E commerce Success Requires Intelligent Marketing

It has been a long fall from the top. Back in the late 1990s, Internet companies were the darlings of a star struck stock market. Pundits proclaimed the Internet would connect everyone and change everything. Consumers would be able to buy any good or service online, at any time, from anywhere. The fact that many companies' business plans were full of holes did not seem to concern many observers.

In 2000, the world changed. Countless retailers imploded when their dependence on a "build it and they will come" strategy failed to bear fruit. Other firms poured too much money into brand building or tried to grow too fast, and were forced to shut their virtual doors forever.

In the wake of this spectacular collapse, it is easy to shun e-commerce hype altogether -- but to do so would be shortsighted. The ideas that drove the initial boom are still valid and in fact have flourished. Customers and businesses really have forged direct connections over the Internet. Convenience has increased exponentially. And a newly profitable e-commerce sector is having a permanent impact on the way business is done.

Are many retailers dead? Yes. Is e-commerce alive and thriving? Yes. That's the distinction. You really have to separate the two.

Solid Business

Models Whenever Internet pure-play success stories are discussed in media or investment circles, two names always stand out -- e-tail giant Amazon.com and auction heavyweight eBay. Both companies have gained a tremendous amount of mind share through advertising and word-of-mouth. Both have seen traffic to their Web sites soar over the years. Most importantly, both have turned a profit at some point in the past year and seem poised for a repeat performance in 2003.

That is vital because in the post-boom era, the yardstick used to measure a company's success is its financials. The new business models must be solid, even if the underlying e-commerce ideals are the same as those proclaimed during the dot-com heyday. EBay appears to be the definition of "solid." The company has reported net profit and revenue increases in its last four quarters, and 10 of 15 Wall Street brokerages covering the company rate it a "buy" or a "strong buy."

Many Pure-Plays Lag

Although Amazon and eBay are not alone in their success, most pure-play e-tailers still have a long way to go. The magical question, is at what point do they start achieving economies of scale and start making money? Sooner or later, they have to reach [that] point ... and that's always going to be harder without brick and mortar.

Murky Multi-channels

Outside the world of pure-plays, the picture grows somewhat murkier. It is no secret that multi channel retailers have greatly expanded their online presence in recent years. The [companies] that are going gangbusters on the Internet are the JCPenney.coms, the EddieBauer.coms and the J.crews and Williams Sonomas. [They] are leveraging the fact that they've got an ongoing relationship with a client base that trusts them and their name.

But are they profitable? Although it is fairly obvious to investors whether Amazon or eBay has turned a profit in any given quarter, it is much harder to determine if a multi channel company's online operations are in the black.

It was easier to glean this data a few years ago, when more businesses spun off their e-commerce operations from their main corporate operations. Now, most firms have reabsorbed their online progeny, and they no longer issue separate profit-and-loss statements for e-commerce divisions. Most e-commerce operations are loss-leaders for their parent companies.

Not That Simple...

Amid this uncertainty, however, it would be a mistake to gauge the success of a multi channel firm's Web presence based strictly on red or black ink on an earnings statement. That is especially true because more companies are actively encouraging consumers to cross channels; a Circuit City customer, for example, can buy an item online and then pick it up at one of the company's retail outlets. Or, a consumer may browse an item online and then buy it in the same company's brick-and-mortar store. In such a transaction, the online component cannot be said to have played no part. In fact, it likely was integral in spurring the final transaction. It really becomes more and more difficult to measure those channels in isolation.

One huge multi channel company, Bank of America, illustrates this integrated concept. BofA maintains a corporate Web site, along with online banking and bill pay services. The bank allows customers to apply for credit cards and loans online as well. Customers also can conduct business at Bank of America by phone, ATM and in person at brick-and-mortar branches.

Online banking is big for the company. From the beginning of 2002 through September, the number of customers using the online bill pay system increased 74 percent. The company has 1.7 million active online bill payers, and also claims to have the largest online banking service, with more than 4.6 million active subscribers.

