all government services. The Board of Inland Revenue is less likely to adopt online payments because the transaction fees would mean that they would be collecting less income even though people paid what they were supposed to.

Advice for Entrepreneurs Looking At Shifting Across To Ecommerce

Philip Colthrust, Managing Director of Sightfactory, advises that entrepreneurs and small businesses take advantage of the shift in consumer dynamic that is taking place due to COVID-19.

This can actually be a great opportunity for any brick and mortar business to shift to online and increase their revenue.

Here’s some of his tips:

·????????Align yourself with a web developer company that knows what they’re doing. Many banks have a shortlist of developers they can direct you to, of which Sighfactory is one.

·????????Be sure to have a proper business plan detailing your transformation to online business. Your plan has to be more than just “I want to sell stuff online”.

·????????Try a hybrid model – both an online and brick and mortar business, but be sure to allocate products accordingly to each segment of your business.

·????????Don’t go online to sell to the same clients you already have. Ecommerce is about expanding your reach to more clients.

·????????If you can access a larger base – regional or international – think about how you can deliver your product to them a cost that’s good for you. Shipping out of the Caribbean is difficult but Sightfactory is working on Shop Caribe – an online marketplace to facilitate regional shipping at a better rate.

·????????Ensure that ecommerce transaction fees are built into your pricing structure.

·????????Consider the costs and benefits of going online – what does it cost for you to sell products in your store vs online? Which is more viable for you?

·????????You can save money in running your small business if you go straight to online.

·????????Treat ecommerce as an investment to boost your business.

Hopefully this article gives you a better understanding of the nuts and bolts of setting up an ecommerce business and all the best to any small and medium-sized business owners who are about to start the online journey! ?Subscribe to our YouTube channel for more content.