E-commerce is becoming the largest retail market in America. To save both time and money, more and more people have been turning to the internet to purchase goods and services. This article gives just a few reasons why e-commerce will only keep growing.
1. Cheaper Real Estate
Whenever you start a business that is selling a good or service, you are required to have real estate, laborers, and insurance. These three variables are significantly reduced when conducting your business through ecommerce. First of all, real estate zoned within retail districts is one of the most expensive types of commercial real estate. When starting your business you may need a store in which you must pay rent in order to sell your good/service. Alternatively, you could also get a consignment with existing retailers to gain the allowance of a given amount of square feet to sell your product in their stores. If you buy retail property in a premium location like a mall, it may cost you $1350 per square foot if you purchase, and much less per square foot if you rent. In contrast, when are selling your product through e-commerce, the only significant real estate cost that you must account for is the warehousing in which you will store your goods. Most startups do not have a large amount of capital, so doing work through e-commerce and simply warehousing your products is a vastly cheaper alternative.
2. Cheaper Labor Costs
Another cost that one must consider when starting a business is managing and minimizing cost. One of the big benefits of an e-commerce enterprise is that you do not have to have a physical store in which people can access. This means that you also do not need to hire workers to man your store on a daily basis. The removal of these extra workers means that you have to pay less worker’s comp, wages, and potentially benefits. Most of these jobs that you are now omitting are commonly part-time jobs which have a very high turnover rate. This also suggests that you also do not need to invest money into paying for the hiring process of new workers along with the implicit costs that come with having to teach new employees. Overall, once your business is up and running menial labor jobs that are required are and the consequential costs of those jobs are vastly diminished.
3. Earn while you sleep
In addition to the lack of need for a physical store, you also do not have any store hours or geographic barriers limiting your availability to customers. This means that anyone around the world, at any time, can conduct business with you if you have the means to ship abroad. E-commerce is much less labor intensive than a regular retail businesses for these reasons.
Above all else, a business’s greatest goal is to make lasting value and money. Making money is synonymous with growth in business, and e-commerce is currently the fastest growing form of retail businesses. This growth is due to the technological advances of our day, and is generally implicit in the existence of any successful online enterprise. Even barring this rapidly growing business field, e-commerce based companies still have a larger potential to grow in comparison to their brick-and-mortar counterparts. This is due to the extremely low overheads and the low fixed costs that come along with starting an e-commerce business. Normally, when expanding a brick-and-mortar business, you must physically buy property and hire new people in new locations in order to branch out your business and overcome the geographic barriers that are limiting your business. Due to the absence of needing to purchase a store to sell your product, you do not have to make those investments to expand your business. Ultimately, this saves capital and allows you to focus on growth.
One of the biggest reasons why you should invest your time in e-commerce is the necessity to compete with other producers of your field. If you started an athletic apparel company, and your competition provided an e-commerce option for their shoppers and you did not, how would you expect to gain an advantage in market share? Failing to adjust to new technologies has killed more than a handful of companies. Sears, a once monolithic company that did not adapt to online e-commerce options, recently went bankrupt.
Building out online marketing and e-commerce can be a helpful step for any startup or business. We hope this article has been helpful to anyone considering creating their own online store or business.
At ELIX, we’re building e-commerce features into the ELIX web portal. Try out ELIX here to create a product or campaign in just a few minutes.