Online Trading

There are many advantages of trading online for a small to medium-size company. The most obvious and important ones are:

  • Access to a larger, global market
  • Lower cost of sales
  • Accessibility 24 hours a day, 7 days a week

This means that smaller companies can compete directly with much larger organisations, without incurring excessive expenditure. However, it is important to be aware that online trading has its own set of risks associated with information security - particularly with the collection and storage of personal information and payment details.

When you are implementing an online trading facility for your business, there are a number of areas to consider at the outset. These include:

Getting online

To implement any form of online trading, you must have a presence on the Internet. You could either set up a dedicated web site for your company or share space on another site.

The simplest route is to make your products and services available on an existing web site that has online trading facilities. For example, many industry bodies and partner organisations have web sites that are used to promote their members. Adding your portfolio to one of these sites is often cheap and easy to implement, but it is not exclusive. For an exclusive presence, you would need to build your own web site.

Building Your Web Site

This does not need to be as expensive or complicated as you might think. There are many web design companies who will do this for you. If you have limited experience of the Internet, this is probably the best approach as such specialists can take care of the site design, arrange for a domain name and for hosting, and ensure that the necessary e-commerce requirements are in place. Web design is a growing industry and many companies (especially the smaller ones) offer very competitive rates. It is, therefore, advisable to carry out research into the best possible price.

If you are more confident in your use of the Internet, you could use a commercial web design package to create your own site. These can be purchased from most computer retailers and often come with pre-defined templates which can be used as a starting point. Tools for publishing the completed web site are usually included with these packages.

Remember that your customers are not necessarily Internet experts - ensure that they can find what they want quickly and purchase it with ease. Keep your design simple but include as much relevant information as possible. Avoid complex pictures, diagrams and unnecessary animations - these take time to download and some visitors may leave the site rather than wait for a page to be displayed.

Hosting Your Web Site

Once you have a basic structure for your web site, the next stage is to publish it. To do this you will need some web space - i.e. an area on the Internet that is reserved to store your site. There are three main options for obtaining web space:

Use Free Web Space Offered by Your ISP (Internet Service Provider).
Many standard Internet accounts offer a certain amount of free space. This is usually around 3-5MB, which is enough for a simple web site with online trading facilities.

Your ISP should provide you with all the information that you need to publish your web site at this space - you will normally need an address (URL), a username and a password.

Be aware that the address (URL) of your web site might be complex and hard to remember. It may be worth speaking to your ISP or a hosting company to purchase a name that is shorter and more relevant - these are known as 'domain names'.

Purchase web space and a domain name from a web-hosting company
If you need more than the amount of free web space provided by your ISP, or if your online trading facilities require more than the basic technology, this is an option you may wish to consider.

You will be charged an annual or monthly fee which could range from five to fifty pounds a month, depending on the amount of space and the technology provided. Also, the amount of information you are able to display will be limited so it is worth checking this out before you agree to buy web space.

There are numerous web-hosting companies which offer competitive prices - a good starting point is to type 'web-hosting' into Google (or your preferred search engine).

Your chosen host will provide all the information that you need to publish your web site - typically an address (URL), a username and a password. They should also provide contracted Service Level Agreements that specify:

  • Hours of service
  • What can be placed on the server
  • How much bandwidth (communications traffic) is available

Read any terms and conditions carefully and ask for clarification if you are not sure about any points in the agreement. Keep in mind that many hosting companies offer specific deals for e-commerce web sites and may provide preferential rates for hosting if you implement their security and payment systems as well.

Run your own web server
To have your own web server you would need to purchase a domain name and then point this to your server. This is a more technical route and you are likely to need the help of a third party specialist to implement it.

Unless there are very good reasons for running your own web server (for example, if you were handling highly sensitive information and needed to implement specialist security measures), it is not recommended you do so, as the security risks can be very high and the time required to manage and run a web server can be extensive.

Adding E-commerce facilities to your Web Site

Once you have a web site, the next stage is to enable it to take orders. For this you will need an e-commerce system. Precedents for online sales have been set by leading companies such as Amazon (www.amazon.co.uk) and, whilst systems of this scale and complexity would be inappropriate for smaller businesses, there is much to be learnt from them. Perhaps the most important lesson is to provide a clear and simple service for online customers.

The complexity of your own e-commerce system will depend on the volume of sales that you anticipate receiving and the methods of payment that you wish to allow. Most payment systems for e-commerce web sites deal with credit cards but it is worth considering other forms of payment such as cash transfers, debit cards and cheques. There are two main types of system:

  • Offline processing
  • Online processing

Offline processing

If you anticipate a low volume of orders, the simplest approach is to provide an online form for customers to complete. The form should request enough information for you to process the order offline using a credit card payment terminal provided by your bank.

