Back in April 2022, Amazon launched their “Buy with Prime” program, allowing sellers to offer customers shopping on their website the option to make purchases using their Amazon Prime accounts and receive items through Amazon’s sophisticated fulfillment network. The goal was to generate additional revenue for Amazon, gather data, and compete with platforms like Shopify.
Continue readingTag: ecommerce (Page 8 of 10)
In the grand theater of ecommerce, competition takes center stage, keeping the audience on the edge of their seats. But not every performance is a heart-pounding Shakespearean tragedy. Each business has its unique script, stage, and actors, and the intensity of rivalry among competitors can vary dramatically.
Today, we will explore the competitive dynamics of the business world, with a special focus on the ecommerce world. For the business strategy nerds out there, we’ll delve into Porter’s analysis of the intensity of rivalry and apply it to online businesses. We’ll review the key factors that impact the intensity of rivalry before looking at strategies to successfully navigate a competitive environment. So, let’s dive in and discover what keeps our audience applauding.
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In ancient times, shopping was an adventure: people had to leave their houses, get in their cars, and explore aisles of physical retail stores, searching for treasures and good deals. Then came ecommerce, which changed the world. People now had the option to shop from their couches and get products delivered directly to their door. As a result, and for a long time, there were two very different worlds that provided very different experiences: physical stores and online shopping. How cool would it be if customers could have a unified shopping experience, whether they shopped from their laptops at home, a smartphone app, or directly at a retail store? That is already the case, and it is called an omnichannel strategy.
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Have you ever been scrolling on your Instagram feed, seen a picture of a model wearing a pair of shoes you really like, and then found a View Products tag? That is social commerce: the fusion between ecommerce and social media. Kids are now born with a smartphone in their hands and social media on the screen. Platforms like Instagram, Facebook, and TikTok drive huge amounts of traffic daily and have billions of users worldwide. Companies had to find ways to monetize all this traffic and data, and social commerce is one of them. This relatively recent way of selling is significantly impacting the digital marketing world, and it is getting bigger by the year. But how big is it exactly and should you use it? Let’s find out.
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In the age of Amazon.com, is it still relevant for brands to have their own ecommerce website? Many entrepreneurs use Amazon, or other marketplaces as their primary and only sale channel. Others focus mostly on their own website. And a lot of businesses go with a hybrid approach and sell on multiple sales channels. So what is the right approach? And is a website still necessary?
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If I had a dollar for every “Get rich with Amazon FBA” course out there, I could quit working and retire early. Whether these courses are useful or not is irrelevant. The sheer number of gurus selling these methods shows how much attention Amazon has been getting for the past decade. Their net revenue went from $61B in 2022 to over $513B in 2022. However, Amazon is not the only marketplace out there. Everyone knows eBay—I remember waking up early to bid on video games and pairs of rollerblades when I was still in middle school. There is also Walmart Marketplace, which is gaining more and more traction, or Etsy for those who like shopping for handmade goods.
Because of the millions of customers these platforms attract, it can be a tremendous opportunity for entrepreneurs. While selling on marketplaces has its risks and issues, they can still be very profitable sales channels. After writing about the dark side of marketplaces, I’d like to talk about the flip side and go over the main reasons why some companies would consider joining one of these platforms.
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Introduction
When I started my first business, I created an online store but also listed my products on Amazon. As a new entrepreneur with little experience, I was expecting to get a few more sales from Amazon than my own website. It turns out that for each order I received on my website, I got almost ten orders from Amazon. There are many great things about selling on popular marketplaces, the most important being piggybacking the marketplace customer base and the built-in trust with customers.
Yet, there are a lot of issues with online marketplaces that are not obvious before you start selling on one of these channels. It took me years before I started to fully understand the challenges and issues that came with online marketplaces. I do not blame the marketplace operators for all these issues, but I want to discuss the dark side of these important online channels so you are better prepared for the day you join one of them, if you have not already.
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I may be one of the few weird people who enjoy looking at financial dashboards and playing with complicated Excel files. I find it fascinating to change a number in a cell and see the whole spreadsheet, charts, and tables change. And you know what? It actually helps me wrap my head around different aspects of the businesses I deal with. I may be a nerd, but I understand that finance, numbers, and ratios may look scary to rookie entrepreneurs. Here’s the deal: understanding and managing cost structures is a key to success, whether in the Ecommerce world or other industries. Some of the costs related to an online business are similar to what you’d find in any other business, while some are unique and tied to online businesses. Others are much more important than in other business models.
I can’t talk about every component of every business; this would take the whole book, and I know a lot more about Ecommerce than other business models anyway. The aim of this section is to focus on costs related to Ecommerce. Cost structures are a very important part of a business. They are key to crafting the best pricing strategy, effective financial planning, and ultimately maximizing growth and profits. So, let’s get started and look at each category.
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Not too long ago, I ordered a really cool-looking pair of boots on Amazon. These were reasonably priced, and the reviews were mostly positive. What I received looked like a toddler designed and 3D-printed these boots, and I immediately returned them to the seller. Most people love the convenience of online shopping and being able to order almost anything without having to leave the couch. However, not being able to physically see and touch the product can cause issues and disappointments. As a result, consumers returned products worth $743 billion in 2023, with an estimated average return rate of 15% to 20%.
While returning items can be a hassle for customers, it is also expensive and time-consuming for companies. Let’s see the main reasons customers return items, the consequences for businesses, and what can be done to reduce item return rates.
Continue readingAbout This Blog
My name is François, I’m the author of this blog. I love writing and talking about business and ecommerce. I hope you enjoy my work, feel free to contact me for any suggestion!