Tuesday, 3 January 2012

E-Commerce as an Internet Business

Components of an Internet Business
    Every era of business yields new strategies and new ways of doing business. With the advent of radio and television came the first mass-market advertising. Now, the Internet has so radically changed business that the rules for corporate strategy that held for the last 50 years (since the dawn of television) have begun to crumble, says Business Town
   There are some literal elements of commerce that are necessary for any transactions to take place, which are as true for regular bricks-and-mortar commerce as they are for e-commerce. First, whether you are doing business online or in the real world, you have to have a product to sell or a service to offer. Then, you must have a place from which to do business. In the traditional world of commerce this can be a physical store or, in a more figurative sense, a catalog or phone number. In the world of e-commerce the place from which you do business is your Web site.
   In both regular commerce and e-commerce you need to find a way to attract customers to your place of business. This is embodied by your marketing strategy, and everything from advertising to word of mouth fits into this category.
   In order to do business, you also need a way to take orders and process payment. In a retail store there are no orders. Customers simply find the products they want, get in a line at the register, and pay the cashier. In e-commerce, orders have to be placed and items shipped.  Orders are usually handled through interactive, online forms. Money is another issue easily handled in traditional commerce. Customers in a retail store pay by check, cash, or credit or debit cards. Online customers cannot pay by cash or check, only through electronic means. Also, there are issues of security that surround online payment that do not come into play in the traditional bricks-and-mortar world. E-commerce transactions have to take place through secure electronic connections and special merchant accounts for accepting payment.
Once payment is collected, delivery of the product must take place. Fulfillment in traditional stores is as easy as putting the item in a bag and handing it over to the customer. Fulfillment in the world of e-commerce is more difficult, requiring shipping and transportation similar to catalog and mail order businesses. For businesses that integrate e-commerce into their existing business plan, fulfillment is as easy as hiring an extra employee to ship online orders. In Internet startup businesses, fulfillment must often be outsourced to a facility that can handle order processing and shipping in a more timely and professional manner.

What is E-Commerce ?

   Electronic commerce, commonly known as e-commerce, ecommerce or e-comm, refers to the buying and selling of products or services over electronic systems such as the Internet and other computer networks says the definition at Wikipedia. It also includes the entire online process of developing, marketing, selling, delivering, servicing and paying for products and services. The amount of trade conducted electronically has grown extraordinarily with widespread Internet usage. Modern electronic commerce typically uses the World Wide Web at least at one point in the transaction's life-cycle, although it may encompass a wider range of technologies such as e-mail, mobile devices and telephones as well.

E-commerce can be divided into:
  • E-tailing or "virtual storefronts" on Web sites with online catalogs, sometimes gathered into a "virtual mall"
  • The gathering and use of demographic data through Web contacts
  • Electronic Data Interchange (EDI), the business-to-business exchange of data
  • E-mail and fax and their use as media for reaching prospects and established customers (for example, with newsletters)
  • Business-to-business buying and selling
  • The security of business transactions

The Necessities of E-Commerce

   Businesses that choose to engage in e-commerce have to remember the primary principals of commerce:
  • Providing a product or service to be purchased.
  • Customers need to know how to find the product or service, so marketing is necessary.
  • The exchange of money for the product or service.
  • A delivery mechanism.
  • Customer service and communication.
These fundamental aspects of commerce are then modified to suit the e-commerce environment.

Successful E-Commerce Operations

   Companies like eMarketer have made it their business to study the trends of e-commerce and generate information on the topic.
Their studies have found the following to be successful e-commerce opportunities:
  • Apparel
  • Books
  • Computer hardware, software and accessories
  • Electronics
  • Entertainment
  • Financial services
  • Flowers
  • Gifts
  • Information
  • Music
  • Travel services
  • Toys
This is not to say that your venture won't experience success by the standard e-commerce definition; it's just that consumers have grown accustomed to purchasing these products and services online.

  To build your business through E-Commerce develop a good understanding of the Internet, how Web sites work and the components that make an effective e-commerce Web site. This doesn't mean you have to design the site yourself, but to have an underlying comprehension of terms is always helpful.

There are a variety of books available to help you learn this, including:
  • For the novice: Internet for Dummies by John R. Levine, Margaret Levine Young and Carol Baroudi. The Dummy series breaks things down into simple terms and tip references.
  • For the advanced: Designing Easy-to-Use Websites by Vanessa Donnelly. A handy guide for those with more technical knowledge.
   Next, ramp up your Business plan to include an effective e-commerce position. Working in the world of e-commerce can upset the apple cart of traditional business models. That is often a positive thing, but if your current business plan doesn't include e-commerce, or your product or service needs to be amended to enter into e-commerce, you'll have to create a new plan.
   Finally, cultivate an awareness of how marketing for an e-commerce enterprise is different from the traditional retail store front or small business arena. A helpful resource for this might be the book Streetwise Lost-Cost Web Site Promotionby Barry Feig.
   An e-commerce definition need not be complicated, but it does ebb and flow with changes in the electronic age. While the foundation is rooted in standard commerce principles, e-commerce will more than likely continue to revise elements that apply only to its practice is what Love to Know Business says.