Doing Business Online Is Not That Trivial - Essay Example

Help! Doing business online is not that trivial!’ As the technology is advancing at a higher rate, the field of commerce is not left behind. A huge number of small and large businesses are focused on use of online in order to supplement their sales in their usual physical locations. These businesses are moving towards the web to reach the increasing number of people that are using the internet regularly. The benefits of having a website are market expansion, diversification of revenue streams, twenty four hour per day availability, convenience, promoting the business presence, cheap research on market, provide an opportunity for growth, it provides a two way communicative marketing, standardization of sales performance and improves credibility. Through market expansion, businesses have been able to break through the barriers in the world where any potential customer from any part of the world can access the company through internet. A company website can be used to diversify its revenues by selling part of the company’s advertising space to other business that will enhance use of company’s services. A website is available to the customers at any time during the day or night as they can get the information they want irrespective of time and location. Website offers convenience for any customer searching for a product (Simms, 2005). This is better than going somewhere to look and ask for someone with information about a certain product. Also instead of queuing to pay for a product, you can do so electronically through the website. A website is the best way to promote your business presence as it will give direction to any potential customer. In case of change of location, you can inform your customers through the company website. A website act as a cheap market for research when you use features such as visitor’s polls and statistics on websites to fid out the likes of your customers and their feelings about your business features. This will lead to product improvement and advanced ways of doing your business (Dunford, 2008). It also provides opportunity for growth of the business as you can use the space to direct potential customers by telling them about your business, what you have achieved and what to achieve in future. Website provides a communicative marketing that is two way as customers give feedback in a quick and easy way about your products and approach in marketing. According to Dunford (2008), a business can standardize its performance on sales by looking at the pitches that has worked and those that have not worked in the past the produce a pitch which is ultimate on the website for every customer to access. Website improves your business credibility as you have a chance to tell your potential customers about the business and why you deserve their confidence and trust. Through this, the customers will do your marketing by spreading positive aspects about the business. The advertising on website is flexible and cheaper as compared to printed advertisements as you can easily modify the content and the advertisement will be available for longer time period. Website adds value to your business as you offer a touch of individualized service to the customer and the customer in turn will experience satisfaction at higher levels (Simms, 2005). E-business is a way of running a business on internet or utilizing the technology of internet in order to improve the profitability or the productivity of the business. Through internet, an E- business is able to sell the products by reaching a very wide base of consumers as compared to the traditional methods. E-business involves a fusion of computing technology and telecommunications for conduction of a business. The management and creation of the relationship between the sellers and buyers is facilitated by an electronic medium that is interactive (Li, 2007). E-business communication focuses on written, electronic and oral communications in the global context of the society. The components of the communication in E-business include sender, the receiver, the message, feedback and the channel. The aim of communication in E-business is to persuade, to create a good will, to share information and to put up self esteem between the seller and the buyer. Business to Business (B2B) transactions are targeted mainly on companies and various wholesale buyers and takes place over the internet. The B2B services or sales are based on sheer volume. These transactions can be developed through creation of a specialized line for products that is not available to the general public. This is applicable in manufacturing world, for instance, if company may require a large number of specific apparatus with the same features in order to use them in the process of manufacturing then these apparatus will not be of any interest for individual customers (Botha, 2004). Business to consumer (B2C) transaction is buying and selling of goods and services over the internet. The term B2C refer to those transactions that take place between a business and the end consumers mostly through the online sale of services and products. In this type of transaction, the retailers will have to be very alert or cautious in order to update their websites and to optimize it to attain the traffic of consumers that they are targeting. An examples of transactions based on B2C include an individual who is shopping for clothes on order to use and to order food and eat in a food joint (Haynes, 2001). A business model can be defined as a way in which a certain firm will sell its products to customers and in