ELECTRONIC COMMERCE (I): BUSINESS OPPORTUNITY

Connectiondeal.com or E-Commerce has become in recent years one of the most used means to make our purchases.

Despite the current economic situation, each year, sales volumes through this channel increase significantly.

The number of Internet users has doubled between 2005 and 2010, reaching 2,000 million.

And, currently, in Spain, there are already 27 online shoppers per 100 inhabitants.

These figures mean that online sales, every time, open up more business opportunities.

For all this (and more questions that we will discuss), we will dedicate to this topic a block of three posts.

Currently, it is an undeniable fact that new technologies (and, in particular, the increasing ease of Internet access) have meant a great change in the way in which they interact in the professional and business world.

This is demonstrated by the data in this regard. Let’s see some.

In the second quarter, this volume reached a total turnover of 2,640.8 million euros, 13.7% more than in the same period of 2011, which constitutes a new historical maximum.

In total, during that second quarter, 36.7 million transactions were recorded, the same figure as in the previous quarter, which represents a 17% year-on-year growth.

This generated economic amount was distributed mainly among the following ten branches of activity:

If we analyze its quarterly evolution, the data is revealing:

– By turnover

.– By number of transactions

ORIGIN AND DESTINATION OF OPERATIONS

Obviously, the data is very good. However, one fact should not be ignored: this growth of electronic commerce in Spain does not necessarily mean that money stays here or, at least, not everything.

The purchase and sale of goods and services via the Internet from Spain abroad invoiced 1,137.9 million euros, representing 43.1% of the total, with 19.2 million operations.

The number of transactions made from abroad and directed to Spanish websites was 394.5 million euros, which represented 14.9% of the total turnover, with 3.1 million operations.

These figures placed the net balance of business volume abroad in a negative balance of 743.4 million euros.

If your interest is to focus on the exclusively Spanish market, you should know that the turnover of electronic commerce generated in Spain and directed to virtual points of sale within our country was 1,108.4 million euros, 42% of the total amount, with 14.4 million operations.

If your objective is focused on internationalization, you should know that, by geographical areas, the ones that make the most online purchases in Spain are the European Union with 77.1% of the total and Latin America 6.5% and the United States with a 4.5%, the tourism sector being the most demanded activity.

METHODOLOGY

Finally, to assess this data, the methodology used by the CMT to prepare its report must be taken into account.

In this sense, only online purchases made through bank payment cards attached to the Spanish payment institutions collaborating have been counted: Sermepa-Serviced, Sistema 4B, Spanish Confederation of Savings Banks (CECA-Euro6000).

Therefore, a payment made by bank transfer, or by means such as PayPal, without a credit card, is not reflected in said report.

ELECTRONIC COMMERCE AS A BUSINESS OPPORTUNITY

In view of the above, it can be affirmed, almost without any doubt, that electronic commerce is a future bet.

The greater ease of access to new technologies, the change in consumption habits, ease, comfort, accessibility, the elimination of borders, etc., mean that there is a great boom in electronic commerce and that, every time, they are more SMEs that benefit from it.

The initial reluctance generated by electronic commerce in its origins has now given way to a set of undoubted advantages, both for companies and for consumers themselves.

Advantages and opportunities for companies

• – Reduces the costs of starting up a business, compared to traditional commerce
• – Creation of new sales channels

– Market expansion: it allows new customers to be reached, making geographic boundaries for business disappear

• – Globalization and access to potential markets of millions of customers
• – Availability 24 hours a day, 7 days a week, every day of the year
• – Increased competitive capacity and efficiency of companies
• – Considerable reduction of stocks and time of transactions, transfers, inventories, data collection, etc.
• – Shortening of distribution chains
• – Quick update of information about the company’s products and services
• – Increased customer loyalty and proximity: through systems that offer personalized attention and offers (eg discounts to the best customers, etc.)
• – Reduce the terms of commercialization
• – Customer service time is optimized
• – Cost reduction at almost all levels of the organization, as well as ROI and promotion costs

In addition, it presents a fundamental aspect to take into account: the implementation of Electronic Commerce in the company will be important value creation.

This creation of value is revealed in different ways:

– As a result of an increase in margins, that is, a reduction in production costs or an increase in profits. Electronic commerce allows this objective to be achieved through:

• Positioning in new markets
• Increasing the quality of products or services
• The search for new customers
• Increase customer loyalty
• The increase in internal efficiency

– As a result of customer satisfaction, through:

• A price drop
• Better customer service
• Products and services best suited to customer needs

Advantages and opportunities for consumers

– Possibility to quickly access the products that interest you, without having to search store by store physically

• Possibility to choose between a much wider range of suppliers
• Greater interactivity and personalization of demand
• Possibility of finding, easily and quickly, the cheapest price
• Shortening of the distribution and automation chains of the trade, which allows obtaining supplies “just in time”
• Possibility of access to products and / or services that, in many cases, cannot be acquired by other means at the place of residence (eg something common in small population centers or far from large cities)
• Optimization of customer service time, which can be attended without waiting for long lines

However, like everything else, it is also true that this type of trade has a number of drawbacks. These are fundamentally related to the security of operations over the Internet.

