Starting an Online Business


 by: Olimpiu Galani

The e-commerce wave started in the mid 90’s and it only took a decade for it to change the face of economics as we knew it. Businesses like Ebay, Amazon or Yahoo created history and rapidly became some of the most profitable businesses and widely known brands.

For people today it is hard to imagine that only ten years ago things like online shopping, email or web search were close to fiction. Online economy changed many things: from speeding up the economic processes to speeding up the globalization process. Even more amazing is that e-economy fulfilled the American Dream for many, as they became millionaires.

The rapid growth of e-business made entering this market easier and easier. The costs of starting an e-commerce website went down very fast and websites like Ebay transformed traditional commerce businesses into “promote and sell” businesses. This e-wave that started in US reached the world, from France to South Africa, from Australia to China.

Romania was reached later but became a real life-style during the last couple of years. Basically, Romania became the top country for the growth rate of Internet access. From 300.000 people in 2000 up to almost 3 millions during 2004, made Romania’s growth rate of Internet access one of the biggest in the world. Under such circumstances, E-economy had to start. If around the year 2000 e-businesses like Rate.ro went broke, in December 2004 Romcard announced a record for online selling of 2.000.000 USD. E-commerce websites like Dol.ro sold online goods for a total value of 100.000 Euro in 5 months from its launch in mid 2003. IT e-shops like Emag.ro, with no offline selling, had revenue of about 700.000 USD at the end of 2003.

All these facts led to the jump start of the e-wave in Romania and it is expected that more and more people and businesses join this new style of doing business.

There are many myths - not so well-known and out-spoken -about running an online store. Many people, Internet newbies, heard stories about e-millionaires and think that running an e-business is easy and will certainly make them rich. Well, the truth is that even if there are many success stories in online selling, there are also hundreds of thousands failures, but it seems nobody’s talking about them. Online selling is a different thing from SUCCESSFULL online selling, which is not at all easy. You have to know and understand many things and failing is easy. Most e-businesses get their income not from big margins, but from a big number of sales. Hence, where there are many sales, very good organizations skills are required. Those operating on a market already having its leaders need to try and become themselves leaders for a specific market segment if they want to penetrate the market. But here in Romania things are different. There are only a few leaders for specific types of online businesses and the price of getting on top is considerably lower then on a market like USA. And none of the big names on the Internet has come on our local market yet, except maybe Google.

One of the biggest issues of an online store is the marketing plan, and how to select between promotion types, eliminate the useless ones and invest in the efficient ones. Another important part is the financials behind an e-store. Unlike a real store, here the number of visitors is crucial. The rates of turning visitors into clients are also very important. Finding the best way to improve these rates brings with it the expected success.

It’s usually difficult to estimate sales, in a traditional business, but when you sell online sales become simple rates. All you have to do is find the best actions to improve the specific rate. For instance, one of the most important rates is the member to client rate. The bigger this rate, the bigger the profit. And here, the marketing techniques with quantifiable results over costs come to action.

While the bigger incomes result from the profit margin on sold products, there are many other options of obtaining revenues when the number of visitors and site members is big enough. Advertising networks are hunting everyday for sites with big lots of visitors to place their ads. Also, incomes may result from newsletters sent to a big number of people, as email marketing is still one of the most efficient marketing tools.

To conclude, starting an e-business is a good decision, provided you take into consideration all the aspects of this business.

About The Author

Olimpiu Galani is Development Manager at http://www.kennomedia.com - web site design company and Senior Editor at http://www.bizwords.ro - stiri afaceri


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