the process the company will sustain itself through generation of the revenues. Various online business models that most companies use include brokerage, advertising, infomediary, merchant, manufacturer, affiliate, community, subscription and utility models. The brokerage model is aimed at bringing the buyers and sellers together by a provision of services that will make the life of buyer and seller a bit easier. In this model, there is a transaction broker or a place of marketing that makes it easier for the buyers to obtain the products that they are looking for. The seller will use the brokerage model to earn through charging a commission or a fee in every processed transaction in exchange of a service. The role of the brokers is very significant in this model in the business to business (B2B) and business to customers (B2C) markets (Haynes, 2001). The advertising model can be compared with the traditional model for media broadcast. In this case, the website is the broadcaster and it provides content that most likely is free, and the services in form of the banner advertisements. The banner advertisement is the main source of revenue for the website. This model depends on traffic and for decent traffic; more advertisements may be included in exchange for money. The advertiser pays according to three types of costs namely cost per click, per impression and fixed cost. The model is very easy to use and very efficient in case of high viewer traffic (Haynes, 2001). The infomediary model is applied in cases where the data on consumers and their habits of consumption is available and is appropriate when the information is analyzed in a careful manner and used in marketing campaigns targeting. Through this model, the sellers and buyers will be able to understand a certain given market. This model requires the consumer to pay some fee in order to obtain information and it is most applicable in the field of reading. It is also applied in blogs where one needs to pay some fee to access private information (Bhasker, 2006). The merchant model is applicable to all online retailers and wholesalers dealing with goods and services. The sales that are made are either through action or on basis of list prices. The model’s advantage is that you will always keep the largest portions of profit. You are also the one to decide the money that you will earn since the products are yours. This model can lead to the highest yield of revenues since you are the one in control of the products prices. The disadvantage of this model is to involvement of more work since you are the owner of the products. It is also risky since high investment is required to run the online store (Kilov, 2002). In the manufacturer’s model, the firm crating the products is able to reach directly to the customer. Due to direct contact with the customers, there is improved understanding of the preferences of the customers, customer service and enhanced efficiency. The affiliate model will provide an opportunity for purchasing any time the people are online. This is achieved by providing financial incentives to the sites of the affiliated partners. If the affiliate will not generate any sale, then the merchant will not incur any cost. The popularity of this model comes from its suiting in the web naturally. The earnings on this model are governed by the amount of traffic. High traffic will generate more revenue and it rewards the website owner the moment one clicks and buys the product. The company affiliated with takes care of sales and the job of the affiliate is to promote the product of choice and wait for sales to be incorporated (Brockdorff, n.d) The community model is governed by the locality o the user. The basic features of this model are free but the revenues on the website are obtained by charging small fee for subscription of various features thus making the site easier to use. The users spend high levels of emotion and time making it easier for users to invest. The revenue is obtained in this model relies on advertising and subscription of services that are premium. The model is suited for areas that promote interaction of community users with each other (Kilov, 2002). In subscription model, the subscription charge for the user of services is periodically. Irrespective of the actual rates involved in using of services, the subscription charges are always incurred. The model is being unique by charging of fees on fixed basis rather than one time use charges. The model provides a company with an ongoing income that can be used in improvement of services thus attracting more customers. In the utility model, the customers will be charged on the basis of the usage rate or in an approach regarded as pay as you go. Its popularity is based on the companies charging the user as per the information obtained. The model also charges on basis of connection minutes (Online Business Watch, 2011). The business models suitable for the selling of the retail property will include advertisement models, brokerage model, subscription and a combination of advertising and subscription model. The advantage of brokerage model is increased revenues since the seller and the broker tries their best to obtain maximum income. This will lead to increased traffic and in turn sales. Also, the commission charged is low thus attracting more customers. Commitment between sellers and suppliers will in turn increase the speed of execution leading to increased sales. The disadvantage on this model is the failure in logging on which could be caused by traffic overload making the site to freeze. This will lead to low sales and reduced