Pros & Cons of E-Commerce

Riding the information highway is a bit like riding a bike or driving a car. You can get somewhere quicker and easier than you could if you just walked, but there are risks that come with the associated speed and convenience that you need to take into account.

Some of the Pros...

eCommerce is fast! If you are connected to a broadband cable network then there are few things faster in this world than the access that you can get to a world of information and industry. A click of a button and a few flashes of light across your screen and your there! Compare that to the hours of commuting, parking, walking, browsing, negotiating, signing, paying and returning home that regular commerce entails and there is just no comparison.

I hardly shop at regular stores anymore because the convenience of shopping at home FAR outweighs the hassle of going store to store at the mall or supermarket for most things and I don't mind waiting for delivery. If I am organised then except for the few things that a I need RIGHT NOW (or in the next 10min - 2hr, depending on the commuting, parking etc etc involved in making an emergency trip to a store) I can get something online in a few minutes and have it delivered next day in 95% of cases.

eCommerce is safe! The fears that many people continue to harbour in regards to the security of their information are unfounded in the majority of cases.

Yes, if you want to buy something from a site promising something for nothing and the language of the contract or sales letter is written in less than perfect english or is rife with spelling mistakes or vague details then you are asking for trouble - and you can't blame problems that come from this sort of activity on eCommerce just as you wouldn't blame the retail industry for problems that you encounter if you buy something from someone at bar!

If you are running firewall software and you have a clean system and shop on reputable sites then saving for the most unfortunate of cases you and your information is just as safe as if you had bought something from a bricks and mortar store.

eCommerce is cheap! Common sense says that someone who is operating a website with hundreds and thousands of customers across the world will be able to sell for less than someone who has less customers and higher rental and utiltiy expenses from operating a physical premises. Take eBay for example - there are millions of sellers selling millions of products that they sell from the comfort of their homes or small business premises and they sell for about 50% of the price of the big department stores with their huge buying power simply because their overheads are next to $0!

Sure, you will pay the same for an Ipod shopping from Apple's website as you would from Apple's Stores, but they are not exactly about to undercut themselves when they are making heaps of money as it is. There is plenty of competition in cyberspace to keep price at ground level.

eCommerce is global! Where else do you get retailers in Australia competing with small businesses in America and individuals in Japan all in the same industry and over the same products and services. And how else could the average person expect to be able to get access to goods and services from anywhere other than their immediate locality if not for eCommerce! It is the wonder of the modern age and a blessing for businesses and consumers the world over.

Some of the cons...

eCommerce is constantly changing! As I mentioned above there are many traps for people who don't take the time to negotiate the fraudsters that are prevalent in cyberspace. The old saying that 'a sucker is born every minute' has particular meaning in eCommerce because all of the old suckers who had been sucked into every trap and scap in the real world were immediately exposed to the same scams again online when they ventured online for the first time.

As with anything new there is a need for people to get themselves educated and sadly education is one of the biggest small parts of people's lives (though hopefully some of these articles with help with that in some cases). Don't think that just because something exists then it is safe. Learn about the internet and stay with the proven safe roads before going for the road less travelled by and that will make all the difference.

eCommerce is competitive! As with anything where there is the potential for profit and the necessity of competition there is a lot of sharp practice online just as there is in the real world. Advertising, with the same subliminal and blatant enticements is just as prevalent online as it is in the real world and people are getting sucked into spending more than they can afford because access to payment by credit card and buy-now-pay-later schemes are everywhere.

eCommerce should be seen as a blessing to be able to take some of the hassle out of real world business and strict planning and budgeting should be invested in shopping and doing business online just as it has to be done in the real world to avoid defeat.

Personally I don't think that there are many cons in the world of eCommerce - only the same cons that exist in any business or commercial environment - buyer beware - look before you leap - there are a lot of principles that apply in real life that need to be taken online but are left at the login page for some reason. eCommerce is not a computer game where you can just restart if you didn't like the score that you got. Take is seriously and you will only reap the benefits!

See Also : Buy SHOES Now and Pay Later my blog magic

E-Commerce is Dead

Let me rephrase this, e-commerce is dead for companies that don't have a unique product. So if you're not an Amazon or an Overstock, and you're trying to sell a tangible product than anyone can sell, forget it. That game is over.

