We’re now in 2015, and as expected, internet sales make up a higher percentage of retail sales than ever before, currently at 6.70% in the US as of 1st January 2015 (Ycharts, 2014).
For exclusively internet retailers, that’s great news, their pool of potential customers is growing year on year relative to their high street counterparts. Not the same for the high street retailers, who have already been taking a hit from rising rents and out-of-town rivals (FT, 2013) and the effect of online will only increase this trouble.
40% of small businesses in the US currently have a website (Huffington Post, 2014). Launching an E-commerce function for these existing, or new, websites can have a positive effect on the business’ sales. There are several benefits of operating your business online, including savings in order processing and operational costs, attracting customers who cannot reach your high street store, and improving your offering through the data that you can collect from online customers (NIBusinessInfo, 2015).
E-commerce has already proved itself to be a hugely popular form of buying and selling and is used by hundreds of big businesses around the world. It is also especially popular with consumer-to-consumer (C2C) transactions through websites such as eBay and Amazon. On these websites customers have to deal with factors such as fear of seller opportunism and information asymmetry (Jones & Leonard, 2014). These factors can lead to lack of confidence from the buying party, something that is not generally associated with business-to-consumer sales (B2C).
For a small business, e-commerce can instigate growth in sales and leads. An increased potential customer base as the website becomes transactional nationally, or even globally, and could generate orders from anyone, anywhere. E-commerce brings the additional benefit of not having to take orders over the telephone, therefore saving on operational and order processing costs.
There is a good reason why the majority of big businesses use e-commerce, especially B2C companies. The ease of use that e-commerce gives consumers over telephone or in-store purchasing means that it is far preferable to use. When one company in any market makes this advancement, all others must follow the same model fast or be at risk of being left behind. Something any business looking to expand and grow would be keen to avoid. Combining this with a strong, positive marketing strategy can attract a range of customers to the website and ultimately to purchase the goods or services on offer.
For small businesses, there are various options for e-commerce available. Several businesses offer e-commerce and hosting for a small monthly fee, and if they were to work with a large e-commerce company, such as PayPal, they would be instantly recognisable as a reputable and trustworthy business, alleviating fears that are often associated with C2C transactions. Alternatively, a computer savvy business owner could set up their own e-commerce system, although this is likely to have several associated costs and would not necessarily be recognised as trustworthy.
Couple this with the ability to reach a much larger customer base, nationally at least, allows a business to quickly expand.
In the 21st century, consumers expect almost everything to be right at their fingertips, and the majority of what they purchase is no different. E-commerce gives ease of use that is unmatched by any other form of purchasing and leaves businesses favourably viewed by customers. Yulin et al (2014) found that people are more likely to purchase online from companies that allow e-commerce compared to those that require telephone orders. From this perspective, it is definitely something to think about for aspiring entrepreneurs and small businesses as they try to expand their reach.
References
Financial Times (2013). Accessed 12 April 2015. Available at: <http://www.ft.com/cms/s/0/eced567c-cc65-11e2-bb22-00144feab7de.html#axzz3X6vXJbjs>
Huffington Post (2014). Accessed 12 April 2015. Available at: <http://www.huffingtonpost.com/david-brown/small-business-gets-serio_b_4639875.html>
JONES, K, & LEONARD, L 2014, ‘FACTORS INFLUENCING BUYER’S TRUST IN CONSUMER-TO-CONSUMER E COMMERCE’, Journal Of Computer Information Systems, 54, 4, pp. 71-79, Business Source Premier, EBSCOhost, viewed 12 April 2015.
NI Business Info (2015) Accessed 12 April 2015. Available at: <https://www.nibusinessinfo.co.uk/content/benefits-selling-online>
YCharts (2014). Accessed 12 April 2015. Available at: <http://ycharts.com/indicators/ecommerce_sales_as_percent_retail_sales>
Yulin, F, Israr, Q, Heshan, S, McCole, P, Ramsey, E, & Kai H., L 2014, ‘TRUST, SATISFACTION, AND ONLINE REPURCHASE INTENTION: THE MODERATING ROLE OF PERCEIVED EFFECTIVENESS OF E-COMMERCE INSTITUTIONAL MECHANISMS’, MIS Quarterly, 38, 2, pp. 407-A9, Business Source Premier, EBSCOhost, viewed 12 April 2015.