What is e-commerce, what are Benefits and risks of having an e-commerce site?
e-commerce stands for electronic commerce and is a way you can sell goods or services over the Internet, e-commerce sites can be banks or shops
All you need to start an e-commerce company is at least one employee or your self but you don’t have to manage the shop all the time as you would a real or physical shop, you also only need the following equipment
- computer (with web page editing software if you are building your own site)
- Internet service provider
- Modem or board-band router (most board-band service providers can supply the board-band router in the package
- Website browser,
- Access to a telephone line, either a normal line if you are using dialup or ADSL if you are using board band (unless you are using cable
- Email software if you are using a Internet service provider that you have to download emails to read
- Stock to sell
- Host to keep your website on (we will looking into this later on in this report)
The benefit of having an e-commerce site is that it will help you in the economic terms of demand and supply.
Demand = People can buy your goods anywhere in the world and any where they are, for example customers who have laptops and a online connection or WAP/internet Compatible phones can buy goods from your website even when they are on a beach if they wish to.
Supply = You can sell your goods anywhere in the world, which means you can have an international market very easily, this will also mean your company will be a virtual worldwide company, as your company can be everywhere without really being there so you don’t have to spend money, on lots real estate in another country.
e-commerce makes it possible for people who work odd hours, people who have special needs and people who live in rural areas, to shop without leaving their homes or travelling a long way to shops and without feeling isolated.
If your company is in rural area you can still sell your goods without your customer coming to you in a remote area where people could not find otherwise.
If you are a manufacture you can sell your goods direct to your customer, this means you can cut out the middleman and make your goods more affordable to your customer and one such company who does this is Dell who only sells their computers online themselves.
- e-commerce makes it possible for your customers to access you 24 hours a day, all year long.
- e-commerce is also very cheap to run as we have already said all you need is a computer, internet access and some stock.
e-commerce is very flexible if you move to a new country as a lot of people are doing you can still keep your company going without the need of closing your company and buying another company in your new country or starting a fresh again.
One risk of E-Commerce can be that customers sometimes are scared of putting their credit card numbers onto sites on the Internet because they don’t trust it, which is a entitled view to have, as you have to be careful who you give are credit card numbers to and that numbers can be easily intercepted.
The first cause why people don’t like using the Internet for shopping, you can do nothing about, as there will always be fraud on the Internet, the second cause why people don’t like using the Internet for shopping you can do something about by using secure 128bit encrypted channels to accept credit cards and stating that you use them.
The internet gives the customer more choice and the ability of searching for the cheapest prices all over the world which can easily become a risk to you as it will mean you have more competitors to contend with in highly saturated market, this means that not only do you have local competitors, you also now have international competitors though the internet offering cheaper products
The last problem can easily be over come by careful marketing and being on the internet yourself as if you are not on the internet you can not fairly compete with them, as being on the internet or not on the internet you will have the same problem. (Please see the marketing section for more information)
In the long run the benefits can out weigh the risks in the Internet market, as the Internet is getting more and more popular with people and you will get a bigger market than you would if you were not on the Internet.
Having said this you must think carefully about your e-commerce strategy because you can easily loss business by making silly mistakes, such as customers not being able to find you or not marketing your business properly.
But don’t let this worry you as these days if you don’t have an Internet presence and you are a business you are considered a “no body”, as not having Internet presence is considered commercial suicide, as you are not fulfilling your companies potential
Later in next parts of this section we will look at implementing an e-commerce strategy
When starting a business you must understand the market you are in, this is true for any business on the internet or not, you must know your market to do this you must do research on it, read the Mintel report and ask people what they would like to see in it.
Find out if there are gaps in the market, in the book Internet Marking foundations and applications Carolyn Siegel says this:-
“The most desirable international markets are also the most highly competitive practically in north America and western Europe”
This means if you are going into one of these highly popular markets you have to except lots of competition and you need to except to spent lots of money on advertising and listings in Search Engines for top ranking.
Find out where your market is, what country is your market in is it in the USA or Europe or is it international, if it this international your web site needs to be multilingual, in other words any person in the country you are selling goods to needs to understand you
You need to choose appropriate language for the counties you are selling to for example it is no good selling goods in Germany if the words on your website are in welsh people are not going to understand you and so you will loss business.
Decide what you are going to sell, bearing in mind what you cannot sell (please see the Ethics of E-commerce section)
Adverting and search ability of your site
The next thing you must decide is how you are going to advertise your site, you can advertise in a number of ways if you are selling local you can send flyers out, or you can advertise on other sites, using banner programs which are available all over the internet.
You must also register your site with more than one search engine, this is how people will know where your site is and will find you, you can register your site with search engines in a number of ways, and the first way is to pay a company to register your site.
The next way is you can use software to automate the register process, in some search engines you need to pay money for top listings.
Another way search engines can find your site is to use META Tags, which are pieces of code at the top of web pages, which some search engines use to find sites by looking at the contents of the web page or site this makes your site easier to find.
Image and branding
The next thing you need to do is choose a branding and an image for your site; this will help people to know whom the site belongs to.
You can do this in a number of ways the first way is to choose a meaningful domain name i.e. the name of your company, for example Pepsi’s company site domain name is www.pepsi.com this is good for branding your site because everyone knows this site belongs to Pepsi because its in the domain name, it is also easy to remember as a address should be easy to remember.
An address should be something that is easy to remember, not to long as people cannot remember long pieces of information and the name must be relevant for the website.
The next way is if your company has a livery, is to use the colours of your livery in your website for example the Harrods livery is green so they use a lots of green in their web site but please remember people who are colour blind can not see green or red so don’t use these two colours for words as people will not be able to read your site, also some colours do not look nice together.
The web site it self
Of course the next stage is to choose how you are going to build your website; you can do in a number of ways.
The first way is to built it yourself from scratch, please note you only choose this option if you know how to built website with built in Java or Visual basic.net programming language, which are hard to do if you don’t know Java or Visual basic.net programming language.
An e-commerce site works like this first you talk to the interface website by putting all the information needed for your purchase, this then sends this data to the control program who processes the information, the data is then stored in a database if needed, sent to the company by email and sent through a transaction/payment gateway to a bank to get the money paid into the companies account this gateway can be either belong to the bank or third party such as world pay, pay pal etc (note the gateway company also can send the customer a confirmation by email that the transaction has been successful and send the results back to the control software, if you choose to build this e-commerce system your self, you will have to arrange for this gateway to be provided and how your program can talk to it).
When the control program has finished processing the data it send the results back to the interface website, which can dependant on how it was set up, display a thank you/transaction has been successful message on the screen (all transfers of the data in and out of the system are encrypted so that it can not the intercepted, and the customer is not aware of the full system. all the customer sees is the interface)
An Alternative solution to building this your self would be to use one of the companies offering hosting and online store building facilities, which you can build standalone trading site, using the building blocks they provide, which puts together all the technical things of how it works for you so you don’t have to worry about it, you can also use these building blocks and put them into a website you already have, so you can turn a existing site into a e-commerce.
Second Annual Report and Strategic Recommendations
Published by the broadband stakeholder group 2002
Cybermarketing By Pauline Bickerton, Matthew Bickerton and Upkar Pardesi
Published by Butterworth Heinemann in 1996
Internet Marketing Foundations and Applications By Carolyn Siegal
Published by Houghton Mifflin in 2004
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