Roughly seven or eight years ago, you had a chance. Around the fall of 2003, a good friend of mine and I embarked on an effort to get into the e-commerce drop shipping market.

The Plan

Our plan was to launch a series of e-commerce drop-ship websites in repetition. Our goal was not to have one "home run" website (although that would be nice), but to make a few thousand dollars off of each website and build dozens that could be easily managed by a handful of people.

We thought that using search engine optimization (SEO) techniques (basically a method that would place us on page one of search engines) and entering very tight product verticals would be an excellent strategy.

My friend and I both had years of experience developing sophisticated software, primarily for wall street firms, and so we figured that we could build a superb e-commerce engine that would meet our needs.

It took us about three months to complete the initial release of the engine. We chose Java as the language to build both the front-end (using Servlets) and back-end of the system. The choice of Java turned out to be a mistake and we had to make a shift to PHP, but I'll explain this in a later blog post.

The Launch

We launched the first website in early 2004. On this site we sold hundreds of knives for outdoor use; hunting, fishing, tactical and recreational. We found one primary distributor that would ship the product for us under our name. We were totally hands off, except for the sale and customer service. This is exactly what we wanted.

We hired a search engine optimization company in California, and they basically educated us on the process of SEO. We incorporated the website SEO techniques into our e-commerce engine so that we could quickly launch other websites and the on-page optimization techniques would come for free.

To drive traffic to our outdoor knife website, while we waited for the SEO process to kick in, we employed Google AdWords. This was expensive, but it worked in driving sales, albeit at a break-even price point.

A Troubling Vertical

We didn't want to stop with the knife business, so immediately went to work on a new site in the wrist watch business, which we later found out was much more competitive than the outdoor knife business. We again employed Google AdWords to drive traffic, but this time, we didn't see any sales at all.

This was troubling and we later determined that there was heavy price competition in this vertical. Sometimes competitive prices were even lower than what we would pay our drop-ship distributor. After about 6 weeks, we shutdown the watch website.

Perhaps the product vertical was really important. This was puzzling. Remember in 2004, many of the larger players (Amazon, Overstock, etc) were not as prominent as they are today. The nimble vertical players seemed to be doing well.

Growth

Conversely, in our outdoor knife business, we started to see more traffic and more sales. Our organic search engine rankings started to jump to page one and at one point we were actually #1 on Google for the keyword "knives". Sales increased to where we were doing mid five digit numbers per month. This continued through 2005 and 2006. Profitability was also very good.

We started another outdoor knife site, carrying many of the same products but focusing on the niche of "pocket knives". This further increased sales. We did make an SEO related mistake with this website however. I don't want to get into too much technical detail, but we hosted the new website on the same IP sub-domain as the existing outdoor knife site. Google didn't like this and would not rank the new website. Yahoo and MSN didn't care though. Lesson learned.

Amazon Momentum

Then something started to happen in 2007. The economy was doing very well at this time but sales started to decline. Our search engine rankings were pretty much the same and in some cases even better than they were the previous year. The problem was competitive.

There were now a few drop-ship distributors in the outdoor knife space and there were many new websites popping up in our industry. Prices were falling, shopping sites were becoming popular (NexTag, Google Marketplace, etc) and Amazon was starting to dominate a large portion of e-commerce. Competitors were driving profits to a near zero level.

Amazon was gaining momentum with its Amazon Marketplace program. Using Amazon Marketplace, any person or business with an item to sell can offer that item directly to Amazon customers alongside the same item offered by Amazon or other Amazon Marketplace participants.

Amazon Marketplace partner companies now had the ability to create data feeds to Amazon and do a daily push of all of their products to the Amazon website.

This created a problem for small e-commerce companies. Would a customer buy a commodity product, like a knife, from a niche website? Or would they prefer to buy from Amazon, often at a lower cost. I think the latter, except for only the most loyal of customers.

There could have been something else happening here as well. What's to prevent a drop-ship distributor from placing their entire product line on Amazon via the Amazon Marketplace program? All they need to do is work under a different name. The online retailer network would never know and couldn't really do much if they did.

All of this is problematic for the niche e-commerce player. Sure, Amazon won't penetrate every market, but they are making inroads in quite a few, especially products that are largely commodities.

