Is Ecommerce Worth It? : A Complete Guide 

July 5, 2023
12
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Yes, e-commerce is worth it. In fact e-commerce is a major part of global trade and many would argue that e-commerce is what keeps the internet running. As an example, the most popular platforms in the world like Youtube or Meta have their businesses built around online shopping and digital marketing. So naturally people are wondering if it’s really worth it and if they should be joining the trend?

We’ve been seeing countless brands make a push for e-commerce in recent years. There is a very positive sentiment for e-commerce as a new sales channel. Many consider ecommerce as a growth hack because it promotes your brand and helps you reach a new global audience, while being suitable even for small businesses. Digital marketing is widely known as the most effective way of promoting your brand, often beating out other marketing channels for its reach, scalability and low cost.

Is ecommerce profitable?

Yes, e-commerce is profitable, but there are numerous factors that we need to take into consideration. We cannot ignore factors like the business model, niche, target market, competition, marketing strategy and more.

ecommerce projections as a graph
Profitability of e-commerce in figures:
  1. Global sales: According to Statista, global ecommerce is valued at $4.28 trillion in 2020 and is projected to reach $6.38 trillion in 2024. This demonstrates a clear trend that positively reflects the profitability of ecommerce in the long-term.
  2. Profit margins: There is some variance in profit margins in ecommerce that depend on the product or services being sold. While some industries have higher profit margins, competition is a key factor that affects pricing and profitability. Profit margins typically range between 10% to 30% but can also be higher or lower depending on additional factors.
  3. Successful examples: There are numerous examples of businesses that obtained great success through e-commerce. A notable example would be Shopify that generated $5.6 billion in revenue from merchant solutions in 2022. Or Amazon that achieved $21.33 billion in net income in 2020 from its marketplace.
  4. Small and medium-sized business: E-commerce proves consistently as an opportunity for small and medium sized businesses to reach a broader customer base. Many of these SME’s have successfully leveraged ecommerce and digital marketing to improve their profitability. As of the moment Shopify the merchant solution platform has more than 1.7 million stores worldwide.

E-commerce is considered an opportunity for businesses of all sizes to reach new markets and expand their operations. Industry figures all demonstrate the viability of ecommerce as a long-term solution for businesses and support the question “is ecommerce profitable”.

Why is ecommerce important?

E-commerce is revolutionary for businesses and has fundamentally changed the modern economy. As the industry matures with more comprehensive and affordable solutions, it’s becoming more accessible for all types of businesses. 

We are also seeing people grow more accustomed to online shopping, and society is in turn becoming more accepting of transactions over the internet. This is an important step for the industry as it normalizes online retail and allows for the benefits to shine through. Furthermore, the adoption of composable commerce, which emphasizes modular and customizable e-commerce solutions, empowers businesses to adapt and scale with greater ease in the evolving digital landscape. Based on only the amount of economic activity e-commerce generates we can conclude that ecommerce is important for business and a benefit for consumers.

Importance of e-commerce:
  1. Global reach: E-commerce allows access to a global customer base unlike the limitations we have in brick-mortar stores. The ability to break through geographical barriers and to market to a wide open world is a prized characteristic of e-commerce.
  2. Convenient: Being able to access the internet from virtually anywhere makes it convenient for both business and customers. Customers have unrestricted access, which allows them to shop even on a busy schedule or on the go. On the other hand, businesses benefit from 24/7 operations and high automation.
  3. Cost-effective: Fortunately for business owners, operating an ecommerce business doesn’t have a high demand for labor or a physical store. This eliminates expenses such as rent, utilities, and staffing requirements. Clouding services and e-commerce platforms provide comprehensive solutions.
  4. Increase sales potential: Due to a larger reach and the ability to service customers virtually anywhere, we gain a greater sales potential. By following the correct optimization steps, businesses can drive their sales and utilize this greater potential.
  5. Market expansion: The market is so large that it can be impossible to service everyone, but when we are looking to expand, ecommerce makes it possible. With full control over your store, you have the flexibility to target new niches, or expand your reach to new locations. 
  6. Scalability: Ecommerce benefits from versatility, allowing you to introduce new products and quickly change your strategy. A business can expand operations without having to invest into major infrastructure changes.
  7. Enhanced customer experience: Ecommerce is always changing and agile. There are countless ways that a business can invest to improve the customer's experience. These changes include; personalized recommendations, customer reviews, quick check out, loyalty rewards and more.
  8. Data-driven insights: E-commerce generates abundant data which can be used to make informed decisions. This data can be synthesized to make decisions regarding strategy, customer experience and inventory decisions.
  9. Competitiveness: In today’s world if we are not shopping online we are using the internet to verify the authenticity and quality of a business. It is even expected from a business to be online and to demonstrate the values of their brand. This naturally is a competitive talking point and can differentiate a business from the competition.

