Understanding e-commerce

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Electronic commerce or e-commerce as it is commonly known is the industry of buying and selling of products and services online. As consumer-buying behavior changes with communities moving online, the question on the minds of many traditional retailers, entrepreneurs, and business owners, is whether their businesses and products and service offerings are suited for online sales. For small businesses, growth is often achieved through the identification of new markets and the acquisition of new customers. E-commerce is an excellent opportunity for companies to extend their sales reach to a world of new customers in a way that was once unimaginable. Selling your goods online can also be considered a great equalizer, because of its ability to level the playing field against larger competitors.

Although the benefits of e-commerce include a large number of potentials customers and lower company infrastructure costs, many small business owners are hesitant to start selling on the Internet due to a lack of understanding of the landscape and resulting concerns about cost, security, and technology. Here are a few questions to serve as guidelines for success:Is your product easy to understand for your online customers? Remember, shoppers will not be able to touch or try your product. Provide detailed product descriptions and images to increase your sales

Can you sell the product at an acceptable profit margin once you factor in the time and expense of packaging and delivery? If you sell low-ticket items, you may need to sell in bulk to increase profits. If you sell perishable items, you will need fast delivery and adequate packaging. Do you sell a service that can be delivered effectively via email? Many information or service suppliers have made seamless transitions to the Internet, for example, converting magazines to digital editions. Does your product appeal to customers outside of your geographic area, or will selling online enhance your service to your existing customers? For example, if you’re selling tickets to a local sporting event, someone who’s several thousand miles away probably isn’t going to be interested. However, that doesn’t mean your neighbors won’t appreciate the added convenience.

Has your business switched to e-commerce?

 

Post By: SimplyBiz

 

