There are anywhere between 12 to 24 million online shops in the world. This single piece of data is enough to confirm the relevance of digital as an important sales channel to businesses. However, the same study shows a dire reality: 80% of those online businesses close down.
That scenario creates a wide array of insecurities for an entrepreneur looking to go digital and explore e-commerce. But even considering the uncertainty, having an online presence can make a difference even when there are no funds to invest in other areas of the business. Gains might come from optimizing the sales process, improving reach and conversion and even the sales average ticket price.
Optimizing the sales process
Optimizing the sales process involves two different situations: clients who are used to consuming your products in a brick and mortar scenario, and those who prefer to negotiate online, through channels such as WhatsApp.
For those who prefer to visit a location to purchase, having the products listed online can still be useful. The customer can browse your selection, make choices and the purchase will be completed quicker and more efficiently when they visit the store to do so. Any questions they may have regarding the product might also be answered with the information you list online, contributing to a more pleasant customer experience.
The sales through WhatsApp might be hasty: those who are used to selling through the app understand the effort that is put into it. Customers expect prompt and immediate response regarding the items they are looking for, which includes sending photos and explanation through text or audio clips. There can be a lot of back and forth until the purchase is made.
Having an online store with your products correctly categorized is the best way to shorten the interaction with your customers in those scenarios: being able to browse on their own, they will then contact the store only to buy or to ask for information that was not available online. Not having to spend so much time on WhatsApp with customers allows you and your team to focus on other initiatives to increase revenue.
Revenue increase
Before we dive into it, let’s discuss a simple equation that might change the way you look at the sales process:
Revenue = Reach X Conversion X Average Ticket
Here are some numbers to illustrate it:
- Reach: 500 people see your product offers every month (whether at the store or through WhatsApp)
- Conversion: 20% of those reached make a purchase
- Average Ticket: $50
Revenue = 500 people X 0.2 conversion (20%) X$50
Revenue= $5,000
Following that same thought process, when you advertise your products or services online to a broader audience, you increase your revenue.
Reach increases because sharing a link to your website with your network is as easy as clicking a couple of buttons; and conversion tends to increase because having the products categorized properly and organized simplify the purchase process.
The average ticket tends to reach a higher value also, considering that when the customer is exposed to all your inventory they are likely to purchase more than one. It is also easier for the business to create incentives for other items to be bought.
Considering smaller changes in the previous scenario, here is another calculation:
- Reach: 600 people (whether at the store or through WhatsApp)
- Conversion: 25% of those reached make a purchase
- Average Ticket: $70
Revenue: 600 X 0.25 X $70 = $10,500.00 (more than double the previous scenario)
In conclusion: take your business online and do not miss any opportunities!
With this information presented, you can now run an analysis of your business. If you are confident having an online store will be beneficial to your business, increase your reach, conversion and even your average ticket, the clear diagnosis is that you are leaving money on the table by not being online.
Now that you are well aware of it, you might worry that setting up an online store is troublesome and expensive. But it is way simpler than that: Olist Shops is a free online store platform that allows you to set up yours in under 5 minutes. Click here to learn more!