Overall, e-commerce has become a critical part of the modern world and there are real merits for businesses. Taking advantage of these factors can potentially alter your business and pave a path towards growth and success. Its importance lies in the ability to drive growth, expand markets, scale operations and improve the customer experience.

What is a marketing channel?

Marketing channels refers to any medium businesses use to promote, distribute or sell their product or services. Businesses use these marketing channels to connect with their target market, and communicate the value of their product. Which marketing channels a brand uses varies on factors like the maturity of the business, the product they are selling and the target demographic they wish to attract. In ecommerce, there are specific marketing channels that are commonly used to connect with customers which are preferred for their effectiveness.

Ecommerce marketing channels:
  1. Company Website: The first and most common marketing channel in ecommerce has to be websites. They give brands full control over how their product and services are represented and come with secure payment processing. Businesses use websites to describe their brand, display their product and process purchases. Websites are often core components to any brand because of the full control over how you use your ecommerce website.
  2. Online Marketplaces: Online marketplaces are platforms where businesses can list their product or services to visiting shoppers. Such platforms provide access to multiple sellers and often provide an additive layer of verification for shoppers. Examples of popular online marketplaces include Amazon, Alibaba, or Etsy. Businesses use these sales channels for their infrastructure and large customer base often considered central to their ecommerce marketing strategy.
  3. Social Media Platforms: Social media platforms are another very common ecommerce marketing channel for businesses to expand their reach and engage with customers. Such channels include Facebook, Instagram or Pinterest. These platforms allow ecommerce features where businesses can sell directly to customers. These features include product tagging, shopping catalogs and integration with payment systems
  4. Mobile Apps: Mobile applications are ecommerce dedicated channels that help businesses reach smartphone and tablet users. These apps are considered an improvement to the overall shopping experience and provide a personalized experience for users. 
  5. Influencer Marketing: Influencers are social media icons that have strong connections with their followers. Influencers often partner with businesses to promote their products through sponsored content.
  6. Dropshipping Platforms: Dropshipping is a business model where businesses sell products without maintaining an inventory. They partner with platforms like Orbelo or Spocket that connect them with reliable dropshipping suppliers or manufacturers. When a dropshipper sells a product, that order is relayed to the warehouse and the order is shipped directly to the customer without any inventory processing by the dropshipper.
  7. Paid Ads: Although expensive paid ads are one of the most effective marketing channels for their ability to generate mass impressions. Factors like organic traffic can take longer periods to scale, while paid ads are something you can immediately use to generate traffic. Popular tools include Facebook, Instagram and Google Ads are the most common.
  8. Email and SMS: Email and SMS are generally used as re-engagement tools and are regarded as the most cost effective options. Once you’ve managed to collect customer credentials and they have permitted contact, you can begin to notify customers in the case of new product launches, discounts and other occasions.

It is perfectly common for a ecommerce business to use multiple marketing channels to promote their product. It is thought that using multiple channels simultaneously expands reach, maximizes sales potential and diversifies risk.

Suggested Reading: Top E-commerce Trends

Why is SEO important for ecommerce?

Businesses have come and gone over the years without as much as a peep.  It's important to remember that there is a fine line between customers reaching your store and total obscurity. Something that is primarily dictated by search engines, is organic traffic, which represents a major competitive element of any ecommerce strategy.

Basic requirements for startup websites:

  • Correct keyword selection and implementation
  • Clean site map, internal and external link building
  • Optimized product, checkout and payment pages
  • Reduced load speeds and frictionless function
  • Apps or integrations for increased functionality
  • Analytics and data tracking
  • Engaging images and content

There is no more satisfying feeling than punching your store's name into Google and finding yourself on page one. Search engine optimization is an important part of any ecommerce marketing strategy and organic traffic can account for a major portion of all your leads, as high as 50% for some businesses. There is generally a lot of confusion regarding the topic of SEO for ecommerce and mistakes are common but can cause long term issues. Below are some important on-page SEO factors:

SEO Infographic
Importance of Keywords in SEO

Each organic visitor to our website originates from a particular keyword, the keywords we use can be random if we do not have the proper research backing our keyword selection. It is important to note that the quality of our traffic can lack intent if we fail to create keyword concentration. Then we have the keyword difficulty, which makes it harder for us to rank for any particular keyword, due to competition for that keyword.

