The second of a two-part series on e-commerce
Written by Writer on Friday, October 3rd, 2008
The second of a two-part series on e-commerce
SRWIPA SIRIPUNYAWIT
Last week we discussed the e-commerce business with two experts: Dan Neary, vice-president of eBay, who oversees emerging markets, including Southeast Asia and India, and Torboon Puangmaha, CEO at Sanook Online Ltd, the owner of several local popular web sites.
This week we will discuss key factors contributing to the success of an online business, which will benefit those wanting to start their own virtual shops.
Here are useful guidelines from the experts.
For starters
There are several means for would-be online entrepreneurs to begin their businesses. First is setting up their own web sites. Second is to sell their products and services through online marketplaces that have already developed high traffic, customers’ base and good credibility.
According to Neary, setting up an individual e-commerce web site requires more time, upfront investment and relevant experience. That would start from programming the web site or customising off the shelf solution. The individual will need to find a hosting environment, set up merchant payment for credit cards and finally invest on advertising cost to promote the web site.
“Each phase requires substantial time and the success of the e-commerce site still depends on elements like product demand, merchandising and customer satisfaction,” Neary explains.
Torboon shares a similar sentiment. It’s not that necessary for individuals to open their own e-commerce sites. That’s not the factor guaranteeing the success.
“The important thing is how you can make as many people see your products or services. So, customers traffic is vital. The higher the traffic on the web sites, the more people will see your products and buy them,” Torboon notes.
There are quite many well-established online marketplaces where they don’t charge anything or, if they do so, at very low rates for those wanting to sell products and services on their sites. So, it’s necessary for the starters to consider carefully and make a smart choice here. Selling their products through the well-known web sites might be a better off solution.
“And when your products or brands become well-known, then you may want to start out your own web sites,” Torboon adds.
Product and service - a key success
The next thing determining the success of e-commerce is to choose the right product and service - one of the core marketing’s 4Ps.
One’s need to offer products and services for which there is a demand and have unique selling points, notes Neary.
Some products are not for online selling particularly those perishable such as some kinds of food or those requiring high involvement of customers, Torboon adds. The reason is that the customers can’t get to see the products before paying money.
Nevertheless, the high-value products such as houses, lands and cars are more often seen on the Internet. Yet, they are also required actual visits of customers to the real sites. So, the web sites are just first gate providing customers the information.
What products should be sold?
According to Neary, the top categories that Thai sellers trade on eBay are clothing, shoes and accessories, jewellery, gems and watches, as well as auto-parts and accessories.
Thai users are among the most active. On any given day, a Thai eBay member sells a piece of jewellery or a watch every 27 seconds and an article of clothing every 56 seconds to buyers all over the world.
“We encourage Thai sellers to also explore other types of products that are unique, durable and easy to ship. A product that is in demand in one market might not work for another,” Neary adds.
Products that fail
A new seller or a newly introduced product may not sell for various reasons such as uncompetitive pricing, inappropriate merchandising, insufficient description or inadequate marketing.
“Often people give up too soon without actually looking into the real reasons behind unsuccessful sales,” Neary says.
He continues that many eBay PowerSellers have shared their strategy of always having a “fresh window display”, in which they regularly rotate items on offer. With this strategy, the products that didn’t sell at the first listing may be purchased at its second or third listings.
The next element of the 4Ps is price. For an online business, price cuts are not encouraged as they are effective only over a short period of time. It’s better to price your items carefully at a competitive rate, deliver value in terms of customers service and benefit from this approach over the long run.
How to market
The basics of marketing apply here-source for products that are in demand, describe your item in local market context so that your item can be found easily, provide detailed information and photos, price your item through some additional marketing features, describe in detail your sales and return policies so as to help the customer make an informed decision when buying a product, says Neary.
“Also ensure buyers understand your differentiation and the benefits of your product offering and provide excellent communications and after-sales service to build a loyal customer base and good reputation,” he adds.
One way of getting your products or websites known is to advertise them on as many websites as possible particularly on the high traffic ones, adds Torboon. Sometimes this doesn’t cost much money. On top of that, the use of search engine is always useful.
“It’s also important to respond to your customers as fast as possible. It shows that you’re always there and for real. It’s one way to build your reputation and brand,” Torboon notes.
Fulfillment
Other vital factor is for the seller to choose a reliable and cost competitive shipping method because the moment the package arrives at your customer’s door, it directly means his or her impression of your service. You need to make sure the items are not lost or damaged during the transit.
Care
Good customer service is the foundation of success. Open communication between customers and sellers is essential. “Always respond to customers’ queries in a timely manner to build trust. Communicate in a clear, honest and friendly way to help encourage positive customer relationships. It’s always easier and cheaper to retain an existing customers than to acquire new ones,” Neary says.
Payment channel
It’s always useful to provide several different payment channels to customers. Through credit cards, e-wallet, bank transfer, and the like are choices should be offered particularly for Thais who still aren’t used to with the use of credit card, says Torboon.
The channel that has earned a lot of popularity is e-wallet. A customer opens an actual bank account and deposit money into it while also opening a virtual account online with e-wallet service providers. This way is secured and convenient. Local customers may get accustomed to the provider Paysbuy.com while international shoppers are familiar with PayPal.
Pros and cons of e-commerce
PROS
- Easy to set up online stores as they require minimal investment and resources compared to actual stores.
- It can access to millions of potential buyers all over the world in a brief of time.
- Flexibility. You can work at your preferred time and schedule, from anywhere in the world with Internet connection.
- Earn additional income without affecting your full-time job.
- It can eventually turn into your major source of income once you have mastered the processes and strategy.
CONS
- It’s impossible for the customers to physically examine the products you sell. Therefore, you will need good photos and detailed sdescription to ensure they know what they are buying.
- Building trust and credibility is tough yet important. Therefore, it’s necessary to be honest to the customers and make sure the products meet their expectation and satisfaction.