If customers are to submit payment details you must ensure that information is handled securely. This means that web pages should be presented using techniques such as:

  • A certificate of authentication. Certificates are granted by trusted third-party agencies to provide assurance to users that you are who you say you are.
  • Encryption (the scrambling of information to prevent unauthorised disclosure or modification using mathematical techniques). This helps to prevent unauthorised users from 'eavesdropping' information that is being transferred.

You should be able to find further information about these specialist techniques from your ISP or web-hosting company.

Online processing

If required, you can provide a facility for people to process orders and credit card payments on the web site. This requires the use of a third-party clearance company such as WorldPay (www.worldpay.com) or PayPal (www.paypal.com).

Credit card payments and associated security requirements are handled by the clearance company for a small percentage of transaction values.

Many of the high street banks offer these services and can provide the necessary information and make adjustments to your web site to implement them. If you are considering this option, contact your bank for further details.

Alternatively, it is possible to incorporate a third-party payment clearance system into your web site. Several packages are available that can be built-in to check transaction details and process payments. However, these systems should only be considered if there is a high volume of transactions, and security of the web site has been thoroughly checked.

Managing Online Sales

It is essential to manage online sales carefully and to provide excellent customer service. News travels quickly on the Internet and negative customer feedback could have a real impact on your business.

As a guide, it is worth ensuring that any potential or current customer of a web site is fully informed of the ordering process. This can usually be achieved if you:

  • Confirm receipt of the customer's order as soon as possible, usually via an e-mail
  • Inform the customer of an anticipated delivery date as soon as possible
  • Once goods have been dispatched, check that the customer has received them
  • Ensure that you comply with relevant rules and regulations for the payment and dispatch of goods

Communication is critical. Ensure that all e-mail correspondence is clear and concise - provide enough information but not too much! If there are any delays with order processing or dispatch, inform the customer immediately and update them regularly. This can be done via e-mail but a telephone call is often appreciated in such circumstances.

Finally, it should be possible for customers to speak to a 'real' person if necessary - a telephone number is essential so that customers can contact you to clarify or discuss any questions they may have.

Often, the fact that a telephone number is given will provide reassurance that the site is legitimate and that customers have 'somewhere to go' in the event of a problem with their order or payment.

Rules and Regulations For Online Trading

There are specific regulations associated with online trading, apart from those concerning payment processing. For example, it is illegal to take payment for goods before they are dispatched and you must provide a data protection consent form. For further information about data protection you may wish to visit the Information Commissioner's office at www.ico.gov.uk

If you are considering any form of online trading, check associated legislation including:

For summary information about these regulations you may find the Office of Fair Trading Consumer Regulations web site useful at: www.crw.gov.uk

If in doubt you can also check with your local Trading Standards office - see: www.tradingstandards.gov.uk.

Avoiding Obvious Pitfalls

There are a number of highly successful, well-known web sites that provide good examples of how e-commerce can work successfully. Time spent researching such existing sites can provide valuable ideas about what to do, and also what NOT to do.

One of the best ways to start is by using existing web sites and viewing them from a customer's perspective - how easy are they to navigate? How straightforward is the ordering process? Do any aspects cause frustration or annoyance?

Some key points to consider include:

  • Ensure the web site is easy to navigate
  • Keep it simple - avoid complex files (pictures etc.) which take a long time to download
  • Ensure you have clear, precise pricing structures
  • Provide sufficient information about the product or service
  • Make provision for selling abroad or to different areas of the UK
  • Publish a clear policy on returns, delivery costs and customer service
  • Publish privacy statements and give details of any tracking systems used
  • Clearly state periods when you may not opeate (e.g. during public holidays)
  • Be aware of any current frauds and scams
  • Be aware of information security issues that are relevant for your business
  • Make plans for business continuity in the event of the web site becoming unavailable for any reason

The Next Steps

Once you have a working web site that allows your customers to trade online, it is essential to publicise it. A simple marketing technique is to ensure that the address of the web site is published in the following:

  • Yellow Pages (in print and online at www.yell.com) and similar business  publications
  • Directories of relevant industry bodies and community groups
  • Local newspapers

It could also be useful to produce business cards and stationery for distribution.

Additionally, it may be worth considering web-based marketing campaigns. Although mass e-mailing is not a good idea, sponsorship of certain words and links within popular Internet search engines (such as www.google.co.uk) can be cost-effective and productive.

If your web site is successful and becomes an important part of your business, it is worth investing more time and effort to improve it. This could be a case of updating the 'look and feel' of the site or making it dynamic (i.e. so that customers can set the appearance and features according to their own preferences).

The following pages may also provide sources of further information:

Guide for New Computer Users  
Broadband
How to Choose an ISP

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