e-commerce and small business

How E-commerce is Shaping the Future of Small Business

Ecommerce and small businesses have proved to be natural partners during the short while since the former appeared on the scene. The computer, telecommunications, and cell phones are transforming the way business are carried out. Small businesses now find that they could compete with large businesses. An awareness of the e-commerce and small business partnership potential could help you develop your own strategy at your small business start.

Only a few pioneers have really seized the opportunities offered by eCommerce and small business partnerships and made good. Most small business persons are yet to explore its full potential.

Ecommerce and small businesses can start the partnership from the very beginning, as when you start your business online instead of offline. On the other hand, many small businesses go online only at a later stage of their existence.

In this article, we would look at what eCommerce is and how it provides a new (and more level) playing field to small businesses.

Ecommerce: What Is It?

Ecommerce involves doing business with the help of computer networks. You could get a clearer idea about e-commerce by reading the separate Definition of Ecommerce.

ecommerce

The real partnership between e-commerce and small business begins when a full-fledged e-commerce web site, offering shopping cart and credit card acceptance facilities, is put up.

How Ecommerce Benefits Small Business

Ecommerce and small business partnership makes competing with large business a feasible proposition for small business, as the latter now finds that it can

Send brochures and other documents to customers or suppliers for immediate viewing, using email;

Collect valuable business information on the internet, such as contract opportunities and competitor actions;

Reduce costs of operation by minimizing:

  • Dependence on expensive facilities such as offices and shops in prime locations;
  • Number of staff needed to service customers; and
  • Wasteful marketing expenditure, by reaching target customers with greater precision and also putting product catalogs online;
  • Reach markets in distant places, even those in other countries, and
  • Provide excellent customer service even to these distant customers through FAQs, automated responses and remote support, for example.
  • There is also the possibility to reduce other costs such as those for inventory holding and warehousing by working in collaboration with suppliers. Such collaboration becomes feasible under e-commerce.

The small business person also finds that e-commerce is not all that expensive. E-mail is available free, internet connectivity is affordable and maintaining a web site does not cost much. Most surprisingly, the costs could often be recovered in no time through increased revenues.

New Opportunities for the Entrepreneur

Ecommerce and small business proved to be true partners in some unexpected ways – particularly in the case of very small entrepreneurs.

No more had the business person any compelling need to locate the business near the customer. A business could be carried on while residing at isolated locations of one’s choice. The internet allowed the person to reach customers all over the world from such locations.

For those business persons who just could not spare fixed timings for business, e-commerce provided the opportunity to work flexible hours. Women could now do business and attend to children and housework, for example. So could the part-time entrepreneur seeking to develop a second income stream.

Probably the greatest beneficiaries of the new partnership between eCommerce and small businesses were the businesses selling niche products. Customers for such products tend to be few and far, and achieving viable sales volumes was almost impossible. Now, however, they could reach customers anywhere in the world, and do so at low costs through search engine marketing.

How Do You Do Ecommerce?

The first requisite for doing eCommerce is dependable connectivity. The article “The Importance Of Strong Connectivity For Your Business” discusses the role of connectivity in modern small business.

Ecommerce and small businesses operate somewhat differently from eCommerce and large businesses. While the latter tend to use eCommerce to reduce costs by integrating customer relationship and supply chain into their operations management, the former seeks to achieve higher profits by reaching wider markets.

E-commerce usually progresses through a number of stages.

  • Using e-mail for communications;
  • Transmitting files and documents over the internet;
  • Conducting fact-finding research;
  • Purchasing products and services online;
  • Selling one’s own products and services online;
  • Collaborating with business partners and suppliers;
  • Bidding online for contracts;
  • Hiring employees with specific skills; and
  • Conducting online meetings.

Small businesses usually set up their own eCommerce web sites after they have become familiar with the internet. With familiarity comes an awareness of how they could benefit from eCommerce.

The web site starts as a simple brochure web site introducing their business and offers to the world. If promoted successfully such web sites could bring the business to the notice of new customers.

Next might come to the facility for visitors to send queries and comments through the web site. Customers might place their orders using a toll-free number or email/fax.

Now comes the important stage of uploading a full product catalog with descriptions, pictures and price information to the web site. Shopping cart and credit card payment facilities are also incorporated. Customers could now place orders online 24 hours a day, 7 days a week.

Web sites usually use search engine marketing to get visitors and some of the visitors might buy immediately. However, it is Email Marketing Campaigns, particularly newsletters, which reach out to the customers and bring real volumes for the small business.

As online sales increase, it becomes necessary to provide customer support facilities. Customer support seeks to improve customer experience through:

  • Creating an FAQ page of frequently asked questions and their answers
  • Providing Contact and Message Forms at the Web site for customers
  • Using online chatbots
  • Autoresponder e-mails acknowledging customer mails ensuring that all customer queries and complaints are attended within predetermined time limits.
  • A stage comes when coordinating all the different aspects that begin to pose problems. These include:
  • Updating product and pricing information;
  • Updating inventory in real-time and handling orders for stockout items;
  • Tracking the status of orders;
  • Invoicing completed orders and tracking payments; and
  • Attending to the increasing number of customer queries.

Ecommerce and small businesses now face a dilemma – to grow or to remain small. If growth option is chosen, it might become necessary to go in for expensive software solutions to integrate front end interfaces with back end infrastructure and accounting.

Ecommerce and Small Business: Problems

Not all small businesses could benefit from e-commerce. Certain products and services are just not suitable for selling online. Bulky items like furniture and farm products that need to be fresh are examples.

Customers might use the web sites offering such products for comparison purposes and then go to a conventional brick and mortar store for actual purchases.

There is also a mindset problem. Some business persons are just not interested in going online. Many might not see any benefit from doing so, or find that they do not have the time or infrastructure to do so. Others might be held back by the initial costs of an uncertain operation or the heavy competition already online.

A number of businesses that do go online, might not adopt appropriate strategies to succeed. A web site needs to be promoted if prospective customers are to become aware of it. The content of the web site needs to create a desire to purchase. And the design of the site must make finding products, placing orders and making payments easy.

And growth brings problems of integration, as mentioned in the last section. The solution might be too expensive for the business.

Ecommerce and Small Business: Strategies

Some e-commerce models have worked quite well while others have yet to prove themselves. The dot com portals, which hoped to become viable by getting visitors through free content and services, and paid advertisements targeted at these visitors, did not quite work out.

eBay pioneered a new way of doing business online through their internet auctions portal. AbeBooks allowed individuals to open bookstores at their site with eCommerce facilities. Many niche businesses succeeded in marketing their products widely through keyword-based search engine marketing. Cooperative working among product developers, fulfillment houses and affiliate marketers allowed all parties to prosper. Specialized content sites, with information of high value, offered free abstracts and access to full articles and materials for a nominal subscription charge.

If you could find an innovative way for eCommerce and small business partnership, you might also grow like eBay or Amazon.

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