E-Commerce Is Here To Stay
What is e-commerce? Simply put, it’s buying and selling goods and/or services online. It’s something many of us do daily and have come to take for granted: paying bills, making purchases, booking airline flights, scheduling appointments.It’s convenient due to its 24-hour availability, global reach and ease of customer service. In fact, 70% of shoppers research products online before making a purchase.
The start of e-commerce began in the 1960s with electronic data interchange (EDI) through value-added networks (VANs). Then in the mid-1990s, e-commerce was transformed with the introduction of Amazon and eBay.
Amazon started as a book shipping business, out of a garage, in 1995. Brick-and-mortar bookstores were limited to about 200,000 titles but Amazon, being an online only store, without physical limitations was able to offer substantially more products to the shopper. They were able to offer not only books but DVDs, CDs, computer software, video games, electronics, apparel, furniture, and toys.
Amazon provided the unique opportunity for a user to review their experience and rate their product. Customer reviews are now considered the most effective social media tactic for driving sales.
EBay, which enabled consumers to sell their goods online, introduced online auctions in 1995 and exploded with the 1997 Beanie Babies frenzy. Since that time, thousands of businesses have entered the online market each year. In 1995, there were 120,000 registered domain names and within 3 years that number grew to beyond 2 million. The most recent count is over 250 million names.
Initially there were many hesitations and concerns with online shopping—providing credit card information—but the development of a security provided a safe means to transmit data over the Internet.
The growing use of the Internet, tablet devices, and smart phones coupled with larger consumer confidence will see that e-commerce will continue to evolve and expand.
Mobile commerce (m-commerce) is gaining speed—more users are purchasing from the palm of their hand. The market for mobile payments is expected to quadruple by 2015, reaching over $630 billion in value. Social media (Facebook, Twitter, Pinterest) is also contributing to the growth. Conversation between businesses and consumers has become easier for transactions to happen online.
If you think e-commerce is a possibility for you, just like any type of business, you’ll need to have a strategy:
First, set goals. Know what you’re going to sell and define your niche. Some questions to ask yourself: do you plan to increase revenue from existing customers? Gain new customers? Sell through new channels? Lower or raise prices? Where do you see your business in five years? In 10 years? This will help you set business objectives for the current year, where you set objectives for sales, profits, customers, traffic, new systems, and new staff.
Once you’ve figured out your goals, the next step is to develop a business plan and do your market research. Assess your strengths and weaknesses, where do you excel, or falter? Evaluate all opportunities, but begin with one strength and once that’s perfected branch out. On the average, it takes about six years of hard work—day and night—to become a success.
Plan how you’ll be driving traffic to your site. There are over 3 million potential customers at any given time that are browsing past an online store. Provide a user-friendly website for your customers—one with speed and ease in mind. Performance of your website is critical. Every 2 seconds of load time on your marketplace is equal to an 8% abandonment rate. Make sure you’ve tested your product before wholly committing it online.
Get solid legal counsel. In addition to having a strong business strategy, it’s important to have a basic understanding of e-commerce law. There are different legal and financial considerations, especially with privacy, security, copyright, and taxation. The Federal Trade Commission (FTC) regulates most e-commerce activities, including the use of commercial emails, online advertising, and consumer privacy. Through any average day, businesses collect and retain personal information from their customers — information that is often sensitive. You are subject to federal and state privacy laws, depending on the type of data that you collect.
There are also online advertising laws that protect consumer privacy and ensure truthful marketing practices online. As an e-commerce business, online advertising is a major part of your strategy. Over the past decade, federal and state governments have passed new online advertising laws — it’s important to be familiar with these.
