Two of the biggest eCommerce players today are Amazon and eBay, where people go to buy and sell a wide variety of brand-new and second-hand items. You can search on these sites practically every consumer product from the latest mobile phones to hard-to-find vintage computer parts. Other online retailers concentrate on specific niches for their businesses such as Spotify, which currently reigns over the music streaming market.
The enormous success enjoyed by these online businesses proves there are concrete financial advantages from engaging in eCommerce. So if you have specific products or services in mind and want to maximize your market reach, an online store could be the best option for you.
There are several tangible benefits from conducting your business through eCommerce including the following:
- Low starting costs. You save on hundreds of dollars from paying monthly filling out a rental application for a physical store. You will also be needing less personnel to operate your business, which drastically lowers overhead expenses.
- Flexibility. When you have to innovate to conform to the latest trends or adjust the prices of your products to reflect economic changes, you can easily do this with an online store.
- Wide reach. This actually counts for one of the biggest advantages of eCommerce—the ability to reach a large number of potential customers.
- More Product information. You can provide enough description on a particular item on your online store to give buyers the desired information before deciding to buy any product.
- Hard Statistics. With search engine optimization (SEO) and other online marketing tools, online store owners have hard data to refer to in measuring the effectiveness of their marketing strategies.
Once you have your online shops organized and running, the next important step is marketing the products to reach as many potential customers as possible. An apparently viable marketing move is to imitate other online sellers, and that is selling your products through the established gateways. But is this really an optimal business decision? Let us consider some of the consequences when you list your products through Amazon and eBay, or use the services of PayPal in processing payments.
Retailers use Amazon.com to sell their products for bigger market exposure. Amazon gets a percentage for each sale (10% to 15%) in addition to subscription or listing fees. A sales channel called Amazon Advantage generates 55% commission for every sale. Hence, if you decide to have your products sold at Amazon.com, be prepared to pay considerable percentage fees and commissions, which means less money going into your stores.
There is also a system called customer tracking at Amazon.com. The site collects data from every registered user and recommends products to users based on their past transactions. If you are just one of several hundred retailers at Amazon.com, your customer data may result to purchases but you have to compete against the other hundreds of stores offering similar products as yours.
EBay charges a $0.35 insertion fee for items within a specific price range. Once somebody bought the listed product, you will have to pay eBay a final value fee based on a percentage of the final price.
PayPal charges fees from the payment’s recipients. Merchants or sellers also pay a fee for every transaction coursed through PayPal. In addition, money placed in PayPal accounts earn interests that PayPal collects.
Using the services of existing eCommerce providers costs money. The money that you spend on them is money that does not go to your cash registers, and money that you could use to bring in more customers to your store. Know that there are effective ways to attract customers to your site, you just need to know what these are.