- Consider the competition online and how it relates to e-commerce.
- Consider previous models which have not work. (Real Life models don't always transition well to e-commerce)
- Testing your chances of success before launching.
- and Lock-Ins.
Before you engage in any business model online when you're doing e-commerce you should consider the competition online. One aspect of e-commerce is that most people don't realize that businesses have been established online for many years now, and getting into the business today you may be playing catch up. For example, Image you are trying to open a new store in your neighborhood, but have a competitor who has been in that neighborhood for year? how will you get those customers to come to your store, when they have been going to your competitor store for years? You may consider offering the same products at a lower price, or market your new store as offering better products but it will take sometime for existing customers to realize you are also a merchant offering the service. This is what happens in e-commerce. A website that has been around for years, lets think back to 1990 has a higher presence on the internet than your spanking brand new website. One thing that most new e-commerce sites take into account is the previous competition that exist already online offering a similar product.
A common idea amongst individuals is that an eCommerce website can have the potential to sell more than a traditional mortar and brick location. This miss-conception comes from that fact that the internet creates efficiencies online, ie. makes it so much easier to sell online with just "1-click" buying, for example does for Amazon.com. The idea as explained by Raffi Amit, co-director of the Wharton e-Business Initiative (WeBI), and INSEAD’s Christoph Zott. is that the internet creates efficiencies online, in which they argue the key element for e-commerce. While in certain situations efficiencies are created when it comes to e-commerce some business models are not so successful no matter how efficient it may seem. Take for example the website Wevan, a model that tried to succeed on the idea that individuals would buy groceries online. According to Joanna Glasne The Website Was Very Optimistic That Indivudals Would Essentially Ditch Their Traditional Ways In Favor Of An Online Model. I Have To Agree With Her That In This Particular Case Wevan Was Wrong On People's Choices When It Came To Food. I Mean When You're Hungry You Want Food Right Away And Not Have To Wait 24/Hr For A Particular Delivery.
E-commerce not only relies on technology for it to be successful, but it also needs a solid business plan to support its operations and flow of income. While all ideas are great, not all ideas have a good solid understanding of how to proceed beyond the initial year or launch. E-commerce is just like any other business and it requires a good foundation for the business to sustain, and sometimes you may need to test the idea before committing to the full project. You probably have seen the word "Beta" around lately, and how companies want you to test their products and services before they officially are in for "business", well e-commerce is the same way. As I have stated previously, not all models will adapt well to the online business, you may consider running a "beta" or a test of your particular e-commerce idea online before committing fully to the concept. Most companies use this practice and there is no better example of this than Google, who has lots of products in their "labs". What I believe Google, is doing is basically testing the water to determine if a particular product has a chance to succeed in the market or not. You can consider your online retail store a lab and test the water to determine if consumers are willing to buy or interact with your particular store or product. You can measure the interest in a particular product or service and determine if your investment or other individuals investment is worth the time or money before proceeding. There are tons of free product that will allow you to run any e-commerce website at no cost, take for example Magento which is a robust e-commerce solution for no cost, which allows you sell any number of products online, so before you consider a full model online consider running a light version of your store or beta website.
Another point of view is Lock-In's - as Amit and Zott argue the point that repeat business and keep the customer happy and returning. A prime example of this and how it worked for a giant e-commerce site was zapoos.com. The site was big on Search Engine Marketing (SEM) and then made efforts to keep customers happy once they shopped through their store. According to Nisan Gabbay, Zappo's success was also attributed to their 17,000 affiliates who helped drive traffic to the website. I would agree that what Zappos did was key in making their model work, after all they were selling a product that most of us would have to try in a store to determine our satisfaction with a particular shoe. Zappo, was later aquired by Amazon.com in 2009 for nearly $900 Million dollars. You can view their recent ads and how they are so focus on customer satisfaction below. Remember the key to this company success was to keep customers happy so they would return and purchase another pair of shoes.
Another point of view is Lock-In's - as Amit and Zott argue the point that repeat business and keep the customer happy and returning. A prime example of this and how it worked for a giant e-commerce site was zapoos.com. The site was big on Search Engine Marketing (SEM) and then made efforts to keep customers happy once they shopped through their store. According to Nisan Gabbay, Zappo's success was also attributed to their 17,000 affiliates who helped drive traffic to the website. I would agree that what Zappos did was key in making their model work, after all they were selling a product that most of us would have to try in a store to determine our satisfaction with a particular shoe. Zappo, was later aquired by Amazon.com in 2009 for nearly $900 Million dollars. You can view their recent ads and how they are so focus on customer satisfaction below. Remember the key to this company success was to keep customers happy so they would return and purchase another pair of shoes.
Remember, before considering an online e-business model you should consider the factors of your existing competion to determine if your model already exist or how you will find your niche online. Another key point to remember is that not all models will succeed online take for example Wevan, who gambled on that consumers would buy in groceries online. Next you may want to test your e-commerce website online by using free services to determine if your idea is viable online. Finally, consider Lock In's, as proposed by Amit and Zott which argue that you should have repeated transaction from existing customer, keep them coming back to your website to do more business as the case for Zappo's who use Search Engine Marketing and Customer service to bring them back to the store to purchase.