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44 comments
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  • Andrew Smith
    This is an excellent video about focusing on customer experience:https://www.youtube.com/watch?v=Xe3lFuk5nxo
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  • Andrew Smith
    A mobile strategy is crucial particularly in South Africa where mobile penetration and use is one of the highest in the world. However the conversion rate (the percentage of “browsers” who checkout and become “customers”) is much lower on mobile than on desktop. When you’re browsing on your phone when standing in the queue at the supermarket or waiting for a taxi you are much less likely to start entering credit card details and a delivery address. Companies need to find ways to capture some details of those casual mobile browsers in order to follow up later through other channels more conducive to transactions.
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  • Andrew Smith
    Some context is usually needed when looking at these reported numbers. Some of them include travel and ticket bookings some consider internet banking and buying airtime as an online transaction and others only refer to physical products purchased online. My understanding is that physical products purchased online is still under R10bn a year and the percentage of adults who have shopped in this way would be much lower.
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  • Jan Askew
    Such an important point. I think the biggest barrier to purchase online is the fear of fraud. Just this week my credit card was compromised online. It is vital that the retailer invests in quality and reputable payment gateways and that we offer a variety of payment options to increase the customer's comfort level. It's also very important to ensure that we keep abreast of legislation such as the Protection of Personal Information Act which places a strict confidentiality onus on companies to protect customer's personal information.
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  • Andrew Smith
    Creating video is now also very accessible for retailers and can often tell a story better than many words and pictures.
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  • Andrew Smith
    @TheTastyChef I'm not actually suggesting that you add delivery charges to the price of the product. My point was more that a R100 product sold in a physical store has to have 10% to 20% allocated to cover rent and therefore the same product sold online for R100 should have some margin available for delivery without increasing the cost or charging delivery every time. It's hard to give an exact percentage for delivery because it's usually dependent on basket size. All courier companies have a basic fixed cost (R40 to R80?) and then charge extra for bigger size and weight. If you are selling cheaper items in small baskets then that basic delivery charge will be a bigger percentage. That is why many stores charge for delivery under a certain basket value to incentivise customers to make a bigger checkout.
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  • Andrew Smith
    Agreed but let's not single out online retailers. There are many horror stories of bad apples in resturants and shops who skim your credit card details. And of course the simple risk of your wallet being stolen and your credit card or personal information being used online even internationally. Fraud and confidentiality is a reality for every business and every type of retailer.
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  • Jan Askew
    You're so right! Being a bit of a dinasuar myself - You tube isn't instinctive for me but for the next generation You Tube it is becoming a verb like Google it. It allows for high impact communication & it doesn't have to break the bank.
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  • Jan Askew
    ShaunAnderson we use a very basic & slighly passive chat that is message based. (Cost & personnel decision) It pops up when the customer is on a page for a few seconds. It's there but not obtrusive. Given that we are a very small company we cnnot be available 24/7 but it tells the customer when we are live & ensures them of our assistance.
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  • Jan Askew
    @andewctn thanks - I will definitely have a look at that!
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  • Jan Askew
    We made many mistakes - some of them quite expensive when we started up our online shop. I think one of the things I learned was that we spent too much time & money on the design of the shop as opposed to the actual functionality. We should have approached it from what does our customer expect & want & then tried to provide that experience.
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  • Sarah Murray
    So if we were to build in the delivery costs what percentage would you build in to be safe?
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  • Alexander Simpson
    It’s not easy to launch an e-commerce business. Because of this competition within the market comes mainly from existing businesses launching online components and not from new “pure-play” e-commerce businesses. This is largely due to a lack of venture capital in the space – a significant amount of capital is required to launch an e-commerce business and investors remain wary. @trainers@netactive.co.za
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  • Reuben John
    Focus 80% of effort on your best products According toPareto’s Law it’s likely that80% of your profits are derived from 20% of products. By focusing on the small number of products that disproportionately contribute towards your website’s success you can achieve exponential growth.
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  • Tyrone Mayer
    I like this a lot from VentureBurn: Billions of people use search engines every day to find products that they want to buy. With a physical store it is very difficult to reach such a large market. However an online store can easily accomplish this. By having an online store a business can reach many more customers than it would with physical stores. According to studies most people click only on the links that appear on the first page of search engine results. They never go to the second or third page. As such it is very important to ensure that your ecommerce site shows up on the first page of results. This can be accomplished by performing an activity known as Search Engine Optimisation (SEO) on the ecommerce site. This activity helps your online store to be more visible to the programs that find results for those who search for things in the search engines.
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  • Sayo Folawiyo
    @TyMayer I agree and like this basic overview. It comes done to EFFECTIVE marketing and targeting the right audience in an authentic manner.
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  • Reuben John
    Other important element is the email marketing.When you start creating awesome content traffic will start to boom… That’s when you want to start growing your email list. Social media marketing and paid ads platforms are always changing and can disappear without notice. But your email list is something that once you build it you own it. One of the best ways you can draw people into your email list is by running contests. You can use all your promotional avenues to point people in the direction of your email list by enticing them with winning something from your store. 1) Start With a Profitable Product.If you already have your store live then you may have a product or two that tends to sell the best. Even if you don’t you can still pick a product that you feel best fits your ideal consumer. This product is what you’ll be giving away for your contest. 2) Have The Contest Running On Your Platform (Blog/Site).The best ways to build an email list with contests is when they’re hosted on something you own and manage. Whether your store is one WordPress or Shopify you’ll have quite a few choices for tools that make running contents rather easy.
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  • Legacy Team
    @SayoF your are right. Authenticity is key and ensuring that the connection made with the consumer is genuine.
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  • Brett Kanichowsky
    It is important how you analyse your consumer data.Your web hosting account and your analytics service produce between them a vast amount of data about your website visitors. Looking at it to see how many people visited your site is worthless and meaningless. Inside the vast amount of data is detailed information about how your website visitors used your site. Mining that data gives you a clue as to what they are looking for and how they go about finding it. Analytics and data alone are not the solution that “big data” experts might make you think. Such information is only historical and doesn’t tell you what people actually want rather it tells you what they did.
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  • Ramon Michael
    @BrettK I like your points here a lot.
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  • Patrick Masha
    It'san informative article. Questions...what are the process and procedure that the business must implement to provide an efficient e-commerceserve?
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  • Brett Kanichowsky
    @MACHCapital some ideas may include: Start by analysing the data. Review of your current brand strength web traffic conversion rates online pricing issues competitor success search engine opportunities and technology implications. Only after you create a realistic vision for the scope and scale of the opportunity can you start to develop the right strategic approach. Replace distracting headers and footers with a progress indicator to reassure consumers that the order process is moving forward successfully. Integrate your data. You can use label and form combinations to your advantage. With data integration information from invoices packing lists and shipping labels can be shared speeding all these processes eliminating data-entry errors and streamlining record keeping.
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  • Shaun Anderson
    How does your online chat work? I have been toying with the idea but not sure how it is implemented and how it is manned... Could you shed some light on this for me and how effective you have found it to be?
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  • Jan Askew
    The worldwide trend is that the cost of delivery is now included in the quoted online price. South Africa is bucking the trend and many online retailers only offer free delivery with Rx total purchase because of having to rely on expensive couriers. My question is whether or not we can continue to buck the trend?
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  • Jan Askew
    We need to remove as many barriers to the buy decision as possible. When a customer gets to checkout and they are suddenly presented with delivery costs and or insurance - this is a major barrier...
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  • Jan Askew
    An online shop is just one aspect of the E-commerce experience. The question remains how available are you to your customers? Your shop is open 24/7. Statistics show that over 60% of customers expect a response to an online query on the same day and 40% within an hour. For a small business that's a huge ask. How do you handle online contacts speedily while still getting some sleep?
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  • Jan Askew
    Customers are becoming increasingly used to contacting their suppliers digitally and disconcertingly for the online retailer they often change their channel of communication depending on access to wifi etc. The same customer may ask a question on Facebook and then follow up on Whatsapp. How do you manage the multi-channel communication with your customers about a product they are considering while shopping online?
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  • Jan Askew
    A challenge and an opportunity for online retailers lies in the fact that customers are becoming more tech - savvy and they are increasingly willing to self-help. This is good news for the seller who then has time to focus on other things but the challenge lies in making sure that the self-help options are easy to find easy to use and actually solve the customer's problem. What self-help options do you offer your customers and how effective have you found them? We use an online chat through the website as well as an FAQ page but we know we need to do much more in this area.
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  • Sarah Murray
    The main trends I am seeing in online buying are growth in mobile spend due to increased mobile penetration in the country and an increase in cross border shopping as consumers are looking for a larger variety of products at a better price.
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  • Sarah Murray
    On doing a little research into E-commerce I found a fantastic report on the growth in South Africa. According to the report online shopping has been slow to take off in South Africa but in recent years has picked up steam. The research indicated that 58% of online adults in South Africa shopped online over the past 12 months amounting to an estimated total spend of R37.1bn.
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