The internet has drastically revolutionized the way people communicate and exchange resources, and has given birth to one of the most profitable and rapidly growing industries: e-commerce. The 21st century witnesses the blossoming of a digital ecosystem that reinforces the development of online shopping, e.g. online store sites, secured money transactions and prompt delivery service.
According to Statista, global e-retail revenues are recorded at 1.55 trillion U.S. dollars in 2015 and expected to soar to 3.4 trillion in 2019. With approximately 53% of global internet users (and increasing) making online purchases (U.S. Government 2016), it is plausible to believe in and invest in e-commerce if you are seeking a sustainable business solution.
1. E-commerce enhances customer experience
Why do more and more people turn to e-shopping rather than physical boutiques? Because it’s convenient. You don’t have to ask shopkeepers for product information. It takes less than a second to compare product and price among stores. And all these activities can be done anytime, anywhere.
a) Comprehensive product description: There are two things that may irritate customers when shopping at physical boutiques: incomplete product descriptions and long wait times for assistance or checkout. As a rule of thumb, a fashion boutique of 90 square meters requires at least one full-time and one part-time attendant to host up to 30 customers at the same time. You’ve undoubtedly experienced first-hand how long it takes for the shopkeepers to notice that you need help. You might also realize that the wasted time in the store can be avoided by shopping online.
It’s a ground rule that e-commerce sites will provide customers with data sheets covering all features and characteristics of products. Some even go further by embedding instructive videos, pictures and customer reviews. Live chat sessions with their staff is also available for shoppers who would like a personalized assistant.
Virtualizing your store is a remarkable way to involve customers in your process. Lay out all needed information and let your customers educate themselves and have a more autonomous shopping experience.
b) Quick and easy comparison: Let’s take the driver of the e-commerce wave as our sample: millennials. Millennials are tech-savvy, discount-hungry shoppers who spend almost twice as much time shopping online as any other age group. According to Mindshare North America (2015), 70% of millennials search for promo codes online before purchasing. These price-conscious buyers appreciate the convenience of online price comparisons, minimized switching costs and no psychological burden.
Online price comparison tools do not only benefit buyers, but also sellers. E-commerce apps like Wiser, DataFeedWatch, SmartFeed or DiscountManager will help you balance competitive price offers with desired margins. Evidently, it’s not as easy or economical for brick and mortar stores to conduct a continual price watch.
c) 24/7/365 availability: You will make money in your sleep with e-commerce. Since the store stays open around the clock, there are no store hours and no limit to shopping time. The only drawback is that customers must wait for the product to be delivered to the designated address. This problem, fortunately, is gradually improving thanks to advances in transportation and logistics services. The fact that orders can be placed at midnight and often delivered at doorsteps within 24 hours entices millions of buyers, generating continuously stronger sales for e-merchants.
2. E-commerce cuts costs
Digitalization is a wise choice when it comes to cost reduction. The significant cost difference between operating an online or physical store can be broken down into three basic cost elements, namely real estate, personnel, and advertising and marketing.
a) Real estate costs: As stated before, a 90-square-meter boutique can serve up to 30 customers at the same time. Imagine how large Amazon stores would be to host their typical monthly traffic of around 2–3 billion visitors. And we haven’t yet discussed where and how much it would cost to build such huge and accessible stores around the world. Apparently, e-merchants have no concern over rental, decoration or maintenance cost for physical showrooms.
b) Personnel costs: Automation works wonders! Checkout, billing, payments, inventory management and other operational processes can all be done precisely and with minimal human monitoring. The precision of computers saves resources otherwise invested in training and managing personnel for repetitive tasks.
c) Advertising and marketing costs: Digital marketing campaigns generally have higher ROI than traditional promotions. How? The answer points to the ever-increasing numbers of internet users, efficient lead generating practices (SEO, social media marketing, content marketing, etc.) and varied business tools at low to no cost.