revenues. The benefits to the business are increase in revenue as there is a tendency to compete for more customers, thus the higher the traffic, the more the revenues. Advantage of advertisement model in retail property is the diversity of the range of products for investment. A wider choice of products to the customers means accommodating a larger traffic which is reciprocated in the amount of revenue obtained. The other advantage is that this method is very easy to use hence attracting more traffic thus increasing the revenue. The disadvantage of advertising model is the bad investment penalty as a new investor without a sound basis on financial matters or analysis of stock may lead to loss of customers. Another disadvantage is stiff competition as your advert will be together with other competitors (Boris, 2011). The advantages of the subscription model are once you make the subscription, there are no restrictions as to the amount of information you will obtain. This will make it easier for the customers to access the site any time they want without restrictions thus there is a tendency of increased traffic and a corresponding increase in the sales and revenues. The company always contains an ongoing income that will assist in improving its services and attracting large traffic. The benefits of this model are related to cheaper expenses on advertisement while there is increase in sales leading to more income (Online Business Watch, 2011). The security issue surrounding all the online models is that the advertisements are made on the site of advertisers. These advertisers obtain the sellers IP addresses once you post something on the site, thus some of the sensitive information about the seller may be easily obtained. This means that most of the client’s data can be sold to other clients revealing the secrets of the businesses. Due to this, most clients felt unconvinced about the online business due to matters related to security. To prevent issues of insecurity, the fears of the clients are addressed using the encryption technology. This is accomplished by testing the sites to obtain high encryption levels. In addition to this all communication between the network and the browser that are on secure layers of sockets are always encrypted (Brauner, 2011). The links that match with the Michael Lappa’s models include (Mark von Brockdorff ‘s Seven types of business model websites: http://www.webgeekly.com/lessons/e-business/the-7-types-of-business-models-for-websites/, Online Business Watch- Types of Business Models (2011): http://www.onlinebusinesswatch.com/internet-marketing-tips/types-of-business-models.html, Boris (2011) the 9 types of online business models, which one do you use? : http://thenextweb.com/entrepreneur/2011/05/25/the-9-types-of-online-business-models-which-one-do-you-use/, ) The electronic means used in the selling of goods and services in UAE are either B2B or B2C electronic markets. These are establishment s where agents and brokers use internet or other means in electronics in order to act as a middle layer between the sellers and buyers. These agents and brokers arrange for the sale or purchase of goods owned by others on the internet then they charge on commission basis (Haynes, 2001).The owners of the site obtain the revenues from the charges then they develop every time the seller posts the goods on their site and when the buyer obtains the required product. The sellers in this case increase their sales as the sites draw more customers making more profit with reduced cost and work on advertising. The traditional means of selling of goods include use of agency and sale of property through media advertisement. Use of an agency includes agents, auction companies and representatives of the manufacturers. In this process the agency will have to charge some fee to the seller as he or she looks for the buyer of the property. If the property is sold, the agency will benefit from charging the seller and the buyer some commission. Sale f properties through media involve the seller and the media only. The seller will have to pay some charges in order for the media to advertise the property to the public. This will help the seller to reach the potential customers faster. In this case the media will get revenue from the advertisement and the seller will increase sales through reaching more customers in a cheaper way (Li, 2007). References Bhasker, B. (2006). Electronic commerce: framework, technologies and applications. New York: Tata McGraw-Hill Education Boris (2011). The 9 types of online business models, which one do you use? http://thenextweb.com/entrepreneur/2011/05/25/the-9-types-of-online-business-models-which-one-do-you-use/ Botha, J. (2004). E-Commerce. Cape Town: Juta and Company Ltd Brockdorff, M. (n.d.) Seven types of business model websites. Retrieved from http://www.webgeekly.com/lessons/e-business/the-7-types-of-business-models-for-websites/ Dunford, T. (2008). Advanced Search Engine Optimization: A Logical Approach. Morrisville Lulu.com Haynes, J. D. (2001). Internet management issues: a global perspective. Hershey: Idea Group Inc (IGI). Kilov, H (2002). Business models: a guide for business and IT. New York: Prentice Hall PTR Li, F. (2007). What is e-business?: how the Internet transforms organizations. New York: Wiley-Blackwell Online Business Watch (2011) Types of Business Models. Retrieved from http://www.onlinebusinesswatch.com/internet-marketing-tips/types-of-business-models.html Simms, J (2005). Benefits of Having a Website. Retrieved from http://www.webworldindex.com/articles/12-Benefits-Of-Having-A-Website.html Read More