Understanding e-commerce

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Electronic commerce or e-commerce as it is commonly known is the industry of buying and selling of products and services online. As consumer-buying behavior changes with communities moving online, the question on the minds of many traditional retailers, entrepreneurs, and business owners, is whether their businesses and products and service offerings are suited for online sales. For small businesses, growth is often achieved through the identification of new markets and the acquisition of new customers. E-commerce is an excellent opportunity for companies to extend their sales reach to a world of new customers in a way that was once unimaginable. Selling your goods online can also be considered a great equalizer, because of its ability to level the playing field against larger competitors.

Although the benefits of e-commerce include a large number of potentials customers and lower company infrastructure costs, many small business owners are hesitant to start selling on the Internet due to a lack of understanding of the landscape and resulting concerns about cost, security, and technology. Here are a few questions to serve as guidelines for success:Is your product easy to understand for your online customers? Remember, shoppers will not be able to touch or try your product. Provide detailed product descriptions and images to increase your sales

Can you sell the product at an acceptable profit margin once you factor in the time and expense of packaging and delivery? If you sell low-ticket items, you may need to sell in bulk to increase profits. If you sell perishable items, you will need fast delivery and adequate packaging. Do you sell a service that can be delivered effectively via email? Many information or service suppliers have made seamless transitions to the Internet, for example, converting magazines to digital editions. Does your product appeal to customers outside of your geographic area, or will selling online enhance your service to your existing customers? For example, if you’re selling tickets to a local sporting event, someone who’s several thousand miles away probably isn’t going to be interested. However, that doesn’t mean your neighbors won’t appreciate the added convenience.

Has your business switched to e-commerce?

 

Post By: SimplyBiz

 