Product Uniqueness

What I take away from this experience is that if you want to sell something online, you have a tremendous advantage if your product is unique. Meaning you are the only provider, you manufacture the product or have it manufactured, and you control distribution.

When this happens, you become much more powerful and not a pawn in the e-commerce system. You can sell product on your own website, upload product to Amazon and control your distribution and your own destiny.

Tags : Buy SHOES Now and Pay Later my blog magic

Starting An E-Commerce Business

The development and expansion of the Internet has made business opportunities, once only available to the wealthy, available to nearly everyone. In the past, opening a business was a huge commitment in terms of finances and risk. Traditional business owners had to quit the their current jobs, obtain bank financing, and sign leases before they even made a penny. It's easy to see why 95% of them failed within five years. Today, business opportunities are available to anyone willing to put in the time and effort to learn about the world of e-commerce. Best of all, you can start an e-commerce business with minimal funds and very little risk. This guide will take you though the steps necessary to start your own e-commerce business.

Find Your Niche

The first step to creating your own e-commerce business is to find you niche. Examine your hobbies and interests for potential business ideas. If you love soccer, consider selling soccer supplies or team uniforms online. You may also consider opening a business that is similar to your current job. For example, as a nurse you may know a lot about medical supplies and how hospitals obtain them. You could start a medical supply business. Your contacts and industry knowledge could give you an advantage over a competitor who does not know the inner-workings of hospitals the way you do.

Research The Demand

Now that you have a few business ideas, it's time to research the demand for your products or services. If you plan to sell to the general public, you'll want to find out how many people are looking for your products or services. As a small business owner, you will not have the marketing funds to create a demand for a product. The products you sell, must already be in demand. A great way to determine product demand is to see how many people are searching for a specific product. Overture has a wonderful keyword tool (http://inventory.overture.com/d/searchinventory/suggestion/) that displays the number of searches for specific keywords. It will give you a good idea of which products are popular and the specific keywords you should target when building your website.

Scope Out Your Soon-To-Be Competitors

Before settling on a business idea, scope out your would-be competitors. Visit their websites and compare the following:

· Professional Look & Feel

· Products and Services

· Search Engine Ranking

· Page Rank (Available on the Google Tool Bar)

· Keywords

· Back Links (how many sites link to them).

You'll need to know your competitor's websites inside and out. Spend some time exploring each one. This will give you an idea of what you're up against. Keep in mind, that your website will need to be equally as professional or better than theirs. Don't worry if you don't think you have the technical skills necessary to create a professional website. The use of professional website templates will be explained later.

While you're researching your competitors, check to see if the products you intend to sell are sold at large department stores such as Wal-Mart, Target, and Amazon.com. It is very difficult for a small business to compete with these large companies because the profit margins are extremely low. You'll need to sell products that are in demand, but aren't sold by corporate giants.

Establish A Business Entity

In order to conduct business, you need to establish a business entity. Fortunately this can be as easy as filing a "Doing Business As" or "Fictitious Name" form with your local County Clerk's office to become a sole proprietor. When you arrive at the County Clerk's office, they will check their records to make sure your intended business name is not already in use. If it's available, you will need to complete the appropriate forms and pay your filing fee. Each state has different requirements. Check with your state for requirements on becoming a sole proprietor.

You will also need a sales tax id. You will need to charge sales taxes in the state where your business resides. Contact your county office for details about sales tax ID's and any other requirements they may have.

Open A Business Bank Account

Now that you are a legitimate business owner, it's time to open a business bank account. Take your court documents to the bank and open a business checking account. Most banks offer a variety of business accounts. Choose the one the best meets your needs. It's usually best to start with their least expensive account because it could be a while before you start earning revenue. You can always upgrade in the future.

Some banks require a business owner to wait specified amount of time, usually 90 days, after the court documents are filed before opening a business bank account. These rules are in place to help prevent fraud. Check with your bank to obtain waiting period information.

Choose A Domain Name

While you wait to open a bank account, you can start building your website. First, register a domain name. Names that end in ".com" are best. If possible your, domain name should include one or more of your target keywords. For example, if you are creating a yoga supply business, you'll want to choose a name with the word yoga, such as yogacenter.com, yoga-supply.com, or yogastuff.com.

