The modern society is characterised by unprecedented technological innovations. For example, computers are common aspects of business organisations today compared to the situation in the last century.
As a result of these developments, a number of businesses are moving to the online platform. To this end, a number of commercial transactions are conducted virtually today. In this paper, the author is going to analyse what it entails to start a new online business. The various issues that have to be put into consideration are highlighted.
Starting a New E-Business
Revolution is just the Beginning
The rise of the internet age has revolutionised many industries in the global market. The internet has made communication a fast and more efficient endeavour. Rowley (2002) suggests that commerce and communication are intertwined in terms of an increase in market size. The internet is increasingly reducing the need for human contact, revolutionising trade in the process. Companies are moving from the traditional markets to the World Wide Web.
The reduced need for human contact in business has broadened the market space for modern companies. For instance, a vehicle trader in Beijing does not need to travel to Singapore with their commodities. All that is needed is an interface that connects the vendor to the consumer. Rowley (2002) argues that the future of business is in the internet. It lays the foundation for such principles as e-commerce.
Starting an online business is a totally new concept. It calls for rationalisation of various market regulations. Amit and Zott (2001) point out that online based businesses play by an advanced set of rules. The magnitude and dynamic nature of the online market calls for innovative techniques of starting an internet based company.
E-commerce Business Models and Concepts
The benefits of starting an online based business are many. Kuratko (2007) holds a similar perspective and argues that an e-business provides for improved supply chain management and personalised services. However, the same cannot be realised without an appropriate framework. Kuratko (2007) points out that most e-business models exist to ensure that enterprise owners reap the benefits of the online market. In this section, suitable models and concepts are outlined.
A business model is a sum total of the ideology, technology, policy and operations that are used in the description of a company. Rowley (2002) makes reference to the storefront as one of the models of an e-business. This model of trading gives the general impression of e-business. Both parties have a direct interaction. To this end, issues like transaction processing, online payments and security are common features of the storefront business model.
Trading, through auctions is a key aspect of commerce. In this regard, Kuratko (2007) makes reference to the auction model of e-business. The issue of auction business was the subject of a Forrester Research (cited in Rowley, 2002). The study found that auction trading collectively constituted a $100 billion market. Under this kind of model, the bidding, buying, and selling process is hastened.
Other models include the portal offer a one stop shop to a variety of commodities. Rowley (2002) also mentions the dynamic pricing model and B2B exchanges concepts which can be adopted in e-commerce. The idea behind the various models allows e-businesses to diversify. Staring a new e-business requires one to work upon their preferred concept of trade. The guidelines of each model help e-businesses meet their expected targets.
Businesses that have an online presence exist because of the huge market on the World Wide Web. Amit and Zott (2001) point out that every market requires an infrastructure to enhance its legitimacy. E-businesses operate based on two major applications. In this regard, the infrastructure depends on web and e-commerce. The infrastructure consists of the internet, the World Wide Web and data communications networks.
The underpinning of the e-commerce infrastructure is the interconnectivity of individuals to form a market. Data communication networks are interlinked to form the internet (Amit & Zott, 2001). The World Wide Web provides all the services of the internet. In this regard, familiarity with the internet and web development is essential aspects in realising the goals on e-commerce. E-businesses must ensure that sufficient web pages exist through which their products can reach the large online market.
Building an E-Commerce Website
Conventional notions of trade require business plans for effective transaction to occur. In the case of e-businesses, e-commerce plans act as substitutes for traditional business plans. In this regard, e-commerce plans are developed with a foresight on the consumer needs. Amit and Zott (2001) point out that a website must primarily identify the target market. The consumer needs and their access to information relevant to the commodity being sold are integral part of building a website.
The construction of an e–business website calls for traders to identify the product to be sold. The positioning of the product is quite essential in this regard. Rowley (2002) points out that such a website should provide the consumer with the purchasing options (online or offline). Online trading requires a shopping cart. E-Businesses call for money transfer services. A shopping cart helps to organise the billing processes.
The final aspect of building a website involves location. The World Wide Web is a massive expanse of trade. In this regard, e-business owners must come up with ways of increasing traffic to their websites (Kuratko, 2007). In this regard, e-business website must have a constant promotional strategy to attract the target market.
Online Security and Payment Systems
Crime is a real threat to any form of business. E-businesses are not guaranteed amnesty from crime. According to Amit and Zott (2001), cybercrime is rampant on the World Wide Web. A survey carried out to measure the magnitude of cyber crime found that 465 of the companies polled faced a security breach (Amit & Zott, 2001). To this extent, online security becomes an integral consideration for new entrants into e-business environments.
