It is just the second month of 2016 and we can already see a huge trend developing. Virtual companies and the Internet are changing traditionally accepted economic practices and making competition even fiercer than it has ever been in the past. This technology is known as e-commerce and it is basically the process by which businesses and consumers buy and sell goods and services through an electronic medium. Everything from food and clothes to entertainment and furniture can be purchased online.
It is no doubt that the internet has dramatically affected the way people shop and interact with businesses. In this modern world of technology, e-commerce is becoming a very significant option for many businesses, especially retail stores.
More and more consumers are shopping online as compared to the past. With developments in more electronic devices that can access the Internet and in mobile technology and applications, consumers are opting to buy products online rather than going the traditional way of visiting a physical retail store. Some of the benefits that such consumers enjoy include saving on time and money, avoiding huge crowds that would normally be found at retail stores and finding better bargains.
Small retail stores often lack the financial muscle to compete with their larger counterparts. However, these retail stores can leverage the benefits that come with e-commerce and even gain a competitive edge against the bigger brands. Such benefits include:
1. A Leveled Playing Field
Small businesses typically do not have the same resources or budget funds as their retail giant counterparts, giving them a disadvantage over the latter. However, making the leap into e-commerce can just help address that problem. Generally, consumers are not aware of the size of your e-commerce budget, so the amount you spend on creating your platform is not as important as the features and services available to them. These features may range from having in-depth product information to order tracking and stored payment information. Advancements in retail technology today are leveling the e-commerce playing field and equipping small retailers with the tools and capabilities they need to satisfy consumer expectations.
2. Reduced Operational Costs
One advantage of adopting the e-commerce model is having your operational costs greatly reduced. These costs may be reduced in the following ways:
a) No Rental Space
Having a physical store at a physical location requires investment in renting out space for the store. However, an e-commerce does not need a physical location and thus the costs that would have been directed to renting out space can be saved.
An e-commerce store does not require much more than what is already available at the brick and mortar location. A clothing boutique that wants to start selling online only needs a computer with an internet connection to run the ecommerce solution (a website or app) and some boxes to ship things in. In this way, adding ecommerce can require far less investment than opening a second location.
With a web-based management system, you can automate inventory management and decrease the costs associated with hiring personnel to do various sorts of work in the store.
c) Advertising & Marketing Cost
If you opt for ecommerce, you don’t have to spend your money on advertising and marketing. However, organic search engine traffic, social media traffic and pay-per-click are some of the advertising channels that are cost-effective.
These savings can then be passed over to customers in the form of discounted prices. This in turn increases customer loyalty to a brand.
3. More Geographical Reach
Having a retail store at a physical location limits the geographical scope that a business has over its consumers. Going the e-commerce way however opens up boundaries as the Internet is not limited to a specific location but rather spans worldwide. Thus an online store has more reach to customers as there are no theoritical geographical limitations. Not only is the internet increasing the number of potential customers that a company can reach, but it is also driving profitability.
4. Gain New Customers With Search Engine Visibility
The traditional mortar and brick store relies on branding and customer relationships, but online retail has the added benefit of driving traffic from the search engine. Customers can follow links in search engine results and land up on e-commerce websites whose presence they were not aware of. This increases the number of potential customers for a business.
5. More Operational Hours
Unlike the traditional physical store that has opening and closing hours, the online retail has no such hours but rather is always open throughout the day and night. The websites run all the time, all year round. This gives online stores an advantage since it increases the number of orders they receive and in turn boosts their sales.
6. Better Understand Your Customers
It is difficult to build a customer persona when you’re running a brick and mortar store. You can get a rough idea of who your customers are, but it’s based on your perception rather than actual data. With an e-commerce store, you have the ability to track your customers’ buying habits. What products are they most interested in? When are they likely to buy? What motivates them? All of this information can be used to sell more efficiently to your customers.
Therefore, e-commerce retailers are better placed to keep a constant eye on consumers’ buying habits and interests to tailors their offer suit to consumers’ requirements.
Adopting the e-commerce model and internet marketing strategy can prevent a small retailer from falling behind their competitors and provide new sources of revenue as more consumers choose to shop online. Thus an effective e-commerce strategy is essential for modern retailers seeking to edge out competition and even gain on big brands.