Each keyword can be divided into three separate categories: primary, secondary and tertiary. Primary keywords represent the exact topic we want to write about, that features as 1-1.5% of the content length. Secondary keywords represent the words that are commonly associated with the primary keyword that help to narrow down the topic of the content for listing on search engines. Tertiary keywords are variations of the primary and secondary keywords that represent the possible ways something can be said.

Keyword levels

It is generally advised, especially if you have a low ranking domain, to use less competitive keywords, to produce highly targeted content. It is also advised to pursue long-tail keywords, which are keywords with added extensions, to target particular types of visitors. Each keyword, depending on their level of relevance, needs to be repeated in your content enough times that they stand out to search crawlers. In ecommerce, we want to know what people are inputting in search consoles to identify how we should describe our catalog. If you, based on your personal opinion, attempt to describe a product, you stand the risk of missing the full potential of your store. And that is why seo is so important to ecommerce.

Importance of page performance

If by chance you manage to generate any type of traffic to your ecommerce website, if your website demonstrates poor load speeds, bad design and images, or any reason to raise an alarm. You should instantly  expect a fall in conversion rates. Read through rates and on-page times are great indicators of your website's overall appeal to customers. Things like image sizes, page architecture and broken links are examples of alarming factors.

Authority Building

Based on a website's domain ranking, it can become easier or harder to rank for a particular keyword and appear on page one of search results. Link building with external websites is a great way to build authority. The logic is essentially: How many times is your website found across the internet due to links pointing to it? More popular websites have potentially millions of links attributing authority to them, and these websites will consistently appear on page one on even the most difficult keywords.


How to promote your online store?

The Marketing Funnel is a marketing concept used to describe the customer journey, allowing us to categorically target our customers based on their position in the purchasing process. It is common that the proportion of customers that move lower down the funnel towards retention diminishes naturally. The main objective of the marketing funnel is to increase leads generated, improve conversion and maximize total customer value. 

Actively focusing on this process is becoming increasingly important in ecommerce strategies. As we bargain for attention we try to make the most out of your investment, and strong retention strategies tend to maximize the lifetime value of stores and provide a stronger customer experience. If done correctly then these steps can lead towards a fast scaling and efficient stores.

Marketing Funnel Diagram

Ecommerce marketing strategies:

  1. Lead Generation
  • Keyword Selection / Organic Traffic
  • Paid Advertisement
  • Partnerships
  • Influencers
  • Social Media
  • Content Blogging
  • Visuals / Product Descriptions
  1. Conversion Optimization
  • Maximizing User Experience
  • Social Proofing; Reviews and Testimonials
  • Features / Page Performance
  • Discount / Incentives
  • Cross Selling / Product Pages / Bundles
  • Delivery Rates / Speed
  • Streamlined Checkout / Registration
  1. Retention / Re-engagement 
  • Email and SMS automation
  • Loyalty Programs
  • Data Insights
  • Clear Return, Refund and Shipping Policies
  • Packaging and Product Quality
  • Personalized Recommendations

There is a common saying in ecommerce strategy, which goes: Finding new leads is expensive and communicating with existing clients is cheap. E-commerce is known for low conversion rates which affects our bottomline, if we are not acting to improve those rates and maximizing the average value of each customer we will find ourselves with persistent issues.

We can only anticipate a finite amount of visitors over the lifetime of our store, we need to treat these visitors as a scarce resource and attempt to maximize their total value. Realizing your store's lifetime value is an important way of weighing the pros and cons of your decisions. Focusing on customer loyalty and building a customer database are fundamental to a campaigns success.

Suggested reading: Conversion Optimization Check-List

In conclusion

We must also be able to interact, communicate and incentivize our shoppers into engaging with our store. We can only reach a select group of people with our marketing efforts and so we must make the most out of our limited window. The right ecommerce marketing strategy is about using the right tools to expand your reach and amplify your reach. With a plethora of new options available and substitutes galore, retention and customer engagement are vital for the growth of any business. For many online businesses, customer engagement can be the difference between survival and redundancy. E-commerce shows no sign of slowing down and it is becoming more and more apparent that the future is online. Having the best strategy is the way to succeed in the competitive environment.

Digital marketing can be a challenge in e-commerce but it is also an important part of the industry. Apps and integrations can be a practical addition to your ecommerce marketing strategy. Growave is an all-in-one marketing solution that gives you several new ways of engaging with customers and driving your conversions. You can read more about Growave or speak to a representative for free.

Suggested Reading: Complete Guide to Customer Loyalty Programs

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