If you have been thinking about venturing into e-commerce you may be wondering whether it is still as profitable as it was before. The answer is a resounding yes.
If you got into e-commerce earlier you would be raking in profits now. At the current moment in time, people around the globe have been staying at home to stop the spread of a global pandemic. This has caused a surge in them are spending a lot of time online.
It’s never too late to start an e-commerce business though. If you want to deal with e-commerce and the internet then read on for our helpful guide on the profitability of this industry.
What is E-commerce?
E-commerce stands for electronic commerce. It refers to the buying and selling of goods and services online. It also involves the transfer of money electronically to pay for sales.
Most of e-commerce has to do with selling physical goods. Yet there are services sold as well such as training and coaching programs.
E-Commerce officially started in 1994. Since then it seems as if people have been wondering if the industry is saturated. There has always been a great number of people setting up e-commerce businesses due to its low cost of setup and potential for very high returns.
Global E-commerce sales are expected to reach $27 Trillion by 2020. With online shopping become more popular by the day, these numbers seem right on track.
Types of E-Commerce Businesses
There are four main types of E-Commerce businesses you can get into. First, there is business to consumer (B2C) where business such as Amazon or Wish sells products directly to consumers. Secondly, there’s the business to business (B2B) models in which businesses like SAP sell software products to other businesses.
There is also a consumer to consumer (C2C) more for businesses like eBay and Craigslist. This is when consumers can sell goods to each other. Finally, there is the consumer to business models where individuals sell their services to big businesses.
Specific types of e-commerce businesses include retail shops selling physical products and individuals selling digital products. You’ll also find dropshipping, wholesale shops and subscription services.
Challenges Facing E-Commerce
While you can make money from e-commerce there are some challenges that you will have to overcome. First, delivery times of physical goods are too long. This is because most companies get low priced goods from Asian countries like China in order to stay profitable.
This means that it could take a significant amount of days for clients to receive ordered items. A lot of time most customers aren’t willing to wait this long.
Another challenge is trying to find low-cost goods that will allow you to make a profit. The high cost of US goods is what forces many sellers to source goods from outside the country. But importing goods creates a customer support problem.
Generally, suppliers from China and other countries don’t offer sales support. This makes it very hard to know what to expect when you are buying stock. If clients don’t get what they ordered refunds and returns also take a lot of time.
The final challenge for E-commerce in 2020, particularly the dropshipping model is that people complain that products bought from China are sometimes low quality. This isn’t entirely true but you may have to do some digging to find the best supplier. Try to ask for recommendations from non-competitive sellers.
How to Succeed in E-Commerce in 2020
While E-Commerce is very profitable, about 80% of e-commerce shops fail. There are certain tips you can use to give your online business the best chance of survival.
Find a Niche
E-commerce has become very competitive so to succeed you must stand out. You can set yourself up as an authority on a specific product or service so that consumers choose to buy from you rather than other general sellers.
Clients can buy goods directly from manufacturers so there has to be a value addition for them to buy from your store. You can create a lot of useful information on how your product can be used. You can even create a website around your product and this can help lead to lots of sales.
Sell Products That People Want
Depending on the type of product you sell, delivery times can take up 30 days. This is why it is better to sell items that people want rather than need.
Clients will be less likely to complain and be distressed if a necklace they ordered is delayed. However, it might be a different story if a phone they need for communication takes 30 days to get to them.
Successful e-commerce companies do a lot of market research to find out what products are in demand. They also check on whether it is possible to make profits from selling them. Check out this helpful post on e-commerce markets that are growing.
Take Care of Your Customers
Many e-commerce businesses struggle because they treat their customers as profit centers rather than people. If you treat your customers with respect, they will buy from you again and again. This creates a thriving business.
Providing great quality also allows you to have premium prices and your customers will not complain. Some ways in which you can care for your customers include setting up a user-friendly store and selling quality products. You should also consider checking on the service provision of third-party suppliers, offering easy return policies, etc.
E-Commerce Is Still Profitable
E-commerce continues to be profitable for customer-focused business owners. More people are buying goods online, which has increased the profitability for many online companies.
Due to the low cost of entry and high profitability, starting an online company in 2020 is a good idea. But to be successful, you must place a high priority on customer satisfaction.
For more tips on how to succeed in e-commerce read the rest of our blog.