At this stage of the game, we all know about the attractive possibilities that the Internet offers for doing business. You’ve read them a thousand times: a market without borders, customers with a mid to high level of purchasing power, low investment and (my favourite) open twenty-four hours a day, 365 days a year.
Apparently, with the electronic store I can sell my products in a huge Chinese market to generous customers who don’t look much at the price, and first thing in the morning I’ll just have to take care of all the orders that came while I was asleep.
Cynicism apart, the truth is that not everything that shines is gold on the Internet.
Setting up a business, whether on the Internet or not, requires thought that is less superficial and quite a bit more in depth.
One of the great fallacies of infonomics is assuming as a truism the inverse of the law, “if it doesn’t exist on the Internet, it doesn’t exist”.
“Beyond Google”, by Jorge Juan Fernández García
In this article, I’d like to give you some food for thought that you should consider before launching a store on the Internet.
1. Business model: Product or Service?
The first basic point to be considered before ordering a web page for our company is if we are interested in selling products or services.
This aspect especially affects sales, the on-line business model (which doesn’t necessarily have to coincide exactly with the physical store, if there is one) and, in general, all communication that we are going to have on our web page.
When we sell services (i.e., a consultancy, decoration jobs, etc.), the e-customer’s attitude will vary a lot, depending on whether the purchase means a higher or lower level of commitment (based on the commitment cost, but not always).
It will be important to work such intangible aspects as our reputation (references) and all the trust and seriousness that we can transmit on-line
When we sell products (books, DVDs, etc.), the sale itself is quicker and direct, BUT the competition is much more aggressive with price policies and customers are especially sensitive to differences. In plain English: if you’re expensive, you don’t sell.
The internet is a business of mass sales and tight margins
The internet is a business of mass sales and tight margins, not the opposite. The accessibility of the web allows purchases to be made very easily from different suppliers. Adding value to the sale is not always easy, but it must necessarily be sought.
the purchasing power of the consumer in the digital economy is i-m-p-r-e-s-s-i-v-e.
Technology is changing faster than the markets.
The markets are changing faster than customers.
“E-Motional Business”, by Nicola Phillips
2. Market: On-line sales vs. Traditional sales
Those who have experience handling a “physical” business should consider several aspects that differentiate electronic sales from traditional sales. Out of all of them, I would especially highlight the following:
A store can capture customers only by being in a good location (Remember the famous quote by Conrad Hilton regarding the key to business: “Location, location, location”). But this aspect is much more complex on the Internet, given that every customer must be attended and there are no showcases. Evidently, there are ways to capture visits (read: positioning, advertising, sponsorships, etc.). However, too often this aspect is not considered from the very start, but rather when the page has already been launched and the owner asks himself, “Ok, now what”?
Just knowing that the page doesn’t sell itself is enough, so ask yourself a lot of questions about the investment in time or money that it will take to promote it. Simply keep it in mind from the start.
Another aspect that is usually overlooked is maintenance work. Not all companies have personnel with the necessary time and knowledge to efficiently manage a line of business. In the best of cases, it will take a significant investment in time, which must be taken into account.
From the real world to the virtual world
The most effective approach is to focus on the Internet possibilities that the real world cannot offer.
A wide-spread and entirely erroneous approach is to attempt to transfer, as faithfully as possible, the advantages of traditional trade to the digital environment.
It is much more effective to focus on the possibilities that the new media offers and that the real world doesn’t:
This premise, applied to the BUSINESS MODEL, means that non-viable businesses in the off-line world can work in the digital media (and vice-versa).
There are also nuances: it may be that a certain retail sale isn’t worth it, or maybe it is if we estimate a minimum-quantity purchase for delivery, for example.
“The first step to selling on the Internet consists of purchasing”
Eugenio Gallego – Managing Director of Mercaempresas
This premise, applied to the MARKET, means that you sell in a new virtual continent. The market covers the entire globe where there is an Internet connection. One click away. You and your competition. Did you think about THEM?
This premise, applied to STRATEGY, means that I can specialise as much as I want (the market is HUGE), as long as the added value is competitive.
The competition is also growing exponentially:
- If you don’t see it, bad news.
- If there isn’t any, maybe it’s not such a good idea.
- If you’re successful, you’ll be copied.
On the Internet, there is no competition to be more or better, the competition is to be different
This premise, applied to DESIGN, means that our web page must be designed more as a tool and less as audio-visual media. Aesthetics are important, but functionality is much more so.
This premise, applied to SALES, means reformulating the aspects of time and space. Customers have to be more patient when acquiring your product by mail. In consideration, they will demand a more extensive catalogue and complete ease of service.
This premise, applied to ADVERTISING, means that traditional advertising will not transfer, as is, to the new media, but rather just the opposite. The current media must adapt to coexist with the new interactive possibilities offered by the Internet and must strengthen its most competitive qualities (such as what happened to the radio with the arrival of the television and what is happening to television with the arrival of the Internet).
This premise, applied to COMMUNICATION, means that your business doesn’t speak for itself, but rather your customers can collaborate, recommend you and contribute and give value to your business, more and better than you can.
Sometimes we fuse or confuse the Information Society with the Computer Society, knowledge with information, originality with creativity, innovation with the incorporation of technical advancement and even with “changes”, continents with content, appearances with reality, the ends with the means...
“Lessons on innovation”, by Jose Enebral Fernandez