E Marketing for E commerce Shopping Cart Site

The first principle of online selling, especially for small businesses that cannot afford to make many mistakes, is to sell the right items. Trying to sell the wrong product online is like failing to hitch the horse to the wagon -- you can do everything else right, and you still will not get anywhere.

Not every product is appropriate for online sales, and those that are may already have reached saturation level in the e commerce landscape. MVI recommends evaluating a new e commerce venture before launching it. Take a long, hard look at your business model, Is anyone else doing it? Develop specialty products.

MVI noted that commodity products lend themselves to online transactions but are often overexposed by giant e tailers. The trick is to advance a unique product niche within a commodity category.

Targeted E Marketing

Advertising is another potential pitfall. Mass market advertising is not only too expensive for most small e commerce ventures, but it does not even work well for them. With blanket advertising, you're wasting half your budget, and you don't know which half.
Instead, companies should explore more finely targeted, and in some cases experimental, promotions. The good news for new and small companies is that they do not have to learn this lesson the hard way, as many e commerce pioneers did.

In finding targeted media in which to inject a message, the key is to think across channels. For example, just because a company is trying to transact business online does not mean it should ignore brick-and-mortar promotional opportunities. Even in the online space, it is not all about Web promotion -- e-mail and back-channel possibilities also exist. Ideally, a promotional strategy should be blind to channel distinctions, because all channels can contribute to e marketing e commerce exposure in today's multi channel selling universe.

In short, small companies should develop a portfolio of promotional initiatives that complement each other. Specific targeted media, e-mail newsletters, blogs, certain chat rooms serve specialized niche audiences specific Web sites [and] printed magazines are possible venues for advertising.

Affiliations e marketing of e commerce

One concept from the bubble years that has become more important in the post-bubble era is strategic partnering. Amazon is doing it. EBay is doing it. Small businesses can do it, too.

The preliminary work of building an affiliate relationship involves identifying potential partners that will benefit the business the most. Partner with sites that have high traffic. Bulk traffic is as important as exact match-ups between partners. Again, cross-channel thinking is crucial. Don't ignore the brick-and-mortar environment. You can partner with a physical retail outlet.

Paying the Search Engines

Another method of gaining notice that has soared in popularity recently involves placing ads on online search engines. These sites, most prominently Google , feature targeted advertising next to search results of predetermined keywords. The cost of buying paid search hits is controlled to some extent through an automated auction process that gives the top spot to the highest bidder. The advertiser pays only for click-through, elevating the efficiency of this type of advertising.

You get a load of recognition for a reasonable price. You might not have a big budget, but for a while, at least, you can out e market Amazon.

An added (and free) benefit of buying search results is sheer exposure -- your name appears fairly prominently even when viewers do not click through. In traditional advertising, such an "impression" would be billed.

Although purchased search results are all the rage, traditional online directories should not be disregarded, either. Specializing in small and medium business e commerce, emphasized the importance of finding directories that match your product category or even geographical location. Find the appropriate vertical directories, not just the generic listings.

Making E Marketing Connections

E Commerce strategies in e marketing should look beyond the dry metrics of dollars and eyeballs. It's all about building connections. Provide links in partner sites. Cross-leverage traffic. Integrate with every part of the business process. Get that site in front of existing customers. Include the site in existing marketplaces like eBay.

Crucial to small-business e commerce success, is keeping customers interested after the first visit. To that end, communication and personalization features are imperative. They not only make a site more engaging, but also open the door to more alluring advertisements. The more customers expect interactivity at the site, the more they'll visit it. Behavioral factors are the most crucial determinant of e commerce success for small enterprises.

E Marketing Today

In a sense, for small businesses , bad news is good news. There's not very much capital in the market today. The formula of heavy e marketing, coupled with the hope of reaching critical mass, is not an option any longer. With the competitive scramble for venture capital also a distant memory, small e commerce projects can launch into a relatively level playing field.

Of course, small companies must dig their trenches far from the giant footprints of big-name online destinations. But with everybody in partnering mode, even the smallest operation stands a chance of affiliating with a larger e-tailer.

Companies with imagination make the real progress in small e commerce. Great targeting can easily make up for a modest budget, leading the way to e marketing e commerce success.