E-Commerce: Is It for You?

Many business owners who use Web sites to increase their exposure to customers are taking the next step: e-commerce.

E-commerce, though daunting, can be worth your time and money. According to a study by JupiterResearch, an Internet research and consulting firm, annual online spending is expected to reach $105 billion by 2007. The weekly eSpending Report produced by Goldman Sachs and Nielsen//NetRatings says e-commerce sites made more than $30.1 billion during the 2005 Christmas selling season. And Amazon.com called last year its best ever—with its biggest sale a pair of $94,000 diamond earrings.

If someone browsing on your site finds an item he or she likes, giving that person the option to buy is like having a storefront that never closes.

Don’t be concerned about inventory. There are cost-effective programs that let you post a manufacturer’s items on your Web site along with a markup. The manufacturer ships items directly to the customer, with no effect on your inventory.

Following are some of the other benefits of e-commerce:

Ease of communication. Mai- lings can be expensive, require a good deal of planning, and don’t always reach the intended target. Your Web site reaches the person who visits it.

Increased market share. The Internet lets you sell beyond your geographic location—even internationally.

Productivity increase. After you’ve paid off the initial investment, a Web site with e-commerce capability can increase productivity.

But be smart, e-commerce also has pitfalls:

Potential for fraud. Not all credit cards used for online purchases are valid. Buyers are not always who they say they are.

Security concerns. You have to protect yourself against hackers who can damage your site or your server.

You could be overwhelmed. Plan for big results, and make sure your distribution is efficient. If you don’t want to risk carrying extra inventory without knowing how many orders you’ll get, at least be sure you have a way to fulfill the orders right away, such as a supplier with 24-hour turnaround.

Constant updating. Updating your site keeps it looking fresh, which tells visitors you’re on top of your site and your products. Updating can be done in-house or be outsourced. Outsourcing requires labor and money, while the in-house option requires labor, training, and money.

Reduced human contact. Peo- ple today can live much of their daily lives without face-to-face interaction with other humans. There’s still something to be said for interacting with a salesperson.

Consumers can’t always gauge product quality. You can use high-quality images to display the products on your site, but nothing compares with seeing and touching actual items.

If you decide to expand into e-commerce, you must get the word out. Publicize the launch as if you were opening another store—which, in effect, is what you’re doing.

Tell existing customers you have enabled your site for e-commerce. List your site with search engines so when people are searching, your site will come up as an option to visit. Make arrangements to have appropriate sites link to yours and link your site to related ones (such as associations or organizations). Finally, if you buy Google AdWords—a form of online advertising that uses keywords to draw people doing searches to your ad—carefully select words that will work for your business—especially if you want to attract Web surfers from beyond your local market.