Online Business and How to Improve It - Term Paper Example

Online Business and How to improve it Name Institution Table of Contents 1. Introduction 3 2. Background and History 3 3. How to Start a Business Online 4 3.1. Tips 4 3.2. What Not To Do 5 4. Most Popular In Saudi Arabia 5 5. How to Improve Your Online Business 6 5.1. Financially 6 5.1.1 Problems 6 5.1.2. Solutions 6 5.2. In Marketing 7 5.2.1 Problems 7 5.2.2. Solutions 7 6. Online Business 7 6.1. Advantages 7 6.1.1 For Customers 7 6.1.2. For Business 8 6.2. Disadvantages 8 6.2.1. For Customers 8 6.2.2. For Business 8 7. Conclusion 9 8. Recommendations 9 9. References 10 Online Business and How to improve it 1. Introduction Technology has changed the world, but especially in the business sector. Almost all businesses use technology in every aspect of operation (Kenneth et al., 2008). They analyze data using computer programs, communicate using network systems, use digital means for marketing campaign, streamline operations with check-out systems etc. Technology has changed operation in business organizations in many ways. Installation of technology can impact business positively or negatively. The internet is considered a vast element that allows people to access information. The most common activities that take places through the internet is buying and selling of goods. In many countries, due to the growth of e-commerce, consumers prefer to do shopping online using different shopping sites. E-commerce has changed the behavior of consumers as they prefer getting their desired products at the comfort of their homes (Kenneth et al., 2008). Change of consumer preferences coupled with technological advancement has led to the growth of online businesses. This paper will highlight the background and history of online business and will describe how an individual can start an online business. In addition, it will detail out online business in Saudi Arabia and ways to improve its operations. Lastly, the paper will detail out the advantages and disadvantages of online business to both the consumers and businesses. 2. Background and History The history of online business dates back to the invention that involved the introduction of computers. Online business became apparent in 1991 when the internet was permitted for commercial use. Ever since, many companies have opted for ecommerce. In the past, ecommerce involved performing commercial transactions electrically by use of technologies such as Electronic Funds Transfer. This gave an opportunity for different businesses to exchange information. Use of the internet started in the 1970s but advanced in popularity in 1994 (Fletcher, Bell and McNaughton, 2004). It took more years to develop security protocols in order to enable rapid access and connection to the internet (Fletcher, Bell and McNaughton, 2004). More and more companies sorted to develop online business in the 2000. Companies in the United States as well as in Western Europe were among the first companies to do business online. The notion of ecommerce changed and people started purchasing goods and services through the internet utilizing secure connections (Fletcher, Bell and McNaughton, 2004). In 2000, the dot-com collapsed and many online businesses were destroyed due to increase in cyber insecurity. However, technological advancement enabled new features to be added in the internet in order to increase its capability. Many more companies started using the internet and by 2002, online business had approximately $700 billion in transaction. Table 1, represents the sales ecommerce sales from 1999 to 2007. It shows a growth in sales due to the increase in the number of online businesses in the United States. 3. How to Start a Business Online 3.1. Tips There are some steps to be taken when starting an online business in order for it to be successful. The first step to take in order to start a business is to find a need and fill it. It is important for an individual to look for a product or service that will attract the attention of the market in order to boost the chances of success (Collins, 2001). One needs to search for products and services which are rare but have high demand. Another step is to build a personal website that consumers can find it simple to use. In addition, another step is to use the search engines to bring buyers to your website. Pay-per-click advertising is an effective way of getting traffic to a new website. Another important tip to make an online business successful is to use e-mail marketing to develop long-term relationship with the potential customers (Collins, 2001). 3.2. What Not To Do There are a number of things that one need not to do when starting an online business. First, an individual should not start an online business without a plan. Lack of pan can lead to business failure. Also, one should not ignore customer service (Collins, 2001). In an online business, all transactions take place through the internet and thus people forget about customer service. One should make sure he or she interacts with the potential customers regularly. Online businessman should not undervalue what they sell. Selling takes place with the aim of making profit. Therefore, an individual should not set the prices of the products too low to make profit. It is advisable also not to finish the advertising budget at the start (Collins, 2001). When starting an online business, it is important to just test one or two social audiences and create a customized audience at affordable price. Do not use the entire advertising budget trying to spread in every social media sites. 4. Most Popular In Saudi Arabia Just like other people in other countries, people in Saudi Arabia now prefer to purchase products through the internet. By 2015, Saudi Arabia experienced an increase in Ecommerce sales from $9 billion in 2012 to about $15 billion (Go-Gulf, 2015). One major reason for this increase is the huge number of online shoppers. The country has approximately 4.43 million online shoppers. There are a number of sites that most visited in Saudi Arabia. This year, the revenue generated from e-commerce amounts to about $6,847.5 million. This number is expected to increase in the years to come (Go-Gulf, 2015). Table 2, represents the total revenue of ecommerce market, it shows the revenue generated from online purchase of different products. In Saudi Arabia, the frequent users of ecommerce are the middle aged people. People between the ages of 25-34 years who purchase products and services through the internet are about 5.5 million (Go-Gulf, 2015). Table 3, represents the number of online shoppers in Saudi Arabia in millions and increase in this number from 2014-2020 Some examples of online businesses in Saudi Arabia that are most visited include Aido.com, Souq.com, Alshop.com and Basharacare.com among others. 5. How to Improve Your Online Business 5.1. Financially 5.1.1 Problems Many online businesses sell their products at low costs due to intense competition and this tends to reduce profits and affect the operation of the business (Leone, 2014). In addition, some people start an online business without planning the budget needed for the business to grow. Most online businesses struggle to raise money when it’s late. Lack of financial plan may lead to online business failure. 