As technology continues to advance the business mindset has begun a shift to the increasingly dominant online markets and many merchants desire to enter the vast realm of e-commerce. While the simplicity and ease of launching your own website may be alluring, actually becoming successful is far more difficult. Many newcomers to the online marketplace often misinterpret or underestimate costs, competition, timing, and the necessity to practice fundamental business practices.
Upon entering the industry, merchants often times fail to understand their target market, including what the buyer wants along with their motivations to purchase the product. As with any business model, it is extremely important to conduct thorough market research to understand who to target prior to entering. You may launch a site with a compelling product and site content, but still remain virtually ignored if you neglected to fully understand the consumer.
Competition within the market creates numerous barriers that may affect the potential success of a new ecommerce website. While there are little to no barriers to entry, obtaining a piece of the market share amongst other popular, well established companies is the primary challenge. In addition to the necessity to foresee these barriers, it is also important to forecast competition’s response to the entry of your new company. These issues can be alleviated with in depth market research and analysis of competition before entry.
While creating a website to launch a business may be easy, many underestimate the numerous initial startup costs. One may think these costs will be substantially lower because its online, but fail to take into consideration how much it can actually cost. Hiring a web design firm to create an A+ store front can typically cost $2,000 all the way up to $10,000. In addition you must consider the cost and time involved with the data entry of product management. Hosting costs must be factored in as well, depending on your websites traffic this should range from $20 – $50 per month for you our virtual private server.
Perhaps the most expensive and most overlooked cost are the merchant services, or the cost involved with accepting credit cards from your website. Typically you will have to spend 2-5% of your revenue plus transaction fees to be able to accept credit cards Visa and Mastercard from your website. If customers decide to refund or chargeback a product, more fees will be involved.
The process and timing that a new company implements is equally important but often times ignored or under planned. Starting up any company, whether online or at a physical location requires a firm plan and process to be implemented and followed in order to succeed.
Similar to other business models, factoring a knowledgeable team of employees into the overall plan and company mission is extremely important. Sufficient communication to subordinates about the planned process and necessary timing to achieve those goals creates vital intrinsic value in the employees. Start ups need to understand that profit may have to take a backseat in the vital first few months when establishing your companies foundation is the most important variable to future success.
The overall broad picture is that ecommerce models should not deviate far from traditional business models. There are necessary and required processes, research, and components to consider in order to create a successful online business from the ground up. While it may be considered by some to be difficult and risky, the internet provides numerous opportunities for business owners that may otherwise be unattainable. Regardless, a firm understanding of the target market, competition, costs, and timing will either make or break your potential for success.