Throughout the last decade there has been quite a bit of hype about the economics defying and magical world of the internet. 

“Everyone” it seemed was getting rich quick. 

Ultimately, I believe we all want an answer to the question, “Ecommerce, is it a boom or bust?”

Throughout the last decade there has been quite a bit of hype about the economics defying and magical world of the internet.  “Everyone” it seemed was getting rich quick.  Well, everyone except for all those companies that were splashed all over the news that went bankrupt.  Depending on where you look or who’s talking, figuring out what to do about how to make money online is like deciding what to do with your life.  It’s an overwhelmingly broad question with no clear answer.  Ultimately, I believe we all want an answer to the question, “Ecommerce, is it a boom or bust?”

There’s money in them there hills…

People are making money online.  And they’re not making it magically.  According to Forrester Research, in 2004 shoppers reportedly spent $144 billion on the web or 6.6% of total retail sales in the U.S up from 5.4 percent in 2003.  In 2005, online sales are expected to account for 7.7 % of total retail sales.  The growth rate outpaces traditional retail, so yes, companies are making money.  And, they are not making it magically.  So you see, there is money in them there hills.  You just have to know where to look.

The Looking Glass (The positive side of ecommerce)

Ecommerce has been a huge success for those companies that have been able to adapt to what the web truly has to offer.  But that right there is the biggest hurdle to most organizations, they just don’t really know what the web has to offer.  Selling online is very appealing for four major reasons:

1. Ability to reduce cost-both product cost and operating expenses.
Selling online means there’s no forms to print, no extra staff to hire and train, and advertising can usually be cut dramatically.  Online sales has both direct and indirect impact on your bottom line because of it’s speed in the seller being able to get money, the increased productivity for staff since manual selling tasks are being taken care of (they can move on to bigger and better things like customer service), and the time savings from the reduction of errors like missing or misspelled customer contact information.

2. Service Enhancer.
Online sales are convenient.  Customers can buy when they want, not when it’s convenient for you.  Plus, online response time for sales is immediate.  Typical shopping carts can check inventory, take credit cards, and set up shipping in a matter of seconds.  A buyer can have their selected item on its way with just a few clicks of a keyboard without ever leaving home.  Try thinking of that the next time you are standing in line behind someone writing a check.

3. Increased Quality.
Ecommerce is all about tracking.  Being able to monitor instantly what your customers prefer, enables you to further refine your product and service offerings.  It also means your customers all see the exact same information.  There’s less chance of your newest staff member putting their foot in their mouth by relaying wrong information.

4. Increased Revenue.
On the average day, there’s more than a few million people wandering around the web.  Your website is available to each and every one of them.  Play your cards right and it doesn’t even have to cost you a penny to get people to visit your site.  You could never print enough flyers, run enough radio ads, or send out enough coupons to match that kind of exposure.  Plus, on the web you can have unlimited offerings.  Adding a new product or service is as easy as a few clicks of a button.  Try remembering that the next time you weigh reprinting a brochure to include something new.

Tech Temptation (The negative side of ecommerce)

Remember those hills?  Well, there’s lot’s of ways to get there.  Just like selling online has a world of options and pitfalls.  Shiny new web technology may excite you (like me) or make you want to run in the opposite direction (like most people).  Either way, do not fall into one of these traps (they can be costly):  

a) Getting the latest & greatest new tech tools just because they are new.  
Hey, I definitely understand the appeal of being the first to have the latest widget.  I equate it to the days of being the first on the block to drive up in the shiny new model car.  The trap comes from not understanding the stipulations that go along with getting the latest and greatest new technology—committing to the time it takes to learn how to use it, understanding the upheaval it will cause those around you, and of course, living with “bugs”.  However, if you are willing to devote the time and money to have the latest and greatest, the competitive advantage you get can be substantial.

b) Building something “new” that you don’t do for a living.
Unfortunately most companies fall into the trap of thinking that building their own ecommerce solution in-house will save them money.  I have yet to see that happen.  Why?  Three reasons.  

-First, it’s almost impossible for any ad hoc development team to keep up with the standards that customers expect after shopping with companies like Amazon and EBay.  

-Second, the security issues that credit companies and the public demand are a constant moving target.  They can sometimes change daily.  Not keeping up can not only cost you legal fees from hacked credit card numbers but also your reputation for letting it happen.