Small Business

ECommerce And Small Business – The Ideal Partnership

Ecommerce Has Opened Worldwide Markets for Small Business. It Has Also Given Rise to Numerous Scam Internet Business Offers

Ecommerce has opened up much wider markets for the small businessperson. It is no more necessary to spend huge sums on publicity to reach distant markets. Ecommerce and small business are ideal partners. Using the Web, small businesses could now reach world markets at low costs.

While a few pioneers like Amazon and Ebay have become huge businesses using the power of Internet, numerous unknown small businesses have used e-commerce to operate quite successfully.

Ecommerce enabled these small businesses not only to expand their markets but also to operate more efficiently at significantly lower costs. We look at the market expansion and cost reduction opportunities of e-commerce a little later. First let us see what ecommerce means.

Ecommerce: What Is It?

Ecommerce involves doing business with the help of computer networks. Typically, the small business sets up a website to do business on the Internet. The products or services offered by the business are described at the website. Facilities to accept orders and payments are also gradually incorporated into the site.

Next comes fine-tuning the backend operations. Orders must be acknowledged promptly and executed to the satisfaction of customers. The real partnership between ecommerce and small business begins at this stage and its success would depend on how convenient customers find the shopping experience.

How Does Ecommerce Benefit Small Business?

With the help of e-commerce, small businesses could compete with larger businesses successfully. Using the Internet, they could now:

  • Send brochures and other documents to customers or suppliers (anywhere in the world) by email for immediate viewing;
  • Collect valuable business information on the internet, such as contract opportunities and competitor actions;
  • Reduce costs of operation by minimizing:
  •  Dependence on expensive facilities such as offices and shops in prime locations;
  • Number of staff needed to service customers; and
  • Wasteful marketing expenditure, by reaching target customers with greater precision and also putting product catalogs online;
  • Reach markets for niche products the world over to generate viable sales volumes, and
  • Provide quick after-sales support even to distant customers through FAQs, automated responses and remote support.

E-commerce provides a more level playing field for small businesses.

  • Small businesses can now research competition and the market using the information available on the Web
  • Businesses can be established working during off-duty hours as an online business need not remain open at fixed hours (your website can continue to do business automatically even while you are working at your regular job)
  • They can reach distant markets or a wider group of prospects in the local market
  • Instead of printing and distributing expensive brochures, a small business can create an impressive catalog of its products at its website, and invite anybody to view them instantly
  • Operating expenses can be lowered by working from less expensive locations (say, from your home or garage) and reducing marketing and servicing costs
  • Cater to a niche market (say for some collectible item) spread over a larger region and generate viable volumes of business
  • Provide customer support even to distant customers over the Internet, at less cost

There is also the possibility to reduce other costs such as those for inventory holding and warehousing by working in collaboration with suppliers. Such collaboration becomes feasible under e-commerce.

In short, ecommerce makes it possible for the small businessperson to actually do what he or she could only dream earlier.

Ecommerce Has Several Business Models

Stocking products in your garage and setting up a website to sell them widely is only one simple model of e-commerce. You can refine the model, say, by:

  • Arranging with wholesalers or manufacturers to ship directly to the customers against the orders you get (drop shipping)
  • Recruiting other webmasters to promote the products or services that you sell, in return for a commission (affiliate marketing)
  • Adopting other innovative solutions that enhance your effectiveness or reduce your costs

E-commerce is an evolving field and small businesses that can tap this technology in innovative ways can expand into huge businesses in surprisingly little time. Read about Amazon and eBay success stories if you want to be convinced.

Unfortunately, the phenomenon of ecommerce has also given rise to numerous bogus Internet business models under which you are more likely to lose money than make it. Understand any business model fully before parting with your money.

New Opportunities for the Entrepreneur

Ecommerce brought some unexpected benefits to small businesses – particularly to the very small entrepreneurs.

No more had the businessperson any compelling need to locate the business near the customer. Business could be carried on while residing at isolated locations of one’s choice. The internet allowed the person to reach customers all over the world from such locations.

For those business persons who just could not spare fixed timings for business, e-commerce provided the opportunity to work flexible hours. Women could now do business and attend to children and house work, for example. So could the part-time entrepreneur seeking to develop a second income stream.

Probably the greatest beneficiaries from the new partnership between ecommerce and small business were the businesses selling niche products. Customers for such products tend to be few and far, and achieving viable sales volumes was almost impossible. Now, however, they could reach customers anywhere in the world through (low cost) promotion of their websites among the niche groups.

