Why Should You Move Into an eCommerce Business model?
What is eCommerce?
eCommerce, in layman’s terms, is a process business that happens online. Also known as electronic commerce, it relates to the buying and selling of goods and services via online platforms. Since its emergence in the last decade of the 20th century, eCommerce has witnessed a speedy growth, gradually becoming an intrinsic component in global commerce and eBusiness. This was accelerated by the Covid 19 pandemic that closed down borders, urging consumers across the world to shift most of their daily activities online.
As the social restrictions came into place, consumers were confined to their homes, paving the way toward the widespread acceptance and adoption of eCommerce. Consequently, many businesses, including the majority of SMEs, considered moving into the eCommerce business model and some were successful, reaping heaps of profits during the pandemic. Today, eCommerce has a promising future as one of the most popular business models among both sellers and consumers.
And there are multifarious reasons why you should move into the eCommerce business model. For instance, it has the potential and capacity to effectively address some of the pain points encountered in offline business models.
Marking a shift from somewhat outdated business models, eCommerce offers SMEs a novel business strategy that responds well to the demands of today’s consumers. And here are some of the challenges faced by SMEs that eCommerce alleviates.
Why Adopt an eCommerce Business Model?
Requires Comparatively Less Capital Investment
eCommerce offers a way out of money-related problems or lack of cash flow, increasing labour costs and insufficient capital
The first and foremost challenge faced by SMEs relates to the age-old question of money. Insufficient capital to establish your business, lack of cash flow and the ever-increasing labour cost pose severe challenges to SMEs. More often than not, SMEs depend on internal funds or financing through personal connections to get their businesses set up. Banks and other financial services are more likely to turn down their monetary requests due to the risk of default and lack of assets. Under such circumstances, even if you have a promising business idea, it may be difficult to make your business dream a reality. And this is further aggravated by poor cash flow and the increasing labour costs.
How can eCommerce Help?
All these problems become immaterial in eCommerce. As mentioned before, eCommerce occurs on online platforms and the capital required to get our business initially established is significantly less when compared to offline business models.
Unlike traditional business models, eCommerce does not require SMEs to have brick and mortar stores and thereby negates the costs involved in the designing, building and maintaining of a physical store. All it takes to set up an eCommerce store is having a virtual space – in the form of a website or an online eCommerce platform such as ShopOnCloud (SoC).
This is advantageous for SMEs as it allows them to expand into global commerce without having to make a great investment to build a shop and address the logistics of the respective country or region. Similarly, due to the ease of managing an online store, eCommerce does not require many employees. eCommerce platforms like SOC are user-friendly and allow SMEs to manage multiple stores with a single account and monitor the stores with ease and efficiency, thereby reducing the labour costs involved. What all this means is that eCommerce offers solutions to many of the cost-related problems encountered in offline business models.
Reduces the High Cost Entailed by Offline Marketing and promotion
Traditional business models and related marketing strategies entail a huge price tag. The distribution of leaflets, TV and radio commercials and other traditional marketing strategies are costly and might not be well received by the digitalized consumers of today’s world,
Turning into the eCommerce business model is highly effective in this regard. eCommerce offers cost-effective marketing opportunities that resonate with customers of the digital age. It enables SMEs to exploit several marketing channels to project the brand image they wish to be associated with and promote their business via multiple outlets.
Some of the marketing channels available for SMEs include influencer marketing, social media marketing and promotional campaigns on the website. For example, Shop on Cloud, an eCommerce website trusted by many, offers easy promotion and offer management for online stores hosted on the website. SOC is equipped with tools that enable SMEs to automate promotions, offers, and discounts, with a set of pre-set rules, discount codes and seasonal offers. There are no additional charges involved and SMEs can use these tools to market their business effectively and creatively.
Provides Effective Engagement With Customers
Another challenge faced by SMEs with just physical stores is the inability to engage with customers effectively. No matter how hard they try, many SMEs fail to provide good customer care and one of the main reasons behind this is the lack of useful data regarding customers. When operating a physical store, SMEs have to rely on data gathered by sales personnel. The problem here is that, often, such data is highly limited and inaccurate. What this leads to is the absence of personalization; many SMEs operating physically do not provide customised services to their clients and this becomes a significant demotivating factor to customers.
Such pitfalls are easily eliminated in eCommerce. Most eCommerce platforms like SOC offer customer analytics, allowing SMEs to monitor and keep track of customer behaviour on their website. For example, SOC allows SMEs to manage and store customer details and shopping history with added features to group and edit details and remarket. Data gathered on eCommerce platforms like SoC can be used to device personalised customer care, offering customers unique customer services. This fosters customer retention, urging customers to return for more. In addition, such data can be used to design and implement marketing strategies that are driven by customer behaviour. Similarly, eCommerce allows speedy communication with customers via chat services and built-in social media communication tools.
Enables SMEs to Face Increased Online Competition
SMEs that do not migrate to an online platform often find it impossible to confront the increasing digital competition. More and more businesses are making use of the multiple tools available for them on online platforms and those that do not make the transition face the very serious risk of being left behind, forgotten by digitised customers. More importantly, they are at the risk of being thrown out of business by those that effectively and strategically utilise eCommerce.
In such a context, the best way to fight the digital competition is by establishing a digital presence yourself by utilising the increased brand visibility and online presence facilitated by eCommerce. For instance, ShopOnCloud is a branded eCommerce platform that offers mobile-first responsive design. This helps SMEs to compete with rivals through an online store that is available across a variety of devices such as smartphones and tablets, not just laptops and desktops, meaning that it is accessible to a vast community of electronic device users. SoC further offers a simple and convenient shopping cart that reduces last-minute cart abandonment, to name but a few features of SOC. All these features help SMEs to establish a prominent online presence that appeals to, engages with and retains customers.
Increasing Staff Turnover
Yet another issue faced by SMEs is the increasing staff turnover. Research shows that there is an increase in the incidence of employees quitting their workplaces due to reasons that are too many to mention here. Provided that recruitment budgets are significantly costly, this is a serious problem that many SMEs are confronted with.
However, when it comes to SMEs operating on eCommerce platforms, this issue is circumvented to a great extent. In the first place, eCommerce, as mentioned before, does not involve a considerable number of employees. Many of the tasks involved in eCommerce can be managed by a handful of employees, which means that SMEs do not have to spend exorbitant amounts aimed at employee satisfaction and retention. In the second place, many tasks involved in eCommerce except for a few can be completed online, meaning that hired employees can work online as well. Working online and from home is highly appealing to employees as it entails reduced commute time, money and saved energy.
What we have discussed here is only a few pain points related to SMEs that are very well addressed by eCommerce. Of course, there is much more room and potential in eCommerce to help SMEs that are making the shift from offline to online. And if you are an SME thinking about moving to the eCommerce business model, you need to consider your options, do your research and make an informed decision regarding the eCommerce website that you want to host your online store. You should opt for a branded website that is secure, like SOC. SOC is backed by the most secure and reliable hosting and CDN service by Amazon Web Services (AWS) and Amazon Cloudfront, offering SMEs increased security. In addition, you need to think about the pain points and choose an eCommerce platform that responds well to these. If you are interested in exploring a platform that offers multiple features and tools that respond to several pain points AND a free trial, SOC will be just the right option for you!