by Richard Barrington, VendorSeek.com
Even with the ongoing recession, building a business online remains a viable approach for any new start-up. Why? Well, while even online retailers are feeling the pinch of a tight economy, they are also expected to pick up market share at the expense of traditional retailers during this downturn.
So, an online approach is both more sustainable during a slowdown and a way to get more out of the next economic recovery.
First, the bad news: according to a recent Forrester study of 117 online retailers, most expect growth to slow over the next year, and most are seeing the recession impact their bottom lines. Now the good news: roughly 80 percent of survey respondents see online retailing as better equipped than traditional retailing for countering the effects of the recession. This is why online retailers should continue to take market share from more traditional competitors.
However, that does not mean that all online businesses will succeed. There are some fundamental steps that will help an online business get off the ground more smoothly.
1. Research Your Market
Market research should help you determine several quantitative facts about your potential market, including overall size, demographic makeup, growth rate, and income level. These facts can serve as an initial reality check on your business plan, as well as help you make initial projections about the scope of your business. Beyond the quantitative benefits though, some fundamental market research should help you form a mental picture of your typical customer. This mental picture can subsequently inform a variety of other business choices, from e-commerce Web design elements, to where to promote your site, to what range of related products or services to offer.
2. Research Your Competition
Your market may look attractive in isolation, but next you need to assess the competition. Who are the market leaders, and what are their strengths and vulnerabilities? Who are the new entrants into the market, and which ones are picking up market share? Knowing your competition will help you determine where you fit into the marketplace, and this in turn will influence your product, promotion, and pricing strategies.
3. Prepare Your Back-Office Infrastructure
This is a key. For one thing, an online business relies on a technology infrastructure that is affordable and yet will stand up to spikes in volume due to seasonality or successful promotions. Then there are key details such as credit card processing -- things that make the buying process as seamless as possible. For most start-up businesses, basic infrastructure issues such as the technology platform and credit card processing are outside their primary areas of expertise, so outsourcing solutions should be considered.
4. Create an Attractive Online Place of Business Through Web Design
Now you can think about setting up shop. That's precisely how you want to think about e-commerce Web design -- it is your place of business. The look and navigation of that Web site helps you project an image to your customers. Are you hip, or are you traditional? Are you complex, or easy to access? Different positioning calls for different images, but there are two universal rules to e-commerce Web design: Don't look amateurish, and don't make it difficult for visitors to make a purchase. This is another area where outside, specialized help can make a big difference, as opposed to spending time on something beyond your reason for being in business.
5. Use Search Engine Optimization (SEO) to Promote Your Web Site
An online business should focus its promotional strategies on capturing an online audience. This means some nontraditional promotional strategies, such as search engine optimization (SEO) and pay-per-click (PPC) management. SEO helps associate your product or service with Internet searches on related topics. Pay-per-click management allows you to pay for Internet advertising according to the amount of activity it generates, and to monitor the results of that activity. Because the Internet is still a relatively new business medium, promotional techniques and consumer behaviors are changing rapidly. Fortunately, there are specialists who can help you stay abreast of evolving strategies in Internet marketing.
Conclusion
Overall, there are two major principles to apply when starting an online business:
Even with the ongoing recession, building a business online remains a viable approach for any new start-up. Why? Well, while even online retailers are feeling the pinch of a tight economy, they are also expected to pick up market share at the expense of traditional retailers during this downturn.
So, an online approach is both more sustainable during a slowdown and a way to get more out of the next economic recovery.
First, the bad news: according to a recent Forrester study of 117 online retailers, most expect growth to slow over the next year, and most are seeing the recession impact their bottom lines. Now the good news: roughly 80 percent of survey respondents see online retailing as better equipped than traditional retailing for countering the effects of the recession. This is why online retailers should continue to take market share from more traditional competitors.
However, that does not mean that all online businesses will succeed. There are some fundamental steps that will help an online business get off the ground more smoothly.
1. Research Your Market
Market research should help you determine several quantitative facts about your potential market, including overall size, demographic makeup, growth rate, and income level. These facts can serve as an initial reality check on your business plan, as well as help you make initial projections about the scope of your business. Beyond the quantitative benefits though, some fundamental market research should help you form a mental picture of your typical customer. This mental picture can subsequently inform a variety of other business choices, from e-commerce Web design elements, to where to promote your site, to what range of related products or services to offer.
2. Research Your Competition
Your market may look attractive in isolation, but next you need to assess the competition. Who are the market leaders, and what are their strengths and vulnerabilities? Who are the new entrants into the market, and which ones are picking up market share? Knowing your competition will help you determine where you fit into the marketplace, and this in turn will influence your product, promotion, and pricing strategies.
3. Prepare Your Back-Office Infrastructure
This is a key. For one thing, an online business relies on a technology infrastructure that is affordable and yet will stand up to spikes in volume due to seasonality or successful promotions. Then there are key details such as credit card processing -- things that make the buying process as seamless as possible. For most start-up businesses, basic infrastructure issues such as the technology platform and credit card processing are outside their primary areas of expertise, so outsourcing solutions should be considered.
4. Create an Attractive Online Place of Business Through Web Design
Now you can think about setting up shop. That's precisely how you want to think about e-commerce Web design -- it is your place of business. The look and navigation of that Web site helps you project an image to your customers. Are you hip, or are you traditional? Are you complex, or easy to access? Different positioning calls for different images, but there are two universal rules to e-commerce Web design: Don't look amateurish, and don't make it difficult for visitors to make a purchase. This is another area where outside, specialized help can make a big difference, as opposed to spending time on something beyond your reason for being in business.
5. Use Search Engine Optimization (SEO) to Promote Your Web Site
An online business should focus its promotional strategies on capturing an online audience. This means some nontraditional promotional strategies, such as search engine optimization (SEO) and pay-per-click (PPC) management. SEO helps associate your product or service with Internet searches on related topics. Pay-per-click management allows you to pay for Internet advertising according to the amount of activity it generates, and to monitor the results of that activity. Because the Internet is still a relatively new business medium, promotional techniques and consumer behaviors are changing rapidly. Fortunately, there are specialists who can help you stay abreast of evolving strategies in Internet marketing.
Conclusion
Overall, there are two major principles to apply when starting an online business:
- Your business plan should represent a combination of traditional business methods and techniques specific to the online medium.
- You should identify the tasks where your organization can add value, and outsource functions outside your primary expertise.
Applying these principles step-by-step, as described above, should help you get your online business off to a successful start.
Richard Barrington is a freelance writer and novelist who previously spent over 20 years as an investment industry executive.
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