How Do You Do Ecommerce?

The first requisite for doing ecommerce is dependable connectivity. Ecommerce and small business operate somewhat differently from ecommerce and large business. While the latter tend to use ecommerce to reduce costs through integrating customer relationship and supply chain into their operations management, the former seeks to achieve higher profits by reaching wider markets.

E-commerce usually progresses through a number of stages.

  • Using e-mail for communications;
  • Transmitting files and documents over the internet;
  • Conducting fact finding research exploring the rich Web resources;
  • Online comparison shopping for products and services needed by the business;
  • Selling one’s own products and services through an e-commerce enabled Web site;
  • Collaborating with business partners and suppliers by integrating remote systems;
  • Bidding online for contracts and work assignments;
  • Locating employees with specific skills by advertising on the Web; and
  • Conducting online meetings with staff and business associates.

The small business Web site starts as a simple brochure site introducing the business and its offers to the world. If promoted successfully, such web sites could reach customers over a wide area.

Next might come the facility for visitors to send queries and comments through the web site. Customers might place their orders using a toll free number or email/fax.

Now comes the important stage of uploading a full product catalogue with descriptions, pictures and price information to the web site. Shopping cart and credit card payment facilities are also incorporated. Customers could now place orders online 24 hours a day, 7 days a week.

Web site promotion is a field where best practices are changing constantly. What was okay yesterday might not work today. For example, email marketing was an effective, and comparatively simple, operation even a few years ago. Today, it has become a complex exercise owing to the extremely serious problem of spam. The emails you send might not even reach its recipient. You have to identify which of the practices work most effectively for you and focus on those.

As online sales increase, it becomes necessary to provide customer support facilities. Customer support seeks to improve customer experience through:

  • Creating an FAQ page of Frequently asked questions and their answers,
  • Providing Contact and Message Forms at the Web site for customers,
  • Autoresponder e-mails acknowledging customer mails,
  • Ensuring that all customer queries and complaints are attended within predetermined time limits.

A stage comes when coordinating all the different aspects begin to pose problems. These include:

  • Updating product and pricing information;
  • Updating inventory in real time and handling orders for stockout items;
  • Tracking the status of orders;
  • Invoicing completed orders and tracking payments; and
  • Attending to the increasing number of customer queries.

You would now have

  • To limit your e-commerce campaigns and remain a small business or
  • Go in for expensive software solutions to integrate front end interfaces with back end infrastructure and accounting.

Ecommerce Limitations

Ecommerce might not suit all small businesses. Certain products and services are just not suitable for selling online. Bulky items like furniture and farm products requiring freshness are examples. Few, if any, would purchase these online.

There is also a mindset problem. Ecommerce might not work if you are a small businessperson who is not willing or able to understand the issues involved. Just putting up a website is not ecommerce, but waste of money. A great deal of work, both operational and promotional, is involved in making e-commerce a success. If you do work at it, and take care to understand what works and what does not, ecommerce could definitely pay you back in high profits.

Ecommerce and Small Business: Strategies

Some ecommerce models have worked quite well while others have yet to prove themselves.

The dot com portals, which hoped to become viable by getting visitors through highly expensive publicity campaigns, and then generating revenue through paid advertisements, did not quite work out. Advertisers in the new medium did not get adequate returns and the portals found revenues drying up before they could recover their costs.

On the other hand, a few have become renowned success stories while numerous others have succeeded quietly.

Amazon pioneered e-commerce by selling books online and focusing on providing complete satisfaction to customers. EBay pioneered a new way of doing business online through their internet auctions portal. ABEbooks allowed individuals to open bookstores at their site with ecommerce facilities. Many niche businesses succeeded by marketing their products widely through keyword based search engine marketing.

Another model included cooperative working among product developers, fulfilment houses and affiliate marketers. The developers focused on developing products that customers wanted. Fulfilment houses specialized on delivering the products to customers efficiently. Affiliate marketers promoted the products among many target groups. All the three prospered through this arrangement.

Yet another model involved specialized content sites. These sites provided information of high value to certain groups. They offered free abstracts to indicate what the reader could expect from the full article. Access to full article was given for a nominal subscription fee. Where the information was not easily available elsewhere, this model generated substantial revenues.

You could make a start with Dr Wilson’s 10 Steps to E-Business on a Shoestring on how to start your own small business at a surprisingly low cost.

What Type of Small Business Could You Start?

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