Five tips for online business to succeed
Nowadays, e-commerce presents a tremendous opportunity for aspiring entrepreneurs as they don’t have to invest a lot of money setting up a store or paying expensive rental fee.
Technology disruption has turned many young people into a millionaire by building their business at their parents’ garage, with a little help of social media platforms and buoyant delivery service.
Electronic Transactions Development Agency (ETDA) reports that e-commerce business of Thai small and medium sized companies has steadily increased. It is expected to reach Bt680 billion this year, representing one-fifth of the total retail trade in Thailand. The number is rising.
At present, there more than 200,000 online merchants on e-commerce platforms such as Lazada, Shopee and JD Central and the other 300,000 merchants doing their business on social media platform, namely Facebook, LINE and Instagram.
The product offerings cover a wide range of merchandise including cosmetics, apparels and food. The online boom also creates opportunities for other related businesses such as bike men and suppliers.
Nonetheless, not everyone can succeed in the virtual world.
TMB Analytics has carried out a survey with 200 e-commerce operators including those involved in social media, e-commerce and online platforms in Thailand with an average income of Bt10 million-Bt100 million a year. The survey is to find out challenges in e-commerce.
The findings reveal five common obstacles that prevent an aspiring entrepreneur from becoming a unicorn.
The first one is the difficulty in making their products distinctive. Around 60 percent of respondents said their products are similar to the offerings of their competitors, and 44 percent of them said they have to buy the similar products from the same suppliers. Sixteen percent said they cannot make separate orders to produce something different, because it is not cost efficient.
TMB Analytics suggests the merchants to fix these problems by presenting unique packaging to make customers recognize their products or focus on the niche market with less competitors.
Secondly, more than 23 percent said online commercials have not translated into an increase in sales as they had expected, even though some spend a lot of money to promote their products on expensive social media platforms.
To address this problem, the merchants must precisely target their customers and laser beam their marketing activities to reach their target customers instead of aiming for the general audience. They need to know their customers better such as their age, gender and occupation as well as their lifestyle. Then, they can focus on niche media outlets that reach to this specific group of customers, which tend to be less costly to advertise when compared the mainstream social media outlets.
Third, many merchants said they face high inventory cost. Eighty-nine percent of online operators have also carried out business offline. Many of them open physical shops and sell their products online concurrently. Thirty-seven percent of them said inefficient inventory management have lessened their profit because they have to spend on inventory.
Nonetheless, the inventory-related problem can be solved by effective management with constant update as the cost of inventory can eat up the profits.
Fourth, eighty-four percent said they face a problem in delivery such as delay, damaged goods or wrong address. Some customers return the products because they are not satisfied with the quality, adding the costs for the operators.
TMB Analytics recommends that the entrepreneurs must carry out the inspection before delivery or using good pick & pack service to rid of certain procedures that can damage their merchandise. Also, the online merchants should choose credible delivery service to ensure their merchandise will be delivered in good condition and on time.
Lastly, as the festive seasons are the best time of the year to sellers, the online merchants must get ready to join the sales promotions offered by the e-commerce platforms. However, many online merchants said they don’t have enough money to promote their products to during “golden period”.
Therefore, they fail to capitalize on the festive mood because they cannot stock up their inventory, buy advertisement or spend on the overtime payment to ensure their staff will be working during the holiday break.
The result, they miss out on the opportunity to boost sales. This is despite the fact that the surveyed merchants said during the holiday seasons, people would spend 20-100 percent higher than normal to buy merchandise online.