3. E-commerce drives business growth
a) More profit margins per unit sold with lower overhead costs: Overhead costs are expenses occurring even if no revenue is generated, i.e. rental cost, utilities, office supplies, repairs and maintenance, etc. For e-commerce, the list is appreciably shorter. A virtual store can be sustained at a lower cost, and store owners can enjoy higher margins and a more flexible pricing mix.
b) Secured cash flow: Online retailers can collect 100% of the payment when the order is delivered to customers. Lower accounts receivable mean that your cash is fully utilized and available to invest. Online payment services also constantly evolve to ensure efficient and secured transactions. Services like PayPal, WorldPay, Google Checkout, etc. are making it easier and safer for both buyers and sellers online.
c) Marketing automation: automated pricings and special offers: Automated tools simplify pricing campaign management, especially when you’re selling wide ranges of products that belong to different brands or categories. Most CMS (Content Management Systems) such as WordPress or Magento offer add-on or integrated pricing formulas (Buy 1, Get 1; Buy 2, Get 1; Buy 1, Get 50% off on next item; free shipping for a cart over xx dollars; etc.).
Plus, you might at least once or twice find Amazon or any other e-commerce sites’ suggestions very close to your shopping needs. That’s the result of up-selling and cross-selling algorithms. By promptly suggesting directly related or complementary items, e-shops persuade customers to put more into their carts, thus boosting sales revenue. Together with powerful initiatives like call-to-action and time/location sensitive offers, shoppers can have a favorable in-store experience right on their couch.
d) Scalability in the Global market: There’s no limit to the size of your online entities. Amazon was initially an online book store and never stopped broadening its portfolio (from products and later to services) for global consumers. It’s not rare for a single business to run several e-commerce channels targeting different market segments. E-commerce opens the gate to global markets for businesses regardless of product portfolio, size or physical locations.
4. E-commerce simplifies management
a) Analytics to track customers’ traffic from profitable demographics: Since all repetitive tasks are computerized and purchasing behaviors are recorded, strategic decisions can be made based on reliable analytics. For physical stores, it costs more and takes much more time to obtain data on shoppers, let alone specific statistics like time spent on each item or abandoned items. Those meticulous insights available to e-commerce merchants will help them better customize the visitor experience, enticing clients to purchase and repurchase.
b) With a laptop, you can manage your store from anywhere: To be precise, with an internet-connected laptop or mobile device, anywhere on this planet can be your office. With the aid of managerial and automation tools, it is possible for you to manage the workload of two or three staff members at a physical store: from order placement and payment to backend processes like inventory management or customer relationship management, all on the same device. E-commerce frees the store manager from the physical leash. Why not supervise the store on the go?
c) Direct customers’ feedback and reviews for quick product or service adjustments: It takes a decent amount of cash and time (the two most important resources for any business) to redesign or renovate even a minor part of a physical store. Plus, it is less likely for a shopper to leave a recommendation at a physical store, either because of the time needed to write down a decent review or the reluctance to talk in person with shopkeepers. Leaving a product or service review online serves both the buyer and seller. Buyers can provide feedback at their own pace, and sellers can easily index all suggestions and adjust their online store purposefully and promptly.
5. E-commerce strengthens brand image
a) Involve happy, loyal customers as evangelists: According to Big Commerce, nearly 70% of online shoppers considered products with reviews more lively and attractive. Authentic reviews create trust, thus greatly influencing the buying decision, especially when they’re from acquaintances. In fact, recommendations from friends and family are twice as influential as conventional advertisements, as stated by 42% of online shoppers. For these reasons, growing customer loyalty should always be prioritized in your branding efforts.
b) Leverage social media to spread brand awareness: There are four prominent social channels you should consider in your e-commerce branding strategy, namely Facebook, Pinterest, Instagram and Twitter. People shop and share on social media, and a quarter of online shoppers are influenced by such recommendations. A third of them are willing to follow favorite brands on Facebook, while a fifth will do the same on Pinterest, Instagram and Twitter. Social media sites, therefore, are efficient, economical channels to establish a personalized relationship with customers.
c) Promote your brand on search engines (Google.com and Bing.com) to build authority in your field: According to Wolfgang Digital, 43% of e-commerce traffic comes from Google organic searches and 26% from Google Adwords. The race to the first page of search results is more competitive than ever and highlights the importance of a well-planned SEO (Search Engine Optimization) strategy. It’s important to note that a solid web presence (strong search engine visibility) will ensure a sustainable base of visitors and growing revenue.
Indeed, e-commerce is a plausible choice for businesses regardless of size and industry. The benefits can’t be denied: enhanced customer experience, business growth, reduced costs, simplified management and stronger brand image. If you find this article helpful and interesting, please share with your friends on Facebook or Twitter. Thanks!