Every forecast I see about online spending suggests that the world is becoming more comfortable buying products and services online. It’s no surprise that online sales are growing as customers become accustomed to the convenience online research provides. For instance, I recently purchased a riding lawn mower. Before I went to look at my options in a retail store, I looked at the store’s online site. This approach gave me much more information than I would have gotten at the retail store, and allowed me to analyze the information, compare other products, and make a decision at my own pace. I still went to the retail store to buy it because I wanted to walk away with my order, but otherwise I would have certainly bought it online. Let’s take a look at the statistics that show how others are using the Internet for commerce and what you should think about before deploying your own e-commerce strategy.
The numbers tell a story worth paying attention to
Here are a few statistics I discovered in my research that are worth looking at for any CIO without an e-commerce strategy in place. Statistics vary among studies so the numbers below are conservative averages.
- Worldwide Internet population in 2002: 600 million (Sources: Nielsen/Net Ratings, ITU)
- Projected worldwide Internet population in 2004: 800 million, up 33 percent (Sources: eMarketer, Computer Industry Almanac)
- U.S. Internet population in 2002: 160 million, with well over 1 million new users a month (Source: Nielsen/Net Ratings)
- 2002 total U.S. online spending up 34 percent to $47.9 billion, when traditional brick-and-mortar stores struggled. Compare this to 2001 online sales of $35.87 billion and $18.6 billion in 1998. (Source: U.S. Department of Commerce)
Online shopping statistics reach beyond the consumer. An interesting recent study by Forbes.com suggests that more C-level executives (CEO, COO, CIO, CFO) go online before work than read the newspaper. Of the 11,000 decision makers studied, 53 percent of the C-level managers go online before work; 41 percent turn to the paper. More than 82 percent check their e-mail before beginning their workday and 54 percent use the Internet for research. On another note, 47 percent said they click on advertising of interest.
So, what is all of this telling us? The Internet boom in online spending has only just begun with the significant growth in purchase volume ahead of us. We may not see the percentage growth as in the past, but the total dollars spent is going to increase considerably in every product and service imaginable.
Developing an e-commerce strategy
The market is out there for whatever you sell. However, it’s important for your company to develop a strategy that puts your products and services “out there.” To develop your own e-commerce strategy, here is an approach I recommend, after going through the process myself:
- Decide what type of strategy fits your business: Some products and services are so complex that they require a one-to-one conversation to sell them. If that’s the case, your Internet strategy may be very simple—to generate leads and provide information. You need to generate enough interest for your Web site visitor to contact you. Most products and services can be described well enough to allow the visitor to purchase them online. If yours can, I highly recommend you incorporate e-commerce capability and sell online.
- Find shopping cart and credit card processing services that meet your needs: I researched over 50 products and services. Ultimately, it came down to selecting a service that I felt provided excellent support and allowed me to use the service under any number of Web site domains. I selected goEmerchant.com; its capabilities remove all the pain I would have to go through to install my own product and maintain a secure server. Also, you must be able to take credit card orders online to capture your company’s full sales potential.
- Target your market and create awareness that drives traffic to your Web site: It doesn’t matter if you have the best product and the best Web site in the world if no one knows about it. There are excellent tools and strategies to help you drive traffic to your e-commerce store. One example is a “pay per click” site called Overture.com. It allows people to find you through search engines like Yahoo.com by letting you place bids on keywords and phrases that relate to your business. It’s a cost-effective advertising approach because you only pay when someone actually clicks on your link and visits your Web site. Compare it to the cost of getting someone to visit your Web site through a mass-mail campaign and you’ll quickly see the advantage. When someone clicks on the link and visits your Web page, an automatic payment is made to Overture.com for that visit. This visit costs you a fraction of the cost for a first-class stamp.
The bottom line
Growth lies ahead in online spending and your job is to help your company cash in on the boom that’s coming. While the dot-com failures may have turned you off the Internet as a viable source to market and sell your products, don’t let that diversion keep you from the real opportunity ahead. In a year when Internet businesses seemed to be failing regularly, many Internet businesses grew substantially like the Wall Street Journal, Sears, Target, Staples, and Home Depot.