Trading online

Trading online

Turning your idea into an online business

Becoming an e-trader and selling products online requires more than a website. Like all businesses, your idea will benefit from a well-researched plan.

Writing a business plan

You should consider all the elements of a traditional business plan, but also think about the following:

  • Who are you trying to sell to? Will they be comfortable buying online?
  • Where are they? Is your market largely UK-based or is it international?
  • Can your product easily be sold online? If the choice of product requires a conversation with the customer, then it may not be suitable to sell online.
  • Are delivery costs low? Your customers will consider delivery charges as part of the overall product cost. If the charge is too high, they may prefer to buy from a bricks-and-mortar store.
  • Is your product in digital form? Electronic products such as software, music or e-books can be downloaded directly from your website, eliminating the need for delivery charges.

Registering for VAT

Your online sales may also be subject to VAT, although you don't need to register until your turnover reaches a certain level. You can check the current turnover limits at the HM Revenue and Customs website.

Choosing the right provider for an e-commerce site

Many website hosting companies can provide you with software to get your business online. Although this low cost method can be useful in the early stages of a business, or to test the water, you should carefully consider talking to professional web designers and developers to give your website the best possible chance of succeeding.

Consider the following when making your web host selection:

  • Will they register your chosen domain name?
  • Do they offer an adequate number of email addresses for you to use?
  • Do they have templates and site building tools?
  • How easy is it to update and manage your web pages and products?
  • Can they offer integrated shopping cart facilities?
  • How easy is it to switch hosts in the future?
  • Do they charge monthly or annual fees? Is there a minimum commitment?
  • Do they limit the amount of content that you can host?
  • What level of service availability do they guarantee? Is there financial compensation if your website cannot be accessed?
  • Do they offer traffic-monitoring options so you can track how many people visited your site and can calculate your conversion rate by reference to how many bought your products or services?
  • Do they back-up your website and its data or do they provide tools for you to do it?
  • Do they update their own systems to ensure they offer you the latest versions of software and security tools?

If you use a professional web design service they may offer a hosting service, if not ask them to recommend one.

Information to include on your website

If you are trading online then you should add the following:

  • Your contact details, including address and telephone number, and VAT details if relevant.
  • A privacy policy explaining how personal data is protected and how financial transactions are carried out (you'll need to comply with the Data Protection Act).
  • Your terms and conditions of sale.
  • A guarantee of the quality of the products or services.
  • A clear exchange/refund policy, describing how refunds will be made delivery costs and timescales.
  • Up-to-date prices and stock availability - include all customer costs e.g. VAT and postage & packing.
  • Customer service details: information on the data people need and how they can contact you to query a transaction.

Collecting payments from customers

To collect payments from your customers through your website, you'll need to include a virtual shopping cart and a secure way for them to pay (sometimes known as a payment gateway).

Collecting payments

To collect payments from customers you will need a merchant account linked to your website. Lloyd's Bank merchant service provider Cardnet ® can advise you on what you need to be able to collect online payments from your customers.

Getting people to visit your website

You'll want to make sure that your customers know where to find your site. Website promotion should be part of your overall marketing plan. If you already sell offline you should integrate your website into your traditional advertising and promotions campaigns.

Your web presence will enable you to reach more of that market as you are not confined to a particular geographical area.

Here are some ways that you can promote your website:

  • Through your website's URL (domain name). Choose a short and simple name that is easy to remember, and use it everywhere - your email signature, business cards, letterhead, packaging and adverts. Your URL is just as important as your business name.
  • Offline marketing - advertise in your local newspaper, or send a press release about your new site to your local paper or trade magazine.
  • Email marketing - collect email addresses from your customers, or buy a mailing list, and send out an email about your website and your latest promotions. (You must comply with the Privacy and Electronic Communications Regulations: you must have the person's permission to send them an email, and you must give them the option to un-subscribe from your list and avoid future mailings. You can also offer people the chance to subscribe to your emails/newsletters directly from your website; same rules apply.)
  • Search engine marketing - you can use a service like Google Adwords to pay for a short advert and a link to your site to appear on the search results page for certain keywords and phrases that you select and pay for. You're charged on a cost-per-click basis, so you only pay when someone clicks on your advertised link.
  • Search engine optimisation (SEO) - you can optimise the content on your site so that it appears high in the natural (non-paid for) listings on a search engine results page when someone searches for a related topic or particular keywords.
  • Social Media - for many businesses social networking websites such as Facebook and Twitter are powerful tools to build relationships with your existing and potential customers
  • Word of mouth - your customers are typically a great source of marketing. Encourage your happy customers to recommend you to their friends.

Making the most of your banking as an online trader

If you are trading online then you are more likely to be using automated payment methods than cheques and cash. With this in mind we have created the Electronic Business Tariff, where payments such as direct debits, debit card payments and Internet banking transactions are free of charge when your account is in credit. There is a monthly fee for this tariff.

You can use our Internet Banking service, Online for Business to access your business account at a time to suit you, 24 hours a day, 7 days a week*. You can also receive up-to-date balance information through our free Text Alerts service.

To make the most of the Electronic Business Tariff, or make online transactions yourself, you may also be interested in our range of card services, such as our Business Credit Card, Business Debit Card and Business Charge Card.

All of these services can be used with our Business Extra Account.

All cards are available subject to status.

Checklist: before you go live

There are a couple of things you should always check before you go live and open your website for business:

  • Have you tested the site and its features prior to going live so you can fix any problems before subjecting your customers to a poor experience? Remember to test from the start to the end of the transaction process - to help with this, your Internet Service Provider may be able to help with dummy accounts or your bank with practice confirmations.
  • Have you made business continuity plans? If your website fails or your trading data is lost, what will you do? Make sure you have a back-up process and have a copy of your website stored away from your ISP.
  • Think about security and fraud. Make sure you are up to date on processes and policies.

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