Online security is meant to protect e-commerce from the numerous threats associated with cyber crime. Key points of vulnerability that result in security threats include the server, consumer and the internet communications pathways (Rowley, 2002). The threats come in form of hacks or cyber attacks which aim at crippling the transaction procedures. Companies are constantly coming up with solutions to the threats of cybercrimes like coming up with firewalls to protect the network, servers, consumers and internet communications.
Payment systems include cash, transfers and the use of credit cards. However, other payment systems like stored value and accumulating balance exist to ensure transactions in the e-businesses are realised. Rowley (2002) points out that all the payment systems of e-businesses are vulnerable to cyber crime. In this regard, online security technologies come in handy to ensure both parties are satisfied upon completion of trade.
E-commerce Marketing Concepts
The success of any business enterprise depends on the finesse in the marketing concepts. Most e-businesses are expected to develop trust between the buyer and seller given the absence of human interaction (Cannon, Perreault & McCarthy, 2008). The difference between traditional marketing to e-commerce is brought about by the tools of trade. To this end, the fundamental marketing techniques are essential in coming up with the necessary concepts for e-businesses.
The first concept involves, ‘putting the consumer in a funnel’. The diversification of commodities helps to ensure that a large number of consumers are held within a given website (Amit & Zott, 2001). For instance, an e-business that is all about home goods should diversify the products. In this regard, marketing a fridge only will chase away a consumer interested in a microwave. Placing the consumer in a funnel implies that consumers will be provided for with numerous options for household goods.
E-business marketing is meaningless without talking about social media. E-businesses rely on the existing networks to capture their target market (Rowley, 2002). The continued internet revolution has resulted in a number of social media tools. In this regard, social media helps businesses in spreading the message about a product. The more social media tools, a company uses, the higher the traffic that is generated to their website.
The relationship between a buyer and a seller is relevant in enhancing, e-commerce. In this regard, e-businesses should come up with strategy that involves consumers in trade practices (Cannon et al., 2008). An ideal marketing concept, in this regard, would be the highlighting of customer reviews coupled by swift response to client queries. Essentially, starting a new online business requires one to come up with marketing concepts that win the consumers’ trust.
E-Commerce Marketing Communications
Marketing communication is essential in the development of a brand and the realisation of sales. Amit and Zott (2001) point out that there are several forms of marketing communications for e-businesses ranging from online advertisements to websites. Online advertising ensures that selected audiences can be targeted for a campaign. There are a number of options where online advertisements are advanced. They include sponsorships, referrals, social networking, videos and search engine optimisation.
Marketing communications tactics can either be online or offline. Rowley (2002) argues that a successful marketing campaign ensures that both tactics are utilised. Offline communications are made to increase traffic to websites for e-businesses. Cannon et al. (2008) argue that there is an increasing trend for consumers to carry out product research online. Making use of both tactics helps to shore up the consumer figures.
Ethical, Social and Political Issues in E-commerce
As already discussed, the internet is an ideal breeding ground or crime. The same can also pose a threat to social values. In certain cases, the internet poses a threat to the environment.
To this end, ethical, social and political concerns ought to be considered when one is setting up an online business. Kuratko (2007) argues that the three issues raised can be organised based on certain models. Categorisation of the issues raises questions touching on information and property right. Also, governance and public safety are of great concern when it comes to the three issues raised.
Ethical concepts are the kind, which adhere to the boundaries of good and bad. In this regard, responsibility and accountability are essential. Rowley (2002) argues that liability and due process constitute the ethical concerns. An e-business must adhere to the ethical concerns to further improve upon the trust sought after by consumers. Social issues relate to information privacy.
The internet is a borderless market. The result is that organisations can infringe on property rights of others. Amit and Zott (2001) point out that a legal framework is necessary to prevent the loss of intellectual property. Such a framework calls for a genuine political will to ensure the necessary laws are implemented fully.
Online Retailing and Services
Online retailing succeeds on the basis of service quality. The study by Jun, Yang, and Kim (2004) sought to establish the link between consumer satisfaction and service delivery. The study found that online retailing is supposed to adhere to certain dimensions of quality service. For instance, timely responses, ease of use, and credibility of the seller result in increased consumer satisfaction. Other dimensions of quality service include security, access and attentiveness in the process of online retailing.
Online retailing, as mentioned earlier, requires a high level of trust to ensure the process goes on smoothly. Jun et al. (2004) noted that a prompt response to queries coupled with ease of use contributed to customer satisfaction. Also, the ease of using the online tools enables consumers to enjoy the services of online trading.
Quality of service depends on how best an e-business is accessible. Customer satisfaction and service quality are indicators of trust in online trade. Starting an e–enterprise requires one to strike a blend between customer satisfaction and the quality of service delivery
Online Content and Media
Trading online requires constant generation of content based on the products being sold. In this regard, e-businesses, must invest in high quality content.
