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Online selling: Are You Game?
Today ecommerce market is flourishing across the world. Global ecommerce sales are set to rise 246.15% by 2021, from 1.3-trillion in 2014 to 4.5-trillion in 2021 as per the 2018 Statista report. Offline retailers are investing in huge capital to penetrate the business of online players such as Amazon and Alibaba.
If we focus on the small scale businesses, this is the most exciting times for starting a new business, focussing online. Thousands of sellers aspiring high to become successful and introducing their business via ecommerce portals, marketplaces and other channels of the online market.
Sadly, most of the businesses churn within a year or two. This happens irrespective of the palate or category. Evidently in the marketplaces, 60%-80% of sellers stop doing business and replaced by the same number of the new sellers. The cycle of churning accounts moreover is the same.
No need to say that the potential of online business space also introduces cutthroat competition among brands. A large number of online sellers start suffering due to lack of knowledge, unavailability of future roadmap, operations inability and cash flow issues.
Introducing an online business is all about recognizing the target customers, vividly clear. This is much like an investigation where you have to read the mind of the people. You need to process the information about similar cases all around the world and develop a pattern to reach your goal. Treat the online like a conventional business and your business will be outdated in a click.
Let’s come to the point and understand the ecommerce scenario with the help of three factors
1. Business portfolio
2. Prominent obstacles
3. Business Roadmap for a stable business
1. Business Portfolio:
The sellers are mostly divided according to the sales volume. A lot of sellers were successful in offline before and stepped in online later, rest are new to both offline and online. This is to be noted that capital does not guarantee success. Money can be put on advertising and marketing for visibility, but it is not a way to make an online brand successful. The consumer is not the same here.
There are also sellers who look for short term profit. Making money by selling in WhatsApp groups and MP’s, and do not really have a long term business plan. Sadly, online is not a place for making a quick fortune. There might have been lucky for a few lucky ones, but without a vision, the business cannot be fruitful.
Let’s divide the business into four parts. Capital, Product, Service and experimentation. These four should be always in sync. Considering that the new sellers might not be strong on the capital part, they must take a calculated risk and invest wisely to generate regular cash flow.
“Burning too much money from pockets hoping that it will help to generate business in future is a MYTH.”
2. Prominent Obstacles:
- Low sales: This is the most common problem which is fatal for small sellers. Discounts, sales events and marketing costs are diminishing the profit margins and in the long term, there is no capital backup to save the business from low funds. Most sellers face this for twelve to eighteen months and then quit.
- Big Brands push you back: It’s common that renowned brands try to capture the market by putting more money in advertising. In the case of marketplaces, this lowers the product visibility and sales dip.
- Operations: Most sellers in India are new to online operations and maintaining service standards for marketplaces or own web store customers is a huge task for them. This is the most crucial part where I have seen major accounts stop doing business as operation expenditure is too high for them and net profit numbers are not motivating.
- Losing the old customers: This one is invisible but important. Few online sellers get good sales numbers initially but later the numbers start dipping. This is all due to lack of interest for upgrading the products, updating the catalogue and take your trusted customers for granted. There are other players analysing your business all the time and styles are always copied, upscale and presented in a better way to steal other’s customers.
3. Business Roadmap for a stable business:
Ecommerce business roadmap is a must for all the sellers and entrepreneurs active in online space. First of all, there is a need for understanding why they are starting a business? The questing should have a clear answer that among millions of styles and products why people will come to purchase my product?
Let’s make this easier. We can consider these points.
- Exclusivity: The product is unique and no one else can make that. But have a clear mind that the viability of the business is more important than being passionate about the product you sell. Before introducing the offbeat product, you must have the base capital and consistent cash flow to take risks. In case your product is actually new inline, do keyword research.
- MDP vs MVP: The concept of minimum delightful product and the minimum viable product is the answer to most of the initial problems. All though the terms are commonly used in digital product design programs in startups, the same concept will also be effective in ecommerce strategies. Selling online is not all about the product, but it’s an experience. In case the experience is not memorable enough, the product does not add any value in the customer’s life. Whatever you are selling, that must make a customer HAPPY, not only satisfied. Aspiring a clothing business is great but invest initially in one vertical to build your customer base. Do not invest a lot of money on getting other verticals, but invest one per cent of that money on better designs of T-shirts. Introduce technology wherever possible to upscale the product. One of my clients has started making cushion covers by using old T-shirts and earned millions by selling cushions. Always check for the target market and improvised products for adapting methodologies.
- Explore: The world is shrinking. If you believe that you have a great idea or product, you may create demand by selling it all across the globe. The taste of people varies across geographical regions. Your exclusivity might click in another country. Try to understand the market beyond your own country. There is huge potential in the markets of the Middle East, Korea, Latin America etc.
Especially for cross-border trade, marketplaces may be the most comfortable option to start with as they provide a lot of tools for international trade. Adapting your site or product pages to their language can increase your site’s appeal to your target audience.
Find your own place. Looking ahead in the future is the key to success. Keep an eye for the technology and business space. Check how the lifestyle is changing and what would be the prime need of the people after a couple of years.
Understand the trends and Business Metrics:
When looking at where the burgeoning online consumer’s cohort spend their money, a common theme develops across the continent.
55% of buyers go straight to Amazon when they shop online. Is selling on the most popular marketplace the key to maximum profits?
Not quite. Mega marketplaces, like Amazon, may offer high visibility, but also higher competition. A smaller marketplace has less competition, making it an easier space for sellers to attract buyers. Individual web stores empower sellers to control their brand and customer experience for generating more sales.
Selling on multiple venues is good to get the most out of each platform. This also helps to analyse the product performance in each site. But ensure to be top of your game in terms of service operations. If you are lacking the manpower or time to maintain the service quality, better go one at one time.
The following image may help to understand the crux of ecommerce strategies.
Online market demands sharp actions and continuous dedication to be successful with the business. From understanding the customer’s mindset to implementing marketing strategies, this is a game of patience and data analytics.