E-commerce For Small Businesses Will Get Worse Before Getting Better

Writing by Nick Stamoulis on Friday, 24 of August , 2007 at 4:07 pm

Greg Howlett is tough on e-tailers. I don’t blame him. As I’ve said before, Google sets up barriers to entry for small businesses. I think this trend will continue as money becomes a more influential factor in the success of Internet businesses.

Anyone interested in starting an online business of any kind, particularly retail businesses that require a lot of inventory, should pay attention to these points Greg makes:

1. Startup costs for online retail now exceed startup costs for offline retail.
2. It takes far more knowledge to compete online than it used to.
3. SEO is becoming more out of reach for small companies.
4. No paid advertising options are lucrative for small companies.
5. Inventory costs are climbing.
6. The trends indicate that startup conditions will get worse rather than better.

If you’re starting your own retail business online, I’d recommend learning more about SEO and Internet marketing before you ever get started. In order to compete online, you’ve got to be able to think long term and set a long term strategy. Don’t go into it blind.

In the early days of e-commerce, a lot of the software that companies are using now didn’t exist. You can easily spend thousands of dollars on software that the big companies use and you will just be spending thousands of dollars. You’re much better off doing it yourself, but you’ll have to learn how to earn a living online and if you’ve never done that then you’ll have a tough go of it. That said, it can be done. Here’s how I would suggest small businesses start off today:

• Don’t go it alone. Get a partner. It is so much easier to work online in a partnership than it is to do it all yourself. Find someone who is in a similar business to yours, but doesn’t compete, and share the costs for a website, e-mail, and other Internet marketing expenses. Share the expenses, share the revenues, more business for both of you.
• Divide the responsibilities between you and your partner. One of you can learn about SEO while the other learns about web design. That way, you can each become an expert in your areas and not step on each other’s toes. This doesn’t mean you’ll actually do all the work. You might hire a web designer to do the work for you, but if one of you knows how to communicate with the professionals that you do business with then you are more likely to get what you want and not get taken advantage of.
• On paid advertising, I’ve seen businesses benefit from it online and I’ve seen businesses not benefit. I agree with Greg. Pay-per-click is probably the most lucrative in terms of ROI for most businesses.
• You’re much better off with a service business online than a business that requires inventory. If you must retail, cut down on your overhead by using a drop-ship method. Otherwise, it could be years before you’ll be profitable enough to make your business pay.
• On Greg’s last post, I’d amend it to say, “Things will get worse before they better.” I do think we’re reaching a peak in e-commerce. We’ll see a sharp decline in the next few years, but that will be followed up with a larger trend toward more Internet startups succeeding. I base this on Elliot Wave analysis in market trends. We’re reaching the peak in the second wave of e-commerce. In market analysis, wave three is usually the longest wave. That means e-commerce is just getting started, but there will be bumps in the road.

All of this aside, success is still possible, even today and in the near future. Calculate your risks, set realistic goals, and only work with professionals who have a proven track record.

Affordable Internet Marketing Services, including SEO, Pay Per Click, Blog Marketing & More! For More Info Call Expert Nick Stamoulis at: 877-295-0620.

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