THE E-COMMERCE DECISION
For both the entrepreneur and the established brick-and-mortar business, setting up a virtual business on the Web can be a great way to expand your market — BUT you MUST first educate yourself as to how to proceed. Extending an existing business to the Web or starting a new Web venture without understanding e-commerce is like trying to hit a baseball with one arm tied behind your back and a blindfold on. It is not simple and it is not easy to build a successful business on the Web. It takes a tremendous amount of planning. Without a clear understanding of the process and clearly defined goals, establishing a successful website can turn into a difficult, complicated, and costly project.
Back during the dot-com craze, the author read a Tom Friedman column in The New York Times entitled “Amazon.You: For about the cost of one share of Amazon.com (AMZN), you can be Amazon.com.” In that column Friedman told the story of a small Midwest online book-selling operation that cost around $150 a month to run. That small bookseller used the same wholesalers as the competition, including Amazon.com, but his net on each sale was better. Friedman stated that the site “offers Millions of Books at Great Prices” including, a John Grisham book for $2.60 less than Amazon.com. Mr. Friedman’s point was that for the cost of just a few shares of Amazon.com stock, and a good, clearly developed idea, a savvy small entrepreneur could compete with a “Web Giant.”
The Brick-and-Mortar’s Decision
Are you the owner of an established, traditional business considering a move to the Web? If so, before moving to the Web, you must first determine the benefits of a Web presence. To do so, ask yourself some hard questions:
- What are your business goals and how will a website support them?
- What do you want to achieve with a website?
- Will a website deliver new customers or more sales from current customers?
- Will it offer better customer support?
- Will it bring good publicity?
- When is the right time to create a website for your business?
- Will this venture adversely affect your brick-and-mortar business?
In other words, if you build it will they come? Forget the hype. Determine if and how a website can enhance your business’s bottom line. Then determine the amount of money you must invest before you turn your first profit from the website.
Any way you look at it, the decision to extend an already successful business onto the Web is a tough call. Before moving forward, considerable research is necessary; without the appropriate technical knowledge and the understanding of the ins-and-outs of e-commerce, it is easy to get lost.
On the technical side, your first sequence of goals should be:
- Learn what it takes to build various kinds of websites.
- Determine what kind of website you want to build.
- Build it.
- Continue to improve and update it.
You must take care that your existing business doesn’t suffer as you and your staff gain the necessary knowledge and proficiency in the technologies needed to purchase and to implement the equipment and software needed for a website. Do you have any idea how much time, effort, and money you must invest in order to have a viable e-commerce site, one that will produce a reasonable return? Take the time to find out.
An Entrepreneur’s New Web Venture
Most of what applies to a brick-and-mortar business also applies to an entrepreneur’s new web venture. But a new e-commerce business also must strive to leave the starting gate with an extremely high performance level if it is to establish its brand name effectively. If it stumbles, in all likelihood that new web-based business will not positively imprint its brand name on the public and therefore will not be in a position to exploit the opportunities available to an innovative web entrepreneur.
For an entrepreneur, the secret to a successful web-based venture is finding a niche. The first step for a fledgling entrepreneur is to determine your niche market — a defined group of potential customers sharing common characteristics that delineate their interest in specific products and/or services. A niche market makes it easier to plan a credible marketing strategy. When you know your niche market, you can tailor your site’s content to appeal to that market. Examples of websites built to serve a unique niche market include 4mdogbooks, platesusa.com, and Gary’s Belt Buckles, which can be found at www.abn1.net/buckles.
Once you decide on your niche market, and your product or service, ask the following questions:
- Is your product easy and economical to ship?
- Who are your suppliers? Can you depend on them for quality products and for prompt delivery?
- What is your price point (the price just above the point where lowering the price will increase your sales but not increase profits)?
- How will you draw customers to your website?
- How will you differentiate yourself from the competition?
- How will you accept orders and process payments?
- What type of fulfillment facilities will you use to ship products?
- How will you handle returns and warranty claims?
- How will you provide customer service?
- What size e-commerce site would you want to build?
- How will you build your new website?
- How much will it cost to build the website, and can you afford it?