Have a go at our eCommerce Business Planning Quiz below. The results of previous respondents are then explained throughout this blog:

powered by Typeform

It used to be that to sell something you needed a shop, you would need customers to come and visit you, you may not necessarily know who they were or how they found you. Things all changed dramatically once the interest became a household necessity.

The retail game changed from all recognition, no you didn’t need to have a  shop on the high street or employ staff. The internet has given even the smallest business to potential to reach a national or even international audience.

Online marketplaces like Amazon and eBay have made it even easier to begin an online retail business as bedroom-base businesses may only require a few hundred pounds in stock to get started.

You have landed here because of your expressed interest in learning more about the e-commerce business sector. Please enjoy the blog below and learn more about this ever more popular sector.

Industry Stats

The figure below shows some of the key industry stats including market value, current market growth and number of UK based businesses. The sustained growth of the industry and the multiple areas of specialism encourages creative entrepreneurs to begin their own ventures. Each adopting and adapting subtly different business plans to carve out their own unique offering.

E-commerce businesses are one of the fastest growing businesses in the UK. The ease with which a new venture can be set up makes them popular ventures for first-time entrepreneurs. The large number of UK based e-commerce businesses (which number over 28,000) does not include the even greater number of casual online traders that use platforms such as Amazon, eBay and Gumtree to sell their goods.

It has become a virtual necessity for businesses to advertise and sell online to avoid being left behind but for those that exclusively do so the potential rewards are great.

The low overhead and operational costs mean businesses that may turnover several hundreds of thousand pounds can be easily managed and maintained by one or two members of staff. Added to the increasing preference for consumers to make their purchases online should see the continued growth of the sector for many years to come.

The numbers vary greatly depending on the product/service and overall offering, but a small e-commerce company may expect to see 25-30 customers a day. The associated costs in acquiring these customers is a key element in any e-commerce business strategy.

The goods and/or services an e-commerce business may offer can fall into one of 13 general categories. Businesses are likely to focus on one or two categories each of which can branch off into any number of subcategories. The graph below shows the split of the popularity of these 13 categories amongst e-commerce businesses.

The most popular area of products for e-commerce businesses is in clothing, with the shoe category following shortly behind. The clothing category is perhaps the widest of the 13 shown with almost unlimited subcategories and areas for new businesses to create specialisation.

A range of pricing and quality will further separate each category. Consumer electronics, for example, can be sourced cheaply from places such as China and sold forward at a competitive price. Other businesses may prefer to source higher quality products that command a higher retail price. For any e-commerce it is important that the supply chain matches the sales expectations, branding and any associated marketing campaign are aligned with one another.

The Average Spend per eCommerce Transaction

The average spend per e-commerce transaction in the UK is £33. This number has levelled off in the past couple of years but whereas the basic transaction value has slightly fallen the overall number of transactions has risen. The increases in the competition have also meant retail prices have remained competitive for many goods sold online.

An added premium has also come by way of the incorporation of unique ingredients as well as sourcing raw materials from organic and ethical suppliers

How Do eCommerce Businesses Get Financed?

An e-commerce business is a perfect venture for any aspiring entrepreneur to try their hand at running a business. A business can be set up for next to no cost, especially when utilising one of the many online marketing platforms. They are an ideal hobbyist enterprise but for those wanting to make a proper business better understanding and planning is required.

Given that the high volume of potential competitors in starting an e-commerce business there is a clear advantage in preparing a proper business plan in order to prepare to begin trading on the best possible footing.

‘Slice & Dice Knives’ started selling on the internet a little over 18 months ago. Davis Silva, owner and founder, initially starting by selling his cooking knives from around the globe online via an Amazon store. After a few months testing the market and getting an understanding of his business, David engaged with a business plan writer to develop a plan for his business. The plan outlined a careful ramp-up of operations, the purchase and development of a new website and the gradual increase of held stock.

The plan helped the business secure a £13,000 start-up loan and has had the ongoing benefit of outlining key forecasted milestones and projected revenues.

Given the low average start-up costs, a high proportion of e-commerce entrepreneurs have started their ventures from personal savings. A number have also secured funds from Start Up Loans and other debt finance from traditional bank loans. The table below shows the main sources of business finance and their associated percentage. In some cases, for larger projects, businesses may need to obtain finance from more than one source.

The layperson may be misled into thinking a fully written business plan would only be a requirement if looking for outside finance. Whilst it is true a solid business plan would be a pre-requisite for any form of form debt or equity finance the value of having a quality business plan cannot be underestimated. Even for those self-funding, a viable and robust business plan is a sure way to keep focused and accountable which will ultimately lead to better business decision making.

Importance of a plan

An e-commerce business must have a very competent understanding of the cost and sales price of its products. Any e-commerce enterprise must also be aware of the costs associated with finding and converting any new customers and the required average spend needed in order to allow the company to breakeven.

Any serious company should look to invest in a proper, written business plan in order to maximise its potential. The graphic below shows a high proportion of e-commerce businesses have invested in a professionally written plan and all new ventures should look to do the same.

So what can we say about starting your own e-commerce business shop?

Pros

  • The sector is in a strong period of growth
  • Ventures can be started with minimal investment
  • Ongoing overheads can be low and businesses can be run with very limited staff

Cons

  • Important to be able to stand out from an increasingly crowded market
  • Takes time to build up a customer base and cash flow planning is therefore key

 

How you can succeed

The best way to get ahead of the competition and eliminate the biggest unknowns and risks when starting your own-commerce business is to invest in a high-quality business plan. The investment is invaluable. We at MyBizPlan provide the highest quality and yet lowest cost business plan in the UK, for a minimal outlay you can obtain a high-quality, visually stunning, financially robust business plan. It will give you a greater chance of seeking that vital finance and in the long run, could save you thousands.

 

If owning and running an e-commerce business sounds like the kind of business for you, get started with an E-commerce Business Plan from MyBizPlan. See which of our solutions is right for you by having a go at our – Do You Really Need a Business Plan Questionnaire?

 

Let us tell you when this blog is ready

An example business plan will be emailed to you shortly