Question

'without an online presence, you might as well be selling out of the back of a covered wagon".

• Do you agree with this statement?
• Do you think having an online presence reduces business risks? Why or why not?

*300 Words

Answer 1

“Without an online presence, you might as well be selling out of the back of a covered wagon”:

I don’t agree with this statement. Because, online business typically pretty easy, low-risk and low-cost to start an e-commerce business, whether or not you already have a brick-and-mortar store. So long as you pick your products wisely and have an appropriate business plan, there’s plenty of potential for passive income and high ROI over the long term.

E-commerce certainly may not be right for everyone, or it may not even be the right time for you, but it’s important to consider an e-commerce-based strategy if you have a retail operation or even an idea you want to put into action over the next several years.

Benefit: Increased Exposure

Increased exposure is one gigantic reward inherent in moving your business online. With an Internet presence and the proper search-engine placement, people from around the world who would never have been able to find your business in the past will be able to do so with just the click of a button or a few keystrokes. Without an Internet presence, your business is more limited to local customers, word of mouth and print advertising in your area. An online presence can also help local customers find you. If you run an Italian restaurant, for example, a website can allow your restaurant to show up when potential customers search for Italian restaurants in your area. Apart from posting your name and location, placing your menu online will show customers exactly what you offer and may entice them to try your restaurant.

• Staying Competitive

According to Entrepreneur, plenty of people will continue to shop in-store, and this market is still far larger than online shoppers. Online shopping is expected to grow at a great pace, with 56% of Gen Xers and 67% of millennials in the US being the most likely demographics to make purchases.

It’s actually important that you learn about e-commerce as soon as you can because it (especially mobile e-commerce) has grown by 300% over the last few years with revenue of $700 billion in the US just last year. It is expected to make up 17.5% of global retail sales by 2021 (up from 7.4% in 2015), and sales are predicted to hit $4,878 billion in the next few years.

• Going Global

It goes without saying that brick-and-mortar setups are bound by location, and depending on your product or service, this could be key to your revenue. But even if you think that your business 'needs' to stay local, expanding globally could allow you to expand into new facets of your business.

For instance, if your business is primarily service-based, you may want to complement your local offerings with products that people can purchase online from you, such as a hairdresser offering specialty accessories. It may also be that you are able to tap into the travel and tourism market more easily if you move towards online selling.

• Lowering Costs

Because e-commerce tends to carry far lower costs than brick-and-mortar setups, adding an online component to your existing business doesn’t need to be a high-risk investment and in fact, in most cases would be a far better choice than opening another storefront if that’s something that you feel you could easily lose money on.

Why is it lower cost to run an online store? a few important points to note:

• Sales on Advertising

Digital advertising is inexpensive compared to traditional channels and can be more easily adjusted to fit varying budgets. You can use a blend of traditional and digital to market your entire operation, or even switch to primarily digital and save a lot of money.

Email is just one example of a simple digital tool that remains a cost-effective and simple way to send information to segmented markets (check out a simple tool like MailChimp if you’re looking to get started on email marketing).

• Save on Staff

You won’t have to pay in-person staff and in fact could consider integrating something like a chat-bot into your social media and customer service activities instead of live help. You may also want to hire an overseas virtual assistant or marketing specialist if you are looking for people to handle customer service or other activities on a 24-hour basis.

• Save on Rent

There will be some initial costs to do with web setup and maintenance – for instance, integrating a Shopify account into your current website, or even doing an overhaul. Shopify costs only a few thousand per year, and for this fee, you also get to use other built-in features that will help you run our business more smoothly. This is especially the case if you are already paying for space to store inventory and are willing to ship from your location.

• Better Targeting & More Personalization

Digital marketing and selling models such as those that use e-commerce may allow you to gather, synthesize and use customer information and data more easily than traditional channels. This is especially the case when you consider retention activities like customer loyalty programs – essentially you can track their buying habits more carefully which offers the opportunity to target marketing and promotional efforts in a more accurate way.

To this end, you’ll also find that there are greater opportunities to personalize your promotions and other offerings as you have data about your customers integrated automatically into the system. If you know how Amazon “recommends” items that it thinks you like, you can easily do that as well. You can also segment and personalize based on specific location, spending habits, or cart abandonment rates.

Upselling and cross-selling may also become easier as you are not stuck with an uncomfortable face-to-face situation where the customer may be turned off if they feel pressured. You can simply provide suggestions for add-ons as a part of the shopping cart process and let the buyer go from there.

• Easily Scale and Grow

One key benefit of running a business online is that you can easily optimize and scale your budget in accordance with all other aspects of the business, and it’s not too difficult to scale your business should you see your customer base expand and grow.

For instance, if you are running Facebook ads, you can easily adjust these in accordance with purchasing behaviour. And even if you find some dips or shrinkage – say, if your offerings tend to be seasonal, you can adjust your marketing and inventory in accordance with these changes as well.

• A more Pleasant Customer Experience

For many tech-savvy individuals who are used to making online purchases, they may not know that for a lot of people who are used to it, it’s just a smoother and more comfortable experience for many. Not only does a customer not need to leave the comfort of their own home, but they also get to avoid traffic, parking, and pushy salespeople trying to upsell or interrupt your conversation with a friend.

When a shop is set up right, the ease of searching, browsing, and ordering can easily outweigh the extra shipping cost. This is especially the case if special features such as live chats that are set up to answer customer questions 24-7, a feat which is becoming more and more affordable if you consider overseas outsourcing or chatbots.

• Passive Earnings

If you can keep your shop open 24-7 and you are able to expand your offerings to a global audience, this means that you have the potential to create a passive income stream – that is, your revenue doesn’t necessarily rely on great salespeople or opening hours. When you and your customers are no longer restricted by logistics such as location and time of day, you have plenty of opportunities to boost revenue in new ways.

2. “Having an online presence reduces business risks?”,

I don’t agree with this statement. Even though it gives a global opening for us, several risks factors are there for doing an online business. For business owners who choose to do business online, there are a number of potential risks and rewards. Before you decide to take your business online, you should consider carefully whether or not you are prepared to face the potential risks of an e-commerce venture, as well as decide whether or not the possible payoffs of transacting business on the Internet will offset these risks in your specific case. You should also consider the cost of starting a website and paying for web hosting, and make sure your business will benefit sufficiently to justify the cost. Some of them are mentioned below:

• Legality

One risk of doing business online is your product or service may not be legal in some areas. Shipping to these areas without knowing you are in violation of local laws might open you up to liability or prosecution. In addition, some locations require collection of sales tax on Internet sales; and if you are not set up to collect these state sales taxes, selling to individuals in these areas online might open you up to problems with the state revenue departments.

• Fraud

Another risk of Internet business is fraud or deception. You have very few ways to verify the person who is providing you with credit card or bank account information is actually the owner of that credit card or bank account. You may send out merchandise only to find you have been given false information, and you can end up out of both the money and the merchandise.

• Start-up Costs

While you can design a website yourself, many companies spend money to have a website professionally designed and pay copywriters to provide them with web copy. You also need to pay for a domain name and website hosting. If your business isn't one that is searched for frequently online, or if there is too much competition online and your business is far down on the search engine rankings, there may not be enough traffic to your website to make the investment worthwhile.

• Internet Security

You also need to be aware of the potential security risks. If you collect information such as payment information or customer data online, for example, your website could be a target for hackers or authors of malicious software. If you are going to take your business online especially if you intend to collect online payments you need to ensure you have protections such as a secured server and firewall in place.