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Found this interesting article while doing a little research and thought you all would find it useful. Basics but good reminders, IMO.
Failures in e-commerce used to make headlines, but you don't hear as much about busted dot-coms these days.
For the most part, venture capitalists have quit funding elaborate offices with rock-climbing walls and pool tables for companies with unclear revenue potential, making flameouts far less spectacular.
Online companies are now more likely to die of lack of planning than of elaborate spending. Here are five questions every aspiring e-tailer should be able to answer before building a Web site:
[SIZE=+2]1[/SIZE] How will I make money?
Not knowing where the profits will come from has killed more than a few online businesses. Often, there's a sense that the money will come from a mix of selling products and advertising, but there's no real idea of how much cash will come in, or when it will arrive.
Find out what the profit margins are in your market — and whether those margins will cover your costs, says Lauren Freedman, president of Chicago consulting firm E-tailing Group Inc. If you plan to sell ads, calculate how long it will take to build up traffic to a level that makes those ad sales possible.
[SIZE=+2]2[/SIZE] Why would anyone buy from me?
Are your products cheaper, easier to find or of better quality? Anyone who has run an online business over the past five years can attest to the boom in competition, intensifying the need for an identifiable advantage.
One edge is selling a unique or rare product, says John Deneen, president of SiteForm Inc., a Chicago Web design company. Companies that sell products that are hard to track down in the real world have the best chances of online success. Take grandfather clocks, for example. "That would be mighty hard to find going door-to-door," he says.
[SIZE=+2]3[/SIZE] How will customers find me?
Just enter the right keywords into Google and your company pops up instantly, right?
Wrong. Moving a company up the search engine lists is an art and a profession, and it usually costs money. It's just one of many ways good e-commerce companies spend their marketing budgets.
LeatherTree.com spends about $10,000 a day in online advertising during the holiday season, says owner Jacqueline Berger. "You have to do that," she says. "Otherwise, you get lost in cyberspace."
[SIZE=+2]4[/SIZE] Who are my suppliers?
Suppliers can make or break a company, particularly if it relies on them to drop-ship orders. To find the right ones, start by talking with a long list of potential suppliers and their customers. Ask for references from companies about the same size as your business. Or visit trade shows to talk to people pitching products who can hook you up with reliable suppliers.
[SIZE=+2]5[/SIZE] How much will shipping cost?
If shipping costs are high, customers may prefer buying from traditional stores. But you should also consider what shipping might directly cost your business. Although customers typically pick up these costs on their orders, there are times when the seller will eat some shipping costs, making deep cuts in profits. Limiting the number of suppliers on your site saves you, and your customers, the hassle of extra shipping costs.
Source : Chicago Business News, Analysis & Articles | Your five questions | Crain's
Failures in e-commerce used to make headlines, but you don't hear as much about busted dot-coms these days.
For the most part, venture capitalists have quit funding elaborate offices with rock-climbing walls and pool tables for companies with unclear revenue potential, making flameouts far less spectacular.
Online companies are now more likely to die of lack of planning than of elaborate spending. Here are five questions every aspiring e-tailer should be able to answer before building a Web site:
[SIZE=+2]1[/SIZE] How will I make money?
Not knowing where the profits will come from has killed more than a few online businesses. Often, there's a sense that the money will come from a mix of selling products and advertising, but there's no real idea of how much cash will come in, or when it will arrive.
Find out what the profit margins are in your market — and whether those margins will cover your costs, says Lauren Freedman, president of Chicago consulting firm E-tailing Group Inc. If you plan to sell ads, calculate how long it will take to build up traffic to a level that makes those ad sales possible.
[SIZE=+2]2[/SIZE] Why would anyone buy from me?
Are your products cheaper, easier to find or of better quality? Anyone who has run an online business over the past five years can attest to the boom in competition, intensifying the need for an identifiable advantage.
One edge is selling a unique or rare product, says John Deneen, president of SiteForm Inc., a Chicago Web design company. Companies that sell products that are hard to track down in the real world have the best chances of online success. Take grandfather clocks, for example. "That would be mighty hard to find going door-to-door," he says.
[SIZE=+2]3[/SIZE] How will customers find me?
Just enter the right keywords into Google and your company pops up instantly, right?
Wrong. Moving a company up the search engine lists is an art and a profession, and it usually costs money. It's just one of many ways good e-commerce companies spend their marketing budgets.
LeatherTree.com spends about $10,000 a day in online advertising during the holiday season, says owner Jacqueline Berger. "You have to do that," she says. "Otherwise, you get lost in cyberspace."
[SIZE=+2]4[/SIZE] Who are my suppliers?
Suppliers can make or break a company, particularly if it relies on them to drop-ship orders. To find the right ones, start by talking with a long list of potential suppliers and their customers. Ask for references from companies about the same size as your business. Or visit trade shows to talk to people pitching products who can hook you up with reliable suppliers.
[SIZE=+2]5[/SIZE] How much will shipping cost?
If shipping costs are high, customers may prefer buying from traditional stores. But you should also consider what shipping might directly cost your business. Although customers typically pick up these costs on their orders, there are times when the seller will eat some shipping costs, making deep cuts in profits. Limiting the number of suppliers on your site saves you, and your customers, the hassle of extra shipping costs.
Source : Chicago Business News, Analysis & Articles | Your five questions | Crain's
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