In today’s world, the internet has changed the way we conduct business. E-commerce has become a popular means of buying and selling goods and services online. Many businesses have moved their operations online, and it’s not surprising to see why. According to Statista, global e-commerce sales are expected to reach 6.54 trillion US dollars in 2022, a significant increase from 3.53 trillion US dollars in 2019. This article explores how investment in e-commerce can increase profits for businesses.
Criteria to meet for an e-commerce Business
- An e-commerce business must meet certain criteria. This category includes companies who conduct business online. Most of these businesses fall under one of the four categories listed below:
- Direct-to-consumer businesses function essentially like physical stores but frequently only online. As hinted by the name, DTC companies go straight to the source and do not rely on other companies to distribute their products.
- Direct-to-consumer vendors sell their own inventory to clients. A well-known example of this is Casper.
- These platforms generate income by taking a percentage of sales and providing services to their merchants.
- Software providers have a big role in the entire e-commerce ecosystem since they provide cloud-based services that enable transactions and other jobs like marketing, payment, customer service, and sales management. Consider Square or Shopify.
- The final stage of the product’s journey is handled by logistics and delivery companies. They transport the goods at the desired location, whether it is nearby or far away. Consider UPS and FedEx.
The reason behind e-commerce investment
With advancements in technology, consumers can now readily study things online and purchase them rather than going to actual retail locations. However, compared to the retail business, e-commerce penetration is relatively modest. Therefore, the e-commerce industry has enormous capacity for expansion and offers the chance to earn billions of dollars.
How can I discover e-commerce businesses to invest in?
You might not be aware that some of the recognizable names from whom you buy your goods online are available for purchase. Make a watchlist of e-commerce-related stocks and ETFs and familiarize yourself with the theme. You can start with any stocks and ETFs that catch your attention on the Public app, adding them to your favorites list without making any purchases, and keeping a watch on them.
Becoming a great writer requires reading for much research. A helpful strategy for enhancing your knowledge is to keep note of what you’re learning.
Important Things to Think About Before Investing in eCommerce
eCommerce thus appears to be a wise business investment. Before beginning, you need to be aware of eight things. Our whitepaper is available if you want further details. Some investors find investing in e-commerce intriguing due to the possible development trajectory analysts foresee, particularly in the post-COVID future.
Over time, the industry has advanced significantly, but there is still much possibility for growth as technology develops. Software for payment processing and delivery services have grown significantly during the last few years.
1. Including It in Your Enterprise Resource Planning (ERP) Solution
● Possibly the most important area is this one. Any eCommerce solution must be fully integrated with the business system of the organization. If not, there is a chance of exorbitant expenditures, delays, and continuous support problems.
● It must be able to connect to inventory levels at each location, customer account information and credit, delivery management, promotion management, marketing management, alternative and equal products, and much more.
2. Availability of Stock
Any eCommerce solution must include a reliable mechanism for managing and controlling inventories. The system is the only source of information the online customer can rely on.
Customer dissatisfaction issues will arise from online purchases of unavailable goods, and you will miss out on sales possibilities if available stock is not displayed online.
3. Use of search engine optimization (SEO)
A high-ranking SEO must be available through your eCommerce solution. This means that you must be easily found if people are looking for you or your solutions online. The likelihood of leads and opportunities from your eCommerce solution increases with ranking.
4. A Rich Modern eCommerce Environment
According to Forrester, “their (B2B firms’) more seasoned B2C brethren have plenty to teach them (about standards for customer experience and eCommerce best practices).“ Because of this, even a B2B eCommerce solution must provide a rich B2C experience.
Customers can leave a physical showroom if they don’t like it. Similar to this, your eCommerce solution needs to be appealing, be simple to use, and have good navigation. Additionally, that user-friendly setting must be accessible from anywhere at any time using any device.
5. Return on Assets (ROI)
● Providing you do your homework and pay attention to your customers, eCommerce may provide ROI models.
● When calculating ROI for eCommerce investments, take into account the following factors:
● Online shopping versus a conventional (physical) investment
● Cost estimates for eCommerce and how it fosters expansion by reaching out to a wider population
● Making customer-specific information available to them, such as discounts, o Implementation speed, which also reflects the supportability of the solution
● Implementation costs; an eCommerce system prepared for ERP
6. Changing Your Plan of Action
Any eCommerce system needs to adjust to your current clientele and marketing plan, not the other way around.If the majority of your clients are interested in eCommerce, you must join the movement if you want to stay in operation for the long run.
A primary strategy must be prospect-friendly if acquiring new clients is a priority.
Your eCommerce solution may be easier if you are only focusing on (current) B2B clients.
There are various solutions that deal with either one or the other.
7. References
When evaluating any investment opportunity or potential business partnership, it’s essential to conduct thorough research and examine references. This includes speaking with past and current clients to get a better understanding of their experiences working with the company in question.
By doing so, you can gain valuable insights into the company’s communication style, reliability, and overall quality of work. References can also provide an opportunity to ask specific questions related to your industry or business needs, ensuring that the partnership will be a good fit. Ultimately, examining references can help mitigate risks and make more informed decisions, leading to a more successful and prosperous business venture.
8. Custom vs. Standard
A custom-made or even home-grown eCommerce solution may be the simplest option for certain people whose needs are rather straightforward. Given that they are created for your market, an industry-specific eCommerce vendor can be the best option for you.
That might be quickly adaptable for your company. Whatever strategy you choose, it’s imperative to make sure you’ve addressed the previously raised issues, including:
● Ongoing support and upgrades (delivery and expenses)
● Implementation costs
● ERP integration
● Supply Chain integration
● Bibliography
Conclusion
Investing in e-commerce can be a strategic move for businesses looking to increase profits. By understanding the benefits, types of investments, factors to consider, challenges and risks, and best practices, businesses can make informed decisions and maximize their returns.
