The web gives greater reach and a level playing field. It is faster, easier and less expensive to create or extend a website than it can ever be to occupy a property and hire staff. The web can cut out the middle man, improve cash flow by insisting on cash with order, and more importantly reduce transaction costs. The most likely bottleneck will not be selling or cash flow, but rather fulfilment and distribution where, inevitably, human resources are needed to pick, pack, ship or install.
B2C (Business to consumer)
This is where you advertise at a standard (or special offer) retail price, and if you are prudent, you require full payment prior to shipping the goods. Most web shops insist on full payment before accepting the order.
Payment can be accepted by cheque or BACS transfer, or credit card details can be down loaded to the shop and put manually through a PDQ machine.
In all these examples the customer can’t be sure their order is accepted at the time it is placed.
The real benefit of a web shop is seen when the web automatically applies for authorisation of a credit card, while the customer is still online.
It takes seconds and in this scenario, if the card is authorised the customer knows that his order is accepted and the goods should be on their way.
There need be no interaction between your staff and the customer – the sale is entirely automatic. This leaves the shop extra time to provide a good fulfilment service, and more time for new marketing and customer loyalty initiatives.
If you cannot incorporate the cost of shipping in your displayed price then it is essential that your web site can calculate (or assist the customer to accurately calculate) the shipping charge to be added to the total before VAT.
When selling to consumers you have to consider VAT. If you are sure all your potential customers will be resident in the UK then you can price all of your goods inclusive of VAT. If you anticipate some of your customers will come from overseas then you have to cater for them.
B2B (Business to business)
If you are selling to non-account customers, then business to business is no different to consumer selling, in which case all of the points above apply. If you are selling to account customers then different issues are raised.
Your site must be able to recognise each individual customer when they arrive on your site, and validate them against a secure password or similar.
A good website will warn your customer if they are over their credit limit or on stop. Every business has different procedures for these occurrences, and your site will need to be able to give specific advice and messages that are under your control.
If they benefit from special pricing, it is imperative your customers see their price structures as opposed to any generic prices offered to casual visitors or consumers.
You may have negotiated special delivery charges with each customer.
The web site must add the correct charges to the total order.
If you deal with customers in a foreign currency then you should display their special prices in the currency they expect. VAT
It is likely that you will display your prices without VAT and then add it at the bottom of the order. In this event your web site has to be clever enough to charge the right percentage on each detail line of the order.
It is useful if your customers can look up a current statement of their account and the progress of any orders they have placed but not yet received.
This saves countless phone calls for your busy staff.
Buying on the web
An increasing number of large customers – most national or international organisations with considerable buying power – are requesting and then demanding their suppliers to submit purchase invoices electronically. Many of them introduced EDI into their business some years ago, but found the costs of EDI to their smaller suppliers prevented the supplier subscribing to such a system even if it put their business at risk.
Business to business
The internet makes it very possible to set up a system for electronic submission of purchase invoices using little more than a standard browser.
This is ideal for low volume suppliers who will gladly sacrifice the time spent keying invoice details into a browser on-line for the high cost of setting up an EDI system.
These simple online systems can be easily enhanced with low cost software, so that larger numbers of invoices are keyed in off-line and then submitted to the Internet in a batch.
Even this process can be automated by printing sales invoices directly out of standard accounts packages, so that they are submitted to the internet automatically.
Whichever level of solution is selected by the supplier, the customer has the benefit of receiving invoices directly into their purchase invoice register, without having to key them, so saving time and eliminating keyboard error.
- From ‘E-commerce Made Simple’ guide from Access Accounting.
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