Create Your Website

One of the keys to successful e-commerce businesses is a professional website. Your website is the first and often the only impression your visitors will have of your business. A professional website can be the difference between your visitors viewing you as a home-based business operating out of your garage and a multi-million dollar business with hundreds of employees. Fortunately, you don't need to be a web programmer to create a professional website. There are companies that sell professional website templates. You can get website templates for free, but it's much better to pay for a highly professional template. To find these templates, simply search for "website templates". You should expect to pay $50 - $150 for a good template with multiple pages and professional images.

Most website templates can be customized with common HTML editors and a simple graphics program. Templates can be edited without having to invest a lot of time and energy into learning how to code web pages.

You'll want your website content to target specific keywords. This can be achieved by creating articles, product reviews, product comparisons and detailed description of your products. Avoid repeating the keywords so often that the text becomes difficult to read. There is a fine line between good copy text and spam text. Spam text is designed to increase your site's listing in the search engines, but often backfires when penalties are issued and your website is dropped from the listing.

Host Your Website

Now that your website has been created, it's time to find a company to host your website on their servers. You should be able to find a good hosting company for around $10 per month. This fee should include technical support and email accounts with your domain name. Domain name-specific email accounts are important for a professional image.

Your website files can be uploaded with a simple FTP program. The hosting company's technical support personnel can walk you through the steps to upload your files and launch your website.

Implement A Shopping Cart

No e-commerce website is complete without a secure shopping cart. There are many shopping cart options. Many e-commerce business owners make the mistake of using Pay Pal to accept payments, which immediately tells visitors that their company is very small and not professional.

A good alternative to Pay Pal is a remotely hosted shopping cart. Remote shopping carts take the burden of maintaining security and credit card numbers off your shoulder and places the responsibility on another company. Remote shopping carts can usually be configured to look similar to your website. In fact, your customers may not realize that they have left your website to place an order. The remote shopping cart provider will give you the HTML to add to your website. When your potential customer clicks on the Buy Now button, he or she is taken to the remote shopping cart to enter the personal information and payment details.

Depending on your choice of a shopping cart, you may or may not need a merchant account to process transactions. Some shopping cart services allow you to use their merchant accounts for a slightly higher fee.

Stock Your Inventory

Now that your website has been created, it's time to stock your inventory. The first step is to find the manufacturers of the products you wish to sell. You can find this information by reviewing your competitor's websites. Some of them may list the manufacturer with the product name or description. Once you have the name, you can search for the manufacturer online.

Contact the manufacturer and tell them that you are interested in becoming a distributor. Ask for a wholesale price list and an application. The price list will help you determine if the profit margins are high enough to justify selling their product.

You'll want to ask the manufacturer the following questions:

· What is the MSRP (Manufacturer Suggested Retail Price) for the item?

· Am I required to sell the item at MSRP?

· What is your minimum order quantity/amount?

Some manufacturers will not sell to e-commerce businesses that do not have a brick and mortar retail location. If this is the case, you'll simply have to find a company that manufactures a similar product and is willing to sell to an e-commerce business.

Promote Your Business

Now that your website is live and you're open for business, it's time to promote your website. If no one knows that it exists, you will not receive any sales. Most website visitors originate from search engines. Before search engines can list your website, they have to know that it exists. You'll need to submit your website to search engines and directories such as Yahoo!, DMOZ, Excite, and others. Search engine submission programs and services are available, but they not effective. Most good search engines require websites to be manually submitted. They enforce this by displaying an image with a series of letters or numbers that automated programs cannot read. The code embedded in the image is required to submit your website.

Search engine algorithms are extremely complex. The ranking of a website in their search results depends on a number of factors, including keywords, density, back links, page rank, and other factors. After submitting your website to the major directories and search engines, the next step is to establish back links. When search engines crawl the web and find a link to your site, they count the link as a vote for your site. The more votes you have, the higher your site will rank (assuming other criteria has also been met). You can acquire back links by sending emails to other website owners and offering to exchange links. It's very difficult for new websites to acquire back links. Most people prefer to exchange links with established websites. In a way, it's a catch-22, but it can be done and the results are worth it.

Starting your own e-commerce business is a lot of work. Making it successful is even more work, but the pay-offs can be rewarding. Thanks to the explosion of the Internet age, e-commerce business opportunities are now available to anyone with a computer, a few hundred dollars for start-up costs, some spare time and the desire to create a business.

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