Considerations for shipping and distribution
If you want to get rich from the growth of the Internet at minimum risk, then invest in a reliable carrier company. People who buy in a hurry expect the goods to be delivered in a hurry too. This is great for products like music and software, where delivery can be made electronically. It's harder when you have physical goods to be shipped to the customer.
Distribution is an area where bricks and mortar companies may have an edge. If you already have a warehouse and you already make mail-order sales, then you're better placed than a pure dotcom company, which only has a web site.
Manage customer expectations
In an e-store you need to make sure that customers know exactly what they're getting and when. Amazon tell you that a book 'normally ships in 2-3 days' so you aren't too upset if it takes four days. If you offer delivery in 24 hours, you need to be clear about any time cut-offs, such as 'orders received by 4pm normally ship the same day'.
No surprises for the customer
Make sure that you calculate shipping charges as part of the whole deal. You may need to charge by weight, by volume or by value of order. If you offer free shipping on orders over a certain value, make it clear whether that value includes VAT.
Living with back orders
Back orders are a fact of life if you accept fax or mail order, so expect them in Internet selling too. Only charge shipping once- it's irritating to be charged extra shipping when it's the merchant's fault that the item isn't in stock. Make it clear on the site how you'll deal with it. Allow the buyer the choice of waiting for a complete shipment or taking part-orders.
In a physical store, you can chat to the owner and look around. If you can see what you want on a shelf, you can be reasonably sure that it's in stock and in reasonable condition before you hand over your cash.
Give plenty of feedback
Placing an Internet order feels risky for the buyer. Make sure your buyers are told that you've received the order and keep them up-to-date on the progress of that order. If you have to make a back-order, let the buyer know when the rest of the order is expected.
Pick a reliable carrier
There are lots of carriers and they compete heavily. Value reliability over price. A lost buyer will probably cost you more than the difference in shipping cost. Pick a carrier who can track goods online. Give the tracking reference to your customer as part of the order processing feedback. Monitor the performance of your carriers.
Be clear about returns and guarantees
Sadly, some of your sales will come back to you. Some may be your fault, but others may be beyond your control. Publish your returns policy and include it as part of the ordering process at your site. Work out who pays for return carriage -if it's you, then make sure your carrier can collect.
Say what you mean and mean what you say
Don't over-promise. Repeat customers are much more valuable than one-offs. Make it clear when you'll deliver and then stick to it - even if it costs you more. Customers appreciate merchants who go out of their way to meet their commitments.
You need to be clear with your customers about what you offer and then live by it. If you outsource, be aware that you can't outsource, responsibility. Buyers don't care why you've failed or whose fault it is - all they care about is getting what they've bought.
There are extra considerations when exporting. Who's responsible for any duty or taxes on the goods, for example? A new EU Directive is setting out a legal framework for shipping within the EU. Most large carriers can collect duty on goods when they arrive but you need to be sure who's going to pick up the tab.
Will your customer be in when it arrives?
Customers usually have to go to work, so there may be problems in receiving your goods. Many companies are experimenting with deliveries to workplaces or to known drop-off points like petrol service stations. If you can offer this, make sure that you can deal with goods that 'go missing' en-route.
Can you outsource it all?
Outsourcing fulfilment can be attractive -letting a warehousing company store and ship the goods. Make sure that it's clear who bears the risk of stock in the warehouse, both for fire and theft. If the warehouse contents vanish, who's left with the bill? If rats nibble your CDs, who pays? Check you're properly insured if it's your risk. Insure it anyway if it's theirs - who knows if they've paid their premiums? Check on their performance -it's your reputation at stake.