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44 comments
    E-Commerce is the way of the future - but NOT for all businesses. Does your product transport easily and cheaply? South Africa is a tough market in terms of delivery costs because postal id generally not a viable option. Can your profit margin absorb the high delivery costs of a courier?
    The worldwide trend is that the cost of delivery is now included in the quoted online price. South Africa is bucking the trend and many online retailers only offer free delivery with Rx total purchase because of having to rely on expensive couriers. My question is whether or not we can continue to buck the trend?
    We need to remove as many barriers to the buy decision as possible. When a customer gets to checkout and they are suddenly presented with delivery costs and or insurance - this is a major barrier...
    An online shop is just one aspect of the E-commerce experience. The question remains how available are you to your customers? Your shop is open 24/7. Statistics show that over 60% of customers expect a response to an online query on the same day and 40% within an hour. For a small business that's a huge ask. How do you handle online contacts speedily while still getting some sleep?
    Customers are becoming increasingly used to contacting their suppliers digitally and disconcertingly for the online retailer they often change their channel of communication depending on access to wifi etc. The same customer may ask a question on Facebook and then follow up on Whatsapp. How do you manage the multi-channel communication with your customers about a product they are considering while shopping online?
    A challenge and an opportunity for online retailers lies in the fact that customers are becoming more tech - savvy and they are increasingly willing to self-help. This is good news for the seller who then has time to focus on other things but the challenge lies in making sure that the self-help options are easy to find easy to use and actually solve the customer's problem. What self-help options do you offer your customers and how effective have you found them? We use an online chat through the website as well as an FAQ page but we know we need to do much more in this area.
    The main trends I am seeing in online buying are growth in mobile spend due to increased mobile penetration in the country and an increase in cross border shopping as consumers are looking for a larger variety of products at a better price.
    On doing a little research into E-commerce I found a fantastic report on the growth in South Africa. According to the report online shopping has been slow to take off in South Africa but in recent years has picked up steam. The research indicated that 58% of online adults in South Africa shopped online over the past 12 months amounting to an estimated total spend of R37.1bn.
    I completely agree with the point about the product being easy to understand by customers. Good quality images and logical informative product descriptions are essential. We totally under- estimated the time needed to write the product descriptions. It does not pay to simply copy n paste from your supplier because Google penalises any copycat content in your Google rankings. However we have found that the time and effort we spend on the descriptions pays off in increased spend and increased dialogue with our customers.
    Agree Tasty Chef - the mobile phone is the new shop. Hence we need to make sure everything we do is mobile-friendly. We initially battled with some technology that worked perfectly on a p.c. but not a phone.
    Tasty Chef I think this raises the whole question of price & how we differentiate ourselves online. I can compare prices & delivery times on my phone within minutes. Before the proverbial fick of the thumb - how do we get the customer to stay on our page and buy our product?
    How does your online chat work? I have been toying with the idea but not sure how it is implemented and how it is manned... Could you shed some light on this for me and how effective you have found it to be?
    That's a great question I would like to add this to my website and would love to know how to go about it and if it is effective! What else can be done to improve the user experience for an online store?
    Something else I think is a big factor is security with online shopping what are the steps we can take to ensure our customers private details are secure?
    Yes delivery costs are high for ecommerce but so is rental for retailers. Physical retailers typically spend between 10% to 20% of turnover on rental – the base rental or turnover rent that most shopping centres charge. If you are selling online your distribution space is much cheaper to rent – usually less than 5% of turnover or free if you are using your garage! This is important to keep in mind when deciding if you are going to charge customers for delivery. Rental costs are “built-in” to the margin of a physical retailer so how much delivery are you going to build-in to the selling price online?
    According to Forbes.com CX trends for 2016 Google tested 41 shades of blue for its advertising hyperlinks. Designers rolled their eyes — then Google claimed that the experiment had netted an extra $200m in annual revenue It would appear that testing testing & more testing is the way to go!
    Even requiring registration or login is a barrier at checkout. This is a humorous video that makes the point well: https://www.youtube.com/watch?v=3Sk7cOqB9Dk
    One idea is to start leveraging the power of chat but with sophisticated automation built in for example https://www.drift.com/driftbot/. You train your “bot” in how to help customers with basic enquiries and only get involved when they get stuck.
    Other than my comments below about delivery charges vs rental I do think it’s true that South African online customers have had it good with pricing of products and delivery. E-commerce is still tiny in South Africa - around 1% of all retail compared to 15% of retail in some developed markets. Customers don’t think about the cost of driving to the mall paying for parking and looking in multiple shops. Online retailers are trying to shift ingrained behaviour and sometimes a good deal makes the difference. This means charging for delivery online is a major barrier. Once customers start shopping online because of convenience and range and not just price I think you’ll see slightly increased delivery charges.
    Have a look at https://elev.io/ for self-service support. For live chat there is https://www.intercom.com/ and https://www.drift.com/. For help desk software that has self-service functions try https://www.desk.com/ https://www.freshdesk.com/ and https://www.zendesk.com/.
    Thanks andrewctn I will go and check those out!
    After signing up with one of the live chat platforms you are given some code to install on your website. There is some configuration but it is not very advanced. Each of your agents are logged in to the chat system either via a browser or desktop software or an app on their phones. When a customer is browsing your site and engages with the chat window the agents are alerted and one of them picks up the call. The agent is usually told which part of the customer is on and some other information and they then chat back and forth with the customer. One agent can handle multiple chats at a time. Some systems also provide pro-active chat where a customer is alerted to the chat window based on certain rules that you set up. For example if they have looked at your product page and are now on the pricing page their chat window would flash and they would be invited to start a chat. This is the equivalent of a salesperson walking over to a customer in the store who is looking particularly interested in a product.
    So if we were to build in the delivery costs what percentage would you build in to be safe?
    A mobile strategy is crucial particularly in South Africa where mobile penetration and use is one of the highest in the world. However the conversion rate (the percentage of “browsers” who checkout and become “customers”) is much lower on mobile than on desktop. When you’re browsing on your phone when standing in the queue at the supermarket or waiting for a taxi you are much less likely to start entering credit card details and a delivery address. Companies need to find ways to capture some details of those casual mobile browsers in order to follow up later through other channels more conducive to transactions.
    Some context is usually needed when looking at these reported numbers. Some of them include travel and ticket bookings some consider internet banking and buying airtime as an online transaction and others only refer to physical products purchased online. My understanding is that physical products purchased online is still under R10bn a year and the percentage of adults who have shopped in this way would be much lower.
    Such an important point. I think the biggest barrier to purchase online is the fear of fraud. Just this week my credit card was compromised online. It is vital that the retailer invests in quality and reputable payment gateways and that we offer a variety of payment options to increase the customer's comfort level. It's also very important to ensure that we keep abreast of legislation such as the Protection of Personal Information Act which places a strict confidentiality onus on companies to protect customer's personal information.
    Creating video is now also very accessible for retailers and can often tell a story better than many words and pictures.
    @TheTastyChef I'm not actually suggesting that you add delivery charges to the price of the product. My point was more that a R100 product sold in a physical store has to have 10% to 20% allocated to cover rent and therefore the same product sold online for R100 should have some margin available for delivery without increasing the cost or charging delivery every time. It's hard to give an exact percentage for delivery because it's usually dependent on basket size. All courier companies have a basic fixed cost (R40 to R80?) and then charge extra for bigger size and weight. If you are selling cheaper items in small baskets then that basic delivery charge will be a bigger percentage. That is why many stores charge for delivery under a certain basket value to incentivise customers to make a bigger checkout.
    Agreed but let's not single out online retailers. There are many horror stories of bad apples in resturants and shops who skim your credit card details. And of course the simple risk of your wallet being stolen and your credit card or personal information being used online even internationally. Fraud and confidentiality is a reality for every business and every type of retailer.
    You're so right! Being a bit of a dinasuar myself - You tube isn't instinctive for me but for the next generation You Tube it is becoming a verb like Google it. It allows for high impact communication & it doesn't have to break the bank.