Posted: Wed 15th Jun 2022
Karen Riddick is the founder and owner of Second Nature Online, as well as an Enterprise Nation adviser.
Specialising in the design, import and retail of ethical and eco-friendly soft furnishings, Karen is an online retail expert, with stores on Amazon, Etsy and eBay, as well as owning her own Shopify website.
In her recent Lunch and Learn, Karen looked at the future of e-commerce and what it means for small businesses going forward.
Here, we round up the very best bits.
You’ve previously mentioned that e-commerce sales are projected to be up to $7.3bn worldwide by 2025. How has e-commerce grown and changed since you began selling online?
This is such a great question because, as a long-term online seller, I can speak from experience about the changes I have observed in the last 15 years! Here are a few:
From little choice to massive choice
We used to have only eBay, Amazon and basic website templates. We now have over 400 marketplaces and sophisticated website platforms such as Shopify and Magento.
From Independence to integration
Services such as online selling, purchase of postage services and accounting used to be handled independently of each other.
These days we have highly sophisticated multi-channel systems aimed at reconciling operations into central hubs where everything can be processed together.
From patience to rage
In the beginning, buyers had very reasonable expectations, and they were very patient. Nobody expected free postage and nor did they expect to receive their order the next day.
I used to post all my stuff at the weekend and never received any complaints or negative feedback about it. These days, customers not only expect their items to be delivered quickly but they often expect free postage, too.
Organic SEO to paid advertising
In the good old days, nobody worried about advertising and promotions.
Being online was all the advertisement you needed! These days, it can be hard to run your business without some investment in advertisement, sponsorship and promotions – both on marketplaces and on independent websites.
Massive progress with broadband coverage and speed has been made.
Many locations in Britain have suffered from delayed improvements to broadband, but we are getting there as a nation, and this has opened up more equal access to e-commerce opportunities.
When I first started, nearly all sales were within the UK but these days over 25% of my sales are to overseas customers, all made possible through the easy overseas routes that are offered by e-commerce marketplaces and couriers.
From niche to competitiveness
Back then, it was easier to find your niche area and to build a nice business with very little competition.
These days there are far more sellers, and it is more difficult to stay ahead of the game – or to even keep up some days.
There is still plenty of opportunity, but sellers need to look more carefully for their niche and keep up to date with modern selling tools and techniques.
In 2008, everything was managed from a desktop computer but these days a multi-million-pound company could be managed from smartphones and tablets, including product images, videos and the use of a wide assortment of apps.
From fag packet accounts to Making Tax Digital
Back in the day, we handed in accounts on the back of a fag packet – now it’s all about Making Tax Digital.
E-commerce has multiple facets to each transaction and so accounting tends to be complicated, especially when selling on multiple marketplaces, in which case third-party integration tools are often required for accounting.
Can you explain what an online marketplace is and what advantages there are to using marketplaces?
When selling online, sellers have a choice between setting up their own website such as Shopify, Magento, Big Commerce – or using a third-party online marketplace such as Amazon, eBay, Etsy, Faire etc.
It is always advisable to have an independent website (even just a basic one) but marketplaces bring considerable advantages:
A structured operating framework is already in place
High buying and browsing traffic
Advertising and promotion carried out by the marketplace
Existing customer reputation
Payment Gateway included
Buyer and Seller protection schemes
Discounted postage labels may be offered
Cyber security likely to be better
GDPR and data privacy may be taken care of
Marketplace guidance and webinars
Seller forums to ask questions and share experience
Specialist areas such as handmade, food and drink
Routes to international selling
Assistance with problem customers
You have experience with WooCommerce and Shopify. Can you tell us a bit more about the benefits and challenges small businesses face when using these types of e-commerce platforms?
Whilst marketplaces are a crucial aspect of most e-commerce businesses, independent websites are also important for various reasons.
Sellers control their presence, operations, image, brand identity reputation
No restrictions on the type and levels of communication with customers
Can use payment gateway of choice
Can include a blog and news page
No commission to pay
Can easily link to social media
No interference from the competition (as happens on marketplaces)
Difficult to get good traffic without significant effort/investment
Takes time and money to set up an independent website
Challenging to maintain an original framework can quickly become out of date
Compliance with data privacy laws is down to the website owner
Spamming and cyber security can be a problem
What do you think will be the next developments for e-commerce platforms?
I have five predictions:
We are still in the midst of growth in terms of the number of e-commerce marketplaces coming onto the market.
This will likely peak, and we may see some of the smaller ones disappearing whilst others lose or increase their share of the market.
Generic sites may have greater challenges with staying ahead whereas niche marketplaces may have more resilience if they can attract and retain a loyal audience.
