Building eCommerce

It’s curious that despite predictions, consumers have not adopted the eCommerce model as readily as had been expected. In many ways, the eCommerce model is apparently far superior to the normal offline model. The ease of use and of doing comparison shopping is greatly enhance. No problems, driving to a store, parking, or lugging a bunch of purchases around. Even in categories eminently suited to internet commerce, e-shopping has developed relatively slowly. Remember, however, that this relative. eCommerce has become a huge new market segment. Just not quite as huge, nor quite as fast as expected.

For the eCommerce entrepreneur, this means that it would be wise to consider the possible reasons for this slower than expected growth and, as far as possible be sure that your business avoids some of the probable difficulties.

With non-digital products, physical products, the lack of instant gratification can be a strong negative factor. In many cases, impulse purchases are driven by the immediate desire to own, use and display the product. Waiting for days or, even weeks, can be a strong deterrent to the shopper seeking instant gratification. For some products, this can be mitigated through providing express shipment, either free or at a reasonable cost. In many cases there is no fully satisfactory solution and you need to carefully consider the nature of your proposed products and the degree to which their sales are normally driven by the need for immediate gratification.

Most likely the biggest problem is consumer fear of identity theft and credit card fraud. While this certainly happens, reasonable precautions and a little common sense on the part of the consumer will nearly eliminate this possibility. For the eCommerce business man it makes it imperative to use secure transaction processing in the most obvious way possible. Security certificates and credit card processing must be impeccable. While ease of use is also a critical factor, the importance of providing a secure purchasing process that is clearly and obviously such, can’t be over-estimated.

An additional factor is lack of access. Despite the growth of internet access, there are still market segments with low rates of computer literacy and internet connectivity. Products oriented toward these segments will not usually do well.

An added concern for online businesses is the degree to which potential purchasers are seeking a social experience as a product. Many shoppers shop, at least in part, for the social aspects of the process - being in and among the crowds, meeting friends, talking with clerks. Since internet shopping tends, by and large, to be a solitary experience this can be a difficult need to meet. Live chat operators, online assistance, telephone operators and forums can meet some parts of this need as well as provide a stickiness to sites which may lead shoppers to return over and over.

Finally, in looking at products that can do well on the internet, the smart eCommerce businessman will normally eliminate any product with a low value to weight ratio, products with strong touch, taste or smell components as well as products which require trial fittings. This being said, it is well to note that some online/offline retailers have done quite well with clothing and even groceries. For simple clothing items with well-known and obvious sizing, the problems are reduced. For higher end items, such as wedding dresses, the customer must be willing to make a significant effort in obtaining and providing accurate measurements. Sites which are successfully selling groceries are fairly rare but have been quite successful in serving local - and therefore limited - markets.

eCommerce websites don’t really allow for the full range of products that an off-line business might offer. At least not for direct sales. Certain types of products and/or services are more readily accepted - and easier to implement - in the online environment than others.

In general, a company that is purely online - a virtual company - generally deals with digital products. The types of things we’re talking about are in the areas of information storage, retrieval and modification, education of all sorts, software, music, movies, communications systems, financial transactions and photography.

Examples would be PayPal and EastBay, Google, Yahoo or any of the search engines, membership sites, hosting companies and so on.

Clickbank is a prime example of a digital marketplace. Everyone of the more than 10,000 products available through Clickbank is downloadable, instantly upon payment.

Business with substantial offline presence may use online sites to sell physical products as a convenience and to increase their customer access and income. Smaller online/offline companies involved with physical products may use drop-shipping or other similar methods to fill orders.

A large number of marketers have discovered that they can vastly inflate the price of their digital products by incorporating CD-ROMs, DVDs and printed manuals. The perceived value of a product can be dramatically increased this way. Expanding a pure ebook by adding downloadable or streaming audio and video is another way to increase perceived value which doesn’t require shipping a physical product.

Online marketers sell some physical products and services with significant success. These kinds of products usually will be high value and low weight and sized to fit into a mailbox. They could involve potentially embarrassing items, go to people in areas with limited access to many items, or shut-ins may be their typical purchasers. Books and magazines, CDs, DVDs and rugs all fit this category well.

Many people find this particular truth distasteful, but sex and gambling are huge online industries. Pharmaceuticals are another. Weight loss products also do very well and there are many recurring weight loss formula scams that make a fortune for the con men that pop up over and over. Gambling, for the thrill and the hope of large gains with no effort, has always been popular. The online environment simply extends access to nearly everyone. A fiercely competitive industry with some of the most advanced web technology around, gambling sites are extremely profitable. Affiliates of gambling sites generally receive hefty commissions based on the losses of the people they refer. Not exactly great incentive to send people to the most honest gambling sites.

The online sex and pornography industry also is usually in the forefront of traffic technology, site design, black-hat SEO and so on. Very few people looking for pornography will complain about the traffic techniques or SEO tactics of sex sites no matter how irritating they are. The embarrassment factor tends to be very high here. This is reported to be the largest and most profitable eCommerce market segment.

Spare parts for consumer items as well as for industrial equipment could be good candidates for online sales. Since retail stores (offline) will often have to special order parts which are rarely stocked at consumer outlets, it’s an eCommerce segment that has very limited offline competition. There can be significant online competition however. One success factor here is to provide customers with reliable and precise information about which part number their particular version of a product needs.