12FN-163: E-Business Blog Entry

IT basics to avoid failures in the e-commerce world (12FN-163: Blog Entry)

Despite an increase in online sales activity with high growth rates, ninety percent of all online businesses fail. The reasons are tactical and fail to address the more urgent strategic issues relative to the online business environment. E-commerce projects eat up vast amounts of internal resources and funding, and most importantly, a failed e-commerce project means the company is losing out on one of the most dynamic and fastest growing sectors in the economy. The online sales should be a substantial source of revenue. They may never rival brick and mortar efforts but they can and should be a major source of revenue and brand exposure.

E-commerce projects fail because leaders do not have the knowledge and understanding of the online world. One must understand the nature of the online world if one hopes to be successful online. It is a vastly different landscape where the business strategies must be tailored to its dynamic nature. There are three things e-commerce initiative must take into account.

1. Visibility on the Web

Location is of paramount importance, even on the web. Finding out how and what people are searching for is very simple and requires no investment and very little time, a popular website of search marketers provides the user with the number of times a keyword was searched for in the preceding month. Then it is about the best locations which are generally on the first page of Google's search results page. Users click on one of the top 10 results without ever moving to another page. Not just any first page but Google's first page, which represents maximum of all search traffic. Winning front-page placement on Google requires a thorough understanding of how search engines operate, web honed marketing skills, time and technical expertise in search engine optimization.

2. Relativity of Keywords

On the web, people leap from site to site with the click of a mouse, driven by information search engines return, the relative nature of the keywords they use, and the online stores ability to satisfy the users query. Because of this, websites must be designed with a certain amount of stickiness. This stickiness is not produced with expensive graphics and Webmaster tricks but in the sites ability to address the users' needs based upon their keyword query.

3. The Flat Nature of the Web

The fact that anyone can setup a website and become a competitor with very little investment means the competition from small online stores is significant and can even be dominate in some verticals. Brick and mortar advantages due to economies of scale become less significant, online merchants do not need buildings, inventory, or a sales staff. The quantity physically available, and product display attractiveness and merchandizing give way to content and the ability of the online store to display enough information for the customer to make purchase decisions.

T sum up, building an online business is a lot like buying and implementing a business system, the software and hardware are purchased and installed, users are trained and then comes the realization that ninety percent of the cost and work are in the implementation. The rate of failure in business system implementation is very high, and for the same basic reasons, leaders are not armed ahead of time with the knowledge and understanding to improve their probability of success. An understanding of how the online community shops is essential. The web is a new frontier, a buyer driven world with different rules where buyers enjoy a seemingly unlimited variety of choices, which successful sellers must conform to. The same basic principles of business still apply to the online world, marketing, customer support, product marketing and capitalization are just as important. Strategy is still important; however the strategies employed require a paradigm shift in thinking, and must take into account another world, one somewhat foreign to what have been used in business ventures of the past.

Creating a website where customers can purchase your products is a relatively simple technical task. However, creating a web presence where the website is actually selling the product is not a simple task. Businesses ignorant of the dynamic nature of the webs landscape are destined to repeat the failures of the past and join the growing number of failed initiatives. Only companies with an informed approach are able to cash in on the growth rate.

Dhritiman Panigrahi

12FN-163
E-Business, Sec-A

PGDM - Finance (2012-14)

IMT Ghaziabad, India