Serving the B2B market
More B2C marketplaces will seek to incorporate B2B selling opportunities, fuelled by the advance of independent B2B marketplaces such as Faire and Creoate.
Trade fairs were cancelled during the pandemic and the rapid rise of online B2B has illustrated a large market in many marketplaces will wish to serve.
Improved integration between web platforms and marketplaces
Web platforms such as Shopify will increase their capacity to link to marketplaces in order to retain customers who wish to sell easily on both.
This is already happening but is likely to become more extensive.
A return to selling in the EU
Most UK e-commerce sellers have lost the ability to sell in the EU following Brexit and for many, this has been catastrophic – but new solutions will emerge which make it easier for sellers to regain or reach their EU customers.
Further partnerships and integrations
Many existing platforms will continue to improve in terms of their functionality.
For example, some aspects of e-commerce can still be quite slow, so I imagine we will see greater speed and improved ability for bulk operations.
Similarly, improved tools and services will emerge alongside technical advances and more practical partnerships between e-commerce service providers.
You’ve expanded your business from selling B2C via marketplaces to selling B2B, and also using online marketplaces. What should our audience consider if they are thinking about choosing an online marketplace?
B2B marketplaces are a great way to reach new customers and are in general a good idea - especially for producers and brands.
Sellers need to think about the following:
Is the marketplace a good fit for your product?
Do you need to be the brand/label owner?
What fees and commissions apply?
What are the payment terms and schedules?
Can you establish international visibility?
Are delivery and/or returns arranged by the marketplace?
What standards, policies and partners are in place?
How do you set up your account?
What onboarding and ongoing support is available for sellers?
Is the site a transaction site or an ‘introduction’ site?
How has the pandemic shaped e-commerce, and do you think any changes to people’s online shopping habits are permanent?
The pandemic brought a rapid and significant increase in the number of people buying and selling online. Our sales doubled over the lockdown period.
Although we are seeing the end of the pandemic, it is likely that many people have converted to online retail and so it is unlikely that the proportion of sales made via online retail will reduce much, even now that physical retail has re-opened.
I should say though that, despite being an online seller, I would really like to see a model whereby online sellers were basing themselves in town centre locations in order to bring a bit of life back to the High Street.
As a separate point, an interesting observation is that, during the pandemic, customers were patient and grateful for the services they received from e-commerce sellers. I wish that particular trait could remain!
On the downside, the pandemic (alongside Brexit, global instability and the rising cost of living) has also resulted in dramatic increases in transport and other overheads, meaning that increased sales are not necessarily reflected in the bottom line or the profits!
As e-commerce grows, what are some tips that you can share with the audience to help them stay competitive in the future?
Keep an eye on your prices – marketplace fees are multi-faceted and other overheads are increasing all the time. It is easy to be caught out by your shrinking margins
Keep your e-commerce admin in good shape. Have an organised method of assigning codes to your products and use an accounts package that specialises in e-commerce, especially if you are selling on marketplaces
Making Tax Digital is applicable to an increasing number of companies now. Do not drag yourself down with admin chaos when you should be concentrating on your business success
Decide on whether you might benefit from reconciling/shrinking your product range or increasing it – I have done both and I can speak to each one as a strategy for competitiveness. Also consider whether to expand into selling other people’s products too
If competition is increasing, think about how to modify products or create product bundles
Upgrade your images, product videos and content in line with modern advice and expectations
Look for new markets, such as B2B, international and local retailers
Look for niche marketplaces – it is often easy and inexpensive to test the water on marketplaces
Branding is a huge advantage these days, especially on marketplaces where additional tools and protection is often offered. A trademark can be obtained relatively cheaply so if you don’t have one, think about getting one
Do not hesitate to train yourself or buy in the expertise you need if you don’t have the skills or time yourself
What are you most excited about the future of e-commerce?
Before Christmas, I had zero excitement about e-commerce because of the stress of managing everything amidst the havoc caused by COVID and Brexit, which brought me to the verge of quitting my whole business.
E-commerce started to feel hopeless and uncontrollable!
I have clawed my way through the dark days, and I have learned to love my business again. I do feel excited about the future of e-commerce, and I would say that some of the things I am looking forward to are:
Knowing that there is always something new on the horizon in terms of e-commerce opportunities
Expanding on the new online B2B marketplaces
Having a great choice of marketplaces and service providers
Taking advantage of the logistical solutions that I think will come in international e-commerce
Taking advantage of the continued love of brands and using e-commerce and social media tools to embrace this
Using Media tools such as imaging and videos to improve presence on e-commerce sites
Having access to increasingly efficient and integrated systems which reduce my workload and admin stress – and which give me more time to work on my business
Learning more and sharing it with other e-commerce sellers.
Be sure to connect with Karen on Enterprise Nation today and book a discovery call.