Building a profitable business online

Consumers today are spoilt for choice and a digitally connected world has allowed them to demand more of what they value most when making a purchase and connect with a provider focused on delivering that value. No company can succeed today by trying to be all things to all people; it must instead find the unique value that it alone can deliver to a chosen market.

In the days before the internet there were many smaller markets scattered around the world, where you would compete with others within your local market on price, convenience, service or product. For example, if you were looking to buy a new book, you would either go to a store that typically sold books cheaper than other suppliers, or maybe you bought from the store near your work because it was convenient, or maybe you went to a speciality store that you knew stocked a wider range of the books that you like to read, or maybe you went to a bookstore that always recommended you a good book to read. However you went about buying that book, you were driven by what you valued most.

The world has changed and since the internet has become part of our everyday lives, we have seen all the smaller markets around the world turn into one big globally connected market, where anyone can buy and sell from anywhere. Now let’s compare buying a book in a globally connected world. Firstly I can find a book cheaper online and search a range of retailers with minimal effort, maybe I am after the convenience of having a book delivered the next day compared to next week, perhaps I can find a specific book online that my local store does not stock and maybe the online retailer is actually really good at recommending other books to compliment the one that I am looking for.

Building an online business driven by price

As mentioned, a consumer now has access to the price of items available from a range of suppliers with minimal effort. If you are looking to start a new online business you cannot win on price alone as there is always going to be someone with a higher turnover and better bargaining power, unless you own the product yourself. The problem with lowering the price is that the customer is not likely to be loyal to your brand and they will easily change to another supplier for the right price.

Companies like Amazon saw these changes coming as a way to sell on a global scale and tailored their offer for this new audience. Amazon started with selling books on their website, as they understood that the customers they were looking to service online would be more likely to hunt for books by title and price, rather than go to the local store which tends to only stock a range of top sellers. Amazon could list every book ever printed on its website, without the need to have a physical copy on a shelf somewhere, meaning they could have a larger range than your local bookshop, be open 24 hours and with minimum operating costs, they could compete on price, product and convenience on a global scale, with the whole business run from a central location.

Building an online business driven by convenience and service

If you are going to be competing with other online retailers you will need to know why a consumer would find your service/platform more convenient, as all websites have the ability to be available 24 hours a day, seven days a week. Your convenience should be focused on removing friction from the transaction, potentially by removing unnecessary steps or increasing the interaction with the consumer. You also need to offer great customer support and build trust with the consumer via your website; this may include simple things like making sure that you have a contact phone number on your website.

An example of a tech company that has scaled into a global business by focusing on convenience is Uber. They used digital assets to take on the cab industry and offer a level of convenience that the cabs could not match. By making it easy to request a car, track its position and then handle the payment with minimal effort they built a loyal following of consumers and drivers, without the need to raise vast amounts of capital and build up a fleet of cars.  Interestingly their start up market was based in San Franscisco, before rolling out to other capital cities around the United States and then the world, all based on offering a convenient comparison to catching a cab.

Building an online business driven by product

If you are looking to start an online business, a product driven offer seems to be the easiest way to get started. However finding or creating a great product to sell online is only half the battle, as you can see from the examples above, you will need to focus on the convenience, service and price to stay competitive and build a profitable business, because if someone else has access to selling the same product they might be able to beat you on price, or maybe they will offer free same day delivery to compete with you. The advantage you have by being product focused is that you will be able to specialise in a specific product or category and deliver new products to your growing consumers over time.

VinoMofo is a leading online distributor of wine, providing a subscription service of 12 handpicked wines to the Vino loving Mofos every month. Here they offer a product that they know their consumers enjoy and would buy regularly from their local stores. What they deliver though is a convenient service that delivers new wine to your door every month, which has been hand-picked by experts, all for a set price that consumers seem happy to pay, as Vinomofo turned over $70 million in 2017, by focusing on delivering great wine to their consumers.

How to get started

Now everyone, including you, can launch an online store in just hours, using an off the shelf website to sell products or services to anyone in the world. We would always recommenced starting with an off the shelf solution for any businesses and only after you are making a profit should you invest in a custom online experience as the costs for building a website can go up quickly due to high costs inflicted around indecisions of your websites look, feel and interaction with your consumer. These will all be refined once your business is up and running..

Once you know the value you are offering, you can start to find your niche group of consumers online, which will become your early adopters and help you to build a profitable business online. If you need help finding your audience, we are the team for you, as our focus is to get your business in front of the right audience from day one.