5.1.2. Solutions In order to improve the financial ability of online business, it is important to measure the performance of the business against the competitor in order to understand the business’ financial position and potential (Leone, 2014). This will improve the setting of prices for products in order to be able to make reasonable profit. The prices should be set after considering costs associated with material and labor. 5.2. In Marketing 5.2.1 Problems One marketing challenge facing online businesses is the identifying the appropriate media for advertising. Finding the right media of advertising is a huge concern for marketer. There are a number of online media that can be used in marketing the company (Leone, 2014). However, not all of them are appropriate. And utilizing many media at the same time is expensive. In addition, online business is faced with challenge of determining the targeting content for audiences. It is difficult to come up with ways to market a product to the international audience due to different tastes and preferences. 5.2.2. Solutions One way to deal with targeting challenge is to identify the target market and organize and enhance the business website for different countries (Leone, 2014). One needs to keep in mind the different audiences when creating the website content. In addition, when starting an online business, it is important to first market the brand by testing one or two marketing media in order to prevent over-spending. 6. Online Business 6.1. Advantages 6.1.1 For Customers Online business also is advantageous to consumers. Customers are able to shop at the comfort of their home and this creates convenience (Fletcher, Bell and McNaughton, 2004). If an individual is busy or cannot access a physical store, he or she is able to order products or services through the internet. Almost all online businesses offer their products and services at much lower prices compared to physical stores due in part to intense competition. Also, customers can visit many sites in order to search for better prices. Online businesses have unlimited array of products and services. As a result the customers have variety to choose from and this enable them get quality products (Lee, 2012). Physical stores make it hard for customers to buy some items. However, online business offer discrete shopping opportunity and privacy as no one will know what one buying. 6.1.2. For Business The internet has benefited many people and businesses around the globe. Online business has enabled small businesses to compete with large organizations. An individual who understands the benefits of doing business online has the potential to grow the business. The internet has changed how advertisements and promotional activities are carried out (Lee, 2012). Use of the internet gives a business instant global presence. Customers from around the world are able to access the offered products and services. Online business is considered a store that never closes as it operates 24 hour a day. The owner therefore can still make money when sleeping because customers can order products and services anytime of the day or night. Online business enables networking opportunities (Lee, 2012). Use of chat rooms and other internet forum enable a business person easily acquire entrepreneurial advice. For instance, business people can share advice about effective promotional and marketing techniques. One of the most significant advantages of online business is the fact that it is cost effective. Opening and maintaining an online business is less expensive that a physical store. 6.2. Disadvantages 6.2.1. For Customers When doing business online, one is subject to the strict laws and regulations of the countries where target customers are. The online business is subject to privacy laws, copyright laws, and tax laws that depend on the location of the company (Leone, 2014). When selling things that should not be sold to children, there are certain legal provisions to follow. Since online business is accessible all over the world, there is a challenge of copycats. In order to remain competitive, it is important to copyright or patent the website which is very expensive. In addition, another disadvantage of online business is intense competition which makes business owners to reduce their prices considerably. 6.2.2. For Business One major disadvantage of online business is hidden costs. These costs may be in form of the consumption of data and shipping costs. Credit card hoaxes and other cyber insecurities may affect consumers when purchasing products online (Leone, 2014). In addition, the pictures displayed on the website may be more attractive as compared to how it looks physically. And deciding to return the product may attract additional costs. When purchasing products from physical stores, one gets access to the products immediately unlike buying through the internet where you need to wait for days for the items purchased to reach. 7. Conclusion In conclusion, due to technological changes as well as changes in consumer tastes and preferences, many companies have opted to sell their products and services through the internet. Consumers in Saudi Arabia prefer to shop at the comfort of their homes and this has increased the revenue generated by online business. Online business has brought about advantages such as convenience, variety and low cost to consumers. It benefits businesses as it is cheaper to advertise via the internet and it is a 24 hour store. However, associated disadvantages include insecurity, additional cost and have intensified competition. 8. Recommendations The benefits of doing business online should be identifies across the globe in order for more companies to open online stores. Researchers and scholars should identify and look for strategies that will minimize the risks that come due to online business. Small online business owners should be educated in order to be able to improve their operations and avoid failure. Businesses should take advantage of the internet as a way of advertising their business and should not just rely on physical stores but develop online store as well that will enable them connect to a larger audience. 9. References Collins, J. (2001). Good to Great: Why Some Companies Make the Leap... and Others Don't. Harper Collins: London. Fletcher, R., Bell, J. & McNaughton, R. (2004). International e-business marketing. London: Thomson Learning. Go-Gulf. (2015). Most Popular E-commerce Sites of the Middle East. Retrieved from http://www.go-gulf.ae/blog/ecommerce-sites-middle-east/ Kenneth C. Laudon, Carol G. Traver (2008). E-Commerce: Business, Technology, Society, Second Edition (Hardcover). Lee, I. (2012). Electronic commerce management for business activities and global enterprises competitive advantages. Hershey, PA: Business Science Reference. Leone C. (2014). Five of the Biggest Challenges Facing Online Marketing, Web Strategies. Retrieved from http://www.webstrategiesinc.com/blog/five-biggest-challenges-facing-online-marketing Read More