Over the last decade, e-commerce has changed the face of the retail sector, helping companies to expand into new markets, engage more efficiently with customers, reduce costs and drive revenue growth. However, following a period of recession, many retailers can find themselves facing an uncertain future.
Under these conditions, e-commerce will continue to be an integral retail sales channel. However, if managed correctly, e-commerce can go much further and open up valuable new opportunities for growth.
To succeed now, it is not just a question of selling online, but taking a strategic view of your online presence to ensure it delivers the maximum possible value to your business. Thankfully, a new generation of e-commerce technologies, powered by Web 2.0 techniques, is now heralding a new era for both businesses and consumers alike.
It is fair to say that the Internet offers businesses an unprecedented opportunity to increase revenue, expand customer reach, drive loyalty and improve margins. In 2009, online merchants generated £49.8 billion in sales in the UK alone, with an online sales increase of 21% over the same period the previous year.
Yet the e-commerce world is constantly maturing and improving, with flaws and shortcomings being addressed, giving way to today’s second generation of software that meets the needs of even more businesses. These changes have resulted in the lowering of many barriers to entry, with the availability of on-demand models (hosted over the Internet) for e-commerce making participation easier and more cost-effective than ever before.
The key to making the most from your online presence is to have an understanding of potential risks, pitfalls and poor online practices, so that you can safeguard against them. Once these pitfalls are understood, your organisation will be in a stronger position to gain from its e-commerce offering.
Open up new markets and drive revenue
Offering an online sales channel can have an immediate impact on revenue. The mere act of ‘being online’ and enabling broader exposure to customers is a significant factor in itself. Geographical barriers are removed, making business opportunities exponentially bigger. Modern e-commerce technologies make it possible to sell in multiple languages and conduct transactions in multiple currencies, giving you the ability to expand into new markets instantly.
In contrast to ‘bricks and mortar’ operations, the cost of investment in e-commerce is much lower, particularly when businesses choose to take advantage of an on-demand model. Under this model, businesses don’t have to invest in the computer equipment, bandwidth or the staff needed to run it, and they share the economies of scale with other companies. With no need for a major up-front investment, companies that might have found the initial start-up costs prohibitive can start trading online much faster, without the need for capital expenditure.
Be easier to do business with
E-commerce makes it easier for your customers to do business with you 24/7 – particularly critical when you have customers in different time zones. Self-service capabilities make it possible for customers to browse or search for what they need, place orders based on a real time view of inventory availability, and check existing orders and track where they are in the fulfilment process.
Yet this need not take away the personal nature of doing business – helplines for additional support may well still be needed. But making online sales channels the first port of call for customers can drastically reduce the pressure on the human resources needed to sell either by phone or face to face.
Increase sales conversion rates
E-commerce today involves much more than offering an online catalogue and a shopping cart. The latest technologies provide excellent support for personalised and targeted marketing campaigns (to help find your customers), sophisticated merchandising techniques (to help drive revenue), and for the collection and analysis of data to fuel the continuous improvement of such processes (to create sustainability and drive growth).
The idea is to make the shopping process as simple as possible by using all this knowledge. If the process is easy, customers are less likely to get frustrated and abandon their shopping cart, meaning an upsurge in sales for the retailer.
Explore new business models
E-commerce provides businesses with a new model for generating revenue not previously possible due to the costs and challenges involved with setting up additional channels. Companies that typically sell through traditional wholesale/distributor networks now have the opportunity to sell through multiple channels, including directly to customers, and as a result take control of the customer relationship and increase profit margins by cutting out the middleman.
Be more responsive to changing market conditions
Selling online offers businesses the chance to respond more quickly to changes in market conditions or to tweak merchandising strategies based on sales performance businesses can easily add or remove products from their online catalogue, alter pricing, create promotions, and communicate these changes to customers quickly and easily – no more waiting for the next version of a printed brochure or catalogue.
Streamline your business
By automating the order process, businesses can streamline activities to reduce the number of human resources needed to carry out routine tasks, giving you more time to spend growing your business rather than simply just running it. Continuous feedback from e-commerce activities enables on-going performance and process improvement, helping businesses to streamline processes further and make them more effective.
Get more bang for your advertising buck
Although the Internet makes it much easier to access and communicate with customers, by making sure you reach potential customers at the moment they have a need, you’ll move one step closer to a qualified sale. With the Internet open for business to anyone, you must invest in ways of reaching your defined target audience. When searching for goods and services, many people will begin by visiting a search engine site. Placing ‘intelligent advertisements’ (based on defined keywords) on search engines such as Google can help attract customers who are actively searching for the types of products you offer.
Take advantage of e-commerce 2.0
The days of simple online catalogues and shopping carts are long gone. Today’s e-commerce technologies offer a far richer experience. The next generation of web technologies – often referred to as Web 2.0 – include a range of tools from basic photo and video sharing to blogs, podcasts, wikis and other social media utilities. From a marketing perspective, tools that enable the creation and dissemination of user-generated content offer the potential to help marketing messages spread like wildfire, harnessing the enthusiasm and energy of your customers.
Stay ahead of the competition
Even if you’re not doing it, you can be sure your competitors are! E-commerce is fast becoming a de facto part of being in business with the trend most in evidence for traditional retailers. And the market is growing – IMRG Capgemini forecast growth of 13% this year.
With all the benefits described above and the expected rise in the popularity of e-commerce sites, now is the time for retailers to cast a close look over their online offerings. Are you keeping track of sales that have not been converted and worked out why? Are you capitalising on each upsell opportunity that presents itself?
Are you as available to search engines and your customers as you need to be? If not, and your current site doesn’t have the capability to scale to your needs, it may be time to examine the new range of Internet-based offerings to see if there is a tool better suited to support your business and meet the ever-increasing expectations of your customers in the challenging months ahead.