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Sector Spotlight Websites

Sector Spotlight: Websites

An overview of business models, industry challenges, due diligence and what it takes to thrive in the 21st century’s defining industry

The coronavirus has completely changed the way that businesses are operating. While there has been a lot of turmoil. Many businesses are turning to e-commerce in order to propel them through this change in consumer spending.

Ecommerce as a sector is certainly becoming more and more valuable despite the dramatic shift that occurred during the pandemic, though. So, no matter the reason, it may be time to get familiar with eCommerce and find out whether it may be time to invest in a business in this sector.

Business models 

This is a great time to buy an online business in the UK. However, there’s also plenty of competition: with minimal barriers to entry, a large and growing number of websites are chasing a slice of the market. 

Rarely including premises or staff, websites are among the cheapest businesses to buy – costing as little as a few thousand or even hundreds of pounds. That said, older eCommerce stores may come with salaried staff, stock and established supply chains.

However, you don’t necessarily need space to store stock. When a customer buys an item you can instead order stock from a third party. Called dropshipping, this business model means that you, as the merchant, never actually have to handle or deliver products.

ecommerce

Yet there’s more to online commerce than selling physical products. Affiliate marketing websites, for instance, generate revenue through commission. Requiring neither stock nor (usually) staff, they are even cheaper and easier to run than eCommerce platforms.

You can also make money through content-driven websites. While content is unlikely to make you a millionaire, many shrewd entrepreneurs have set up blogs or online newspapers in underserved niches and generated strong revenues through website monetisation platforms like AdSense, Chitika or Total Media Group.

Websites can also be a vehicle for providing Software as a Service (SaaS). No longer running applications on their own computers and servers, businesses can, through SaaS, slash IT costs.

It can also be useful to add eCommerce capabilities to an already existing business by acquiring an online business that can add to your business. You will need to do your research carefully in order to find the right business but this is a way to get your business ready for the changes in consumer habits so that you can weather any storm.

Buying a UK website: who owns what?

When you buy a website, ownership rights – encompassing visual design, images and text content – will transfer to you.

A website created on an open-source platform like WordPress can be saved to your computer and uploaded to any web host company’s server to be visible on the internet.

Sites like Weebly or Wix, which offer ready-made website templates and solid backend support, are increasingly popular alternatives. However, they tie-in customers to monthly or annual subscriptions and users are committed to using their systems and hosting the website on their servers.

Ownership of the site’s domain name will also transfer to you. A contract with the domain registrar grants you ownership, much like a contract with a telephone company for a phone number.

The benefits

  • Much lower upfront and running costs than a brick-and-mortar business
  • Flexible hours means you can supplement your income from existing job or business and fit around childcare commitments
  • A niche website can be shaped around personal interests or hobbies
  • Online tools make it easy to automate workflows

Overcoming industry challenges

UK online sales have continued, however, the future is undoubtedly now less certain. If online retailers are able to keep going through the uncertainty that is being experienced with the dramatic drop in the markets due to the pandemic, then they will, most likely, see long term growth.

There is a shift in consumer lifestyle habits that will tend to see people stay at home more and more. eCommerce will be able to capitalise on this by offering consumers a way to spend money without leaving their home. 

“We are in uncertain times…We have seen a real spike during the last few weeks from companies wishing to create or update websites, launch new e-commerce channels and create social media campaigns focused on home-workers and a real focus on using influencers and SEO to reach new audiences.” Scott Jones, CEO of 123 Internet Group.

Ecommerce

Consumers are also spending more time online and this will perfectly place an online business to find customers where they are rather than trying to bring them to you.

Support

The government’s ‘Do More Online’ campaign was set up to help micro-businesses and sole traders sell their goods and services online.

You could also get support from industry associations IMRG (Interactive Media in Retail Group) and BritORA (British Online Retailing Association).

Elsewhere, self-styled online business development consultants offer free preliminary advice on web-based commerce in the hope of enticing you to pay for their expertise. 

Find a niche

If ready access to a national or global market offers rapid scalability, it also makes some retail categories extremely competitive. From books to jewellery, Amazon and other dotcom giants hoover up a huge proportion of traffic in many mainstream product areas. 