However, this problem has a lower and lower level due to the following aspects:

• Internet users are increasingly familiar with electronic purchasing processes, registration in forums, portals, stores, etc., so it can be said that the fear of the Internet is being lost.
• Today there are different protocols such as SET (Secure Electronic Transaction) or SSL (Secure Sockets Layer) that make sure that these types of transactions through computer networks are as secure as possible.
• There are also numerous reliable payment systems such as virtual POS terminals of the different banks or the PayPal System.
• In addition, as a mechanism to grant greater security and confidence to the Web pages, what are known as the online trust seals have emerged. These are companies that try to unify criteria and give confidence to the user who visits a website, establishing minimum requirements for topics such as the processing of personal data or accessibility to the website, etc.

It also helps to generate greater security and confidence in the user the fact that an online store shows tax information, information about the purchase process, shipping costs, return conditions, etc.

AND WHAT CAN YOU EXPECT FOR 2020?

Before venturing any forecast in this area, we must bear in mind that we are facing a market of great dynamism, which is not only affected by the real economic issues but also how the technology itself evolves.

However, analyzing the evolution of recent years, it does seem possible to describe a scenario:

1) First, taking into account how Electronic Commerce has evolved in Spain, it is estimated that by 2015, 50% of the Spanish population will buy through the Internet.

2) In view of the previous data, annual growth has been close to 20%. The increase in consumer confidence, the increasing access to the Internet and, with some luck, an improvement in the economy, could be data that favor this growth.

3) The MBE transport company shows in a report that the number of shipments of packages with SME products dedicated to electronic commerce has grown by 65% ​​in recent years.

4) As of 2020, the entry of new sectors is expected, which will provide an important boost for Electronic Commerce.

Thus, to the already announced entry of DIA, it is necessary to add the strategy that Coca-Cola has planned to enter direct actions of Electronic Commerce; as well as Mercadona, which is strengthening its digital structure, which makes it anticipated that it will place a bet on this market.

These situations usually produce a drag effect on the sector, as happened in the aforementioned case of Zara.

5) In countries like the United States, 10% of sales through Electronic Commerce are via mobile or tablet.

These types of devices are progressively gaining more and more market share in Spain.

6) Electronic Commerce is also increasingly favored by mobile payments as support.

In 2011, the number of users was 160 million, reaching 212 million in 2012. BBVA estimates the forecasts for 2016 at 448 million users.

This is an interesting fact for Spain since the smartphone penetration rate is one of the highest in Europe.

CONCLUSION

Based on the foregoing, and after several experts consulted, the general conclusion is that, although it seems that there is already an offer for everything, Electronic Commerce in Spain is still taking its first steps.

It is not surprising, therefore, that more and more companies look for the right combination between Electronic Commerce and internationalization.

In our country, in view of what has been done, what is being done and what seems to be coming; Seeing the gaps in certain markets, the improvement options that others offer, seeing the needs of users, Electronic Commerce presents itself as a very interesting business opportunity.

AND WHERE ARE THE OPPORTUNITIES?

To answer this question, we can take as reference data from last year.

In 2012, one of the sectors that represented a major boom was the textile sector. In the last quarter of the year, it rose two positions to be in the fifth position, obtaining 5.1% of the total turnover of Electronic Commerce, which means reaching revenues of more than 123 million euros.

This boom was favored, on the one hand, by the change in consumer habits in this economic sector and, on the other, by the launch and expansion throughout the world of the Zara website, as well as the updating of others in the sector , such as Cars, Commercial Vehicles , Domains , Websites , Electronics , Textiles ,Home Appliances , Machinery & Commodities, which offer great discounts.

Therefore, a good first option would be to go to under-exploited markets.

In addition to fashion, we find other sectors that are not very exploited, with opportunities and that offer a great tour, including health or food.

Another option (and that applies to any market) is to improve the existing offer. At this point, the options are almost endless.

The key is to analyze the competition and its deficiencies. These abound in Spanish online businesses (shopping experience, delivery and return conditions, information, etc.).

For example, an option in this regard is to improve the usability of the Web page. An example of this is Doctortrade, which improves the eBay buying and selling experience thanks to software that identifies the products and allows you to make offers without having to describe them.

Therefore, creativity and innovation will be the benchmarks.

And considering the latter, many options arise:

• Opt for new business models
• Expand the depth of our products through services
• Expand the experience, giving continuity to the relationship with the client, increasing the value of what we offer

It is about analyzing what our customers buy and evaluating, taking advantage of their suggestions, how we can extend our products or services.

For all these reasons, if you are thinking of launching yourself into the business world or if you do not already have your e-commerce website, it would not hurt to include this dissemination and distribution channel.

Apart from the fact that the capital needed to start it is not high, with a good marketing strategy and a good Web positioning, visits to your online store will increase considerably.

Sebastian

Sebastian was born and raised in the busy city of Abbottabad. As a journalist, Saad Mushtaq has contributed to many online publications including the PAK Today and the Huffing Post. In regards to academics, Saad Mushtaq earned a degree in business from the Abbottabad UST, Havelian. Saad Mushtaq follows the money and covers all aspects of emerging tech here at The Hear Up.Thanks