According to Kuratko (2007), social media is an ideal path to use in the generation of content. For instance, a company that deals with travel services must constantly generate information about various destinations. To this end, social media tools like Facebook and Twitter can greatly increase traffic on e-based websites. E-businesses must ensure that their websites have social media icons.
Online content ultimately ends up on a company’s website. Consequently, the website must be appealing. Kuratko (2007) argues that poor website designs translate into low sales for e-businesses. In this regard, websites should be developed to ensure the consumers can navigate easily.
The online content must reach the consumer with as little interruptions as possible. Consequently, websites should be designed to minimise the number of pop-ups. The link between online content and media is the frequency. E-businesses must always generate content and keep their social networks alive.
Social Networks, Auctions and Portals
Social networks consist of a group of people (or businesses) with common social ties. Amit and Zott (2001) argue that social networks and portals are increasingly working hand in hand, given the mutual benefit. To this end, social networking sites have services that are of a portal nature. For instance, it is common to find searching portals on community sites. The symbiotic arrangement between portals and social networks is a breeding ground for business to thrive.
Advertisements are an avenue through which social networks can be monetised. E-businesses require social networks for marketing and branding (Kuratko, 2007). For instance, through Facebook, an e-business can market itself as a brand. Social networks are also essential in monitoring the online reputation of a company. To this end, an e-business can evaluate performance in the market.
The internet has several consumer sites. However, online auction sites are the most common sites for consumer-to-consumer trading (Cannon et al., 2008). Dynamic pricing is another common aspect of e-businesses. Auctions are regarded as one of the any forms of dynamic pricing.
Categorisation of the concepts gives rise two types of auctions. In the consumer to consumer auction, an intermediary party (mostly an auction house) is introduced. In the case of business to consumer auctions, the business has ultimate claim to the assets being sold. To this end, a symbiotic nature should be developed, between portals, social networks and auctions. It optimises the performance of an e-business.
Supply Chain Management and Collaborative Commerce
Collaborative commerce allows allied e-businesses to collaborate in their trading objectives. Rowley (2002) suggests that such a move enables the companies to meet the market place demands. In this regard, collaborative commerce relies on communication and an efficient information sharing mechanism. Joint research efforts are also common. However, such collaborative ventures result in a complex web of business processes. Supply chain management becomes necessary to ensure that collaborative commerce is a success.
Supply chain management is all about ensuring the goods and services get to the consumer in an efficient and effective manner. According to Amit and Zott (2001), the effective and efficient service delivery must ensure that allied parties in collaborative commerce are satisfied. Supply chain management achieves its objectives by scraping redundancy. For instance, the minimisation of inventory levels and optimisation of production adds to the efficiency of product delivery.
The effects of excellent supply chain procedures include an optimisation of the logistics and distribution of commodities. Amit and Zott (2001) argue that supply chain managements reduce the cost of product and service delivery. To this end, e-businesses that opt for collaborative commerce must ensure the incorporation of high standards of supply chain management.
Supply Chain Management
Supply chain management is a concept that seeks to address the problems of product delivery to customers. Some of the problems include lengthy supply chains with multiple partners scattered in various places (Rowley, 2002). The many players in a supply chain create a challenge in the flow of materials and information. In most cases the flow can be slow and prone to errors.
As previously discussed, e-businesses thrive on efficiency. Supply chain management proves is an important aspect of any online based business. In some cases, a transaction may involve shipment from one country to another (Amit & Zott, 2001). To this end, supply chain management needs to be incorporated in an e-business plan. E-businesses must put in place measures to ensure that consumers receive commodities bought in a timely manner.
The product must arrive to the consumer without any form of damage or inconveniences. The absence of a human interface calls for the fulfilment of e-transactions. Supply chain management is a concept that guarantees the completion of an e-transaction. Companies like E-Bay and Amazon owe their success largely to an effective supply chain management system.
A number of issues have to be taken into account in the process of starting a new online business. For example, the entrepreneur should note that the e-commerce revolution is just starting. In addition, they have to take into consideration the various security requirements needed to carry out online transactions. When this is done, the entrepreneur will be able to harness the potential of the e-commerce platform.
Amit, R., & Zott, C. (2001). Value creation in e-business. Strategic Management Journal, 22, 493-520.
Cannon, J., Perreault, W., & McCarthy, E. (2008). Basic marketing: A global-managerial approach. London: Wiley.
Jun, M., Yang, Z., & Kim, D. (2004). Customers’ perceptions of online retailing service quality and their satisfaction. International Journal of Quality & Reliability Management, 21(8), 817-840.
Kuratko, H. (2007). Entrepreneurship: Theory, process, practice. Chicago: Balle Books.
Rowley, J. (2002), E-business: Principles & practice. New Jersey: Cengage Learning.