Picking a less competitive niche is an easier way to gain a foothold in a given market. SEO-wise, targeting long-tail terms like ‘buy 1950s retro furniture’ rather than ‘buy furniture’ is a more productive seam to mine for the smaller player. 

What it takes to develop a successful online business

Money helps, but is not a critical factor given the low price of entry into this market.

Running a website also arguably requires fewer sacrifices in terms of leisure time and family life. You can work from home and cut out the commute and work flexible hours to fit around childcare and other commitments.

Thanks to off-the-shelf website builders like Wix or WordPress, coding skills are not necessarily essential either.

However, some knowledge around SEO, social media and basic digital skills certainly will come in useful.

ecommerce

What really matters is a commitment to ongoing self-education and improvement. From mobile optimisation to marketing automation, new trends and innovations emerge with dizzying speed.

Your position on Google search results will make or break you and the rankings are in a perpetual state of flux. Sometimes you have to make progress just to stand still.

If that sounds overwhelming then help is available and it needn’t be expensive. Websites such as PeoplePerHour give you access to freelancers who can help with everything from SEO to web design, either for a fixed fee or an hourly rate.

Essential skills

  • Basic proficiency in IT/digital
  • Hunger to improve and stay up to date with fast-changing market
  • Comfortable with multitasking – you need to wear a lot of hats
  • Knowledge of online marketing and using social media (if only to verify the quality of outsourced work by freelancers)
  • Being happy to spend most of your time sitting in front of a computer

What to look for when buying a website

Conducting due diligence on a website is arguably much easier than on bricks-and-mortar premises. You needn’t travel anywhere to assess the business, there are few, if any, employees to consider and probably no physical property to inspect.

And you can gauge a website’s traffic, SEO rankings, usability and reputation using only Google and a plethora of (usually) free online tools and platforms.

Among other things you should look for: 

Healthy traffic from a mix of sources

Look at the website’s historic traffic, in terms of volume and source (direct or via search, paid, referral or social), and its SEO status using platforms like Moz, Google Keyword Planner SimilarWeb, SEMRush, QuantCast and Alexa.

Google’s frequent algorithmic changes are notorious for causing havoc with search rankings. While Google’s plans can only ever be guessed at, broadly speaking the search engine is becoming ever-more effective in rewarding sites that look good, are easy to navigate and give users what they want.

The best way to assess a website’s reputation among customers is via social media monitoring and sentiment analysis tools. There are too many useful tools to list here but here are 10 recommended by iProspect.com.

How long has the website been in existence? Waybackmachine is an intriguing archive comprising snapshots of millions of websites’ home pages at various junctures throughout their history. 

Financial health

As with any other business, you will want to see financial accounts to ascertain revenues and costs over the past 3-5 years.

Revenue trends . Is the business seasonal? If revenue is declining, what might it take to revive it?

Growth potential. Look for where you can add value to increase traffic and revenue with only modest investment. For instance, a pet-accessories website might be on page one of Google for the term ‘dog toys for sale’ but sell only a limited range of dog toys. Expand your product line in this area and it’s easy to see how revenues could rise rapidly.

Internet franchises

There are a lot of different types of franchises that fall under this category. Most franchises in this sector will allow you to work from home which is an appealing option to many people. If you don't have the experience, find a franchisor that will offer you training and support. Finding the right franchise for you will mean finding the right business model. 

There are many franchisees that have had great success through investing in a franchise. There are also options that will allow you to capitalise on the need that many businesses now have to increase their online visibility. This is the case that has been found by Eazi-Apps franchisees, for example. 

“I’ve been running the business now for 6 months. The technology is genuinely easy to use and I can build an app in a few hours. The training and marketing support has been fantastic. I have published 4 apps this month and get referrals most days. I really enjoy working from home and spending more time with my family.” – Simon. B, Eazi-Apps franchisee.

Working from home and online is particularly appealing since COVID19. Becoming a franchisee will give you the change to build a business with the backing of a well-known brand. 



Anthea Taylor

About the author

Anthea Taylor is Content Producer at Dynamis and writes for all titles in the Dynamis stable including BusinessesForSale.com, FranchiseSales.com and PropertySales.com as well as other industry publications.

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