Monthly Archives: February 2018

Making Money Online Requires Analysis, Planning, Effort and Lots of Patience

It seems that right now is the best time for making money online. According to Statista.com, retail e-commerce sales worldwide amounted to 1.86 trillion US dollars during 2016 and online retail revenues are projected to grow to 4.48 trillion US dollars in 2021.

Ashwin Ramasamy writing for PipeCandy estimates that there are between two and three million eCommerce websites, excluding websites from China, on the web. So, if you do the calculation, taking the numbers of 2016, the average annual revenue per eCommerce website could be around 740,000 US dollars.

And with an online retail revenue of 4.48 trillion US dollars projected for 2021, there seems to be a lot of spare capacity to take up. Is making money online that easy? Not really…

“eCommerce has about an 80% failure rate. Other researchers claim it’s as high as 97%. One of the reasons the failure rate is so high is because an eCommerce business can be easy to set up, for a small amount of money. Creating a store front is easy. Making it successful, on the other hand, not so much”, says Dianna Labriem in Tech.co.

So, the Trillions of US dollar revenue generated each year by online retailers is shared by a handful of eCommerce websites.

Making money online the hard way

From the moment that you’ve activated your ecommerce website, you need already to know what value you’re offering your customers. In other words, what is your competitive advantage in the online market you’re targeting?

A sustainable competitive advantage may be defined as ‘the ability to deliver superior value to the market for a protracted period of time’ 1. Here, superior value refers to the fact that the consumers of a product or service must be convinced that they are getting something of value for their money. The value proposal for Bricks and Clicks retailers was previously discussed in this blog.

The hard way of making money online starts with analyzing your online market.

Analyzing your online marketplace

To make money successfully online, you need to know everything about your market. Your market consist of your customers, suppliers and intermediaries and your competitors.

Analyzing your customers:

  • Who are your biggest customers?
  • Who are the most profitable?
  • Where can you find your customers online?
  • Do your customers have any unmet needs?
  • What are the benefits they seek from your products?
  • And what price are they willing to pay for your products?

Analyse your intermediaries:

Intermediaries have captured a significant proportion of the profits available in the online retail market 2.  Therefore, their impact on your business’s marketing mix should be analysed.

  • The place (delivery) – most online retailers are dependent on logistic service providers to do the ‘last mile of delivery’ to their customers. Retailers should analyse the different service providers and choose one that is the most reliable at the best price;
  • Your product – only source products of the highest quality at reasonable prices from reliable suppliers;
  • Your promotion – which marketing intermediary will deliver your marketing messages the best? Google’s AdWords or social networks such as Facebook or Twitter?
  • The price that intermediaries charge – analyse the offerings and choose those who deliver the best service at reasonable prices.

Analyse your intermediaries

Analyse your competitors:

You need to find out how to satisfy customers better than the competition. By doing a competitor analysis you may begin to understand the level of competition that exists in your target market and it will help you to make the right pricing decisions.

The strategies and actions of your competitors may well determine if you will be making money online:

  • Who are our present and potential competitors?
  • What are the positions that they have established in the market?
  • What are their strategic objectives and thrusts?
  • What are their present and future strategies?
  • What are their strengths and weaknesses?

The next step to do to get your online business on its way, is incorporating all the data you’ve generated with your analysis into a strategic plan.

A strategic plan to make money online

By now you should know who your customers are; who the intermediaries are that you’re going to use; and whom you’ll be competing against. Now you should develop a competitive strategy.

The competitive strategies available for online retailers to obtain and maintain a sustainable competitive advantage are 1:

  1. The differentiation strategy – value is added to the product or service through differentiation to make it different from competitors’ products and services.
  2. The low-cost strategy or overall cost leadership – this implies that an organisation will supply a product or service more cost-effectively than competitors.
  3. The focus strategy – here you can focus on a special product/market niche that you may later monopolise.
  4. The pre-emptive move or first-mover advantage – this strategy can be pursued by an online retailer who takes a calculated risk by being the first to enter a market with a new product or service.
  5. Synergy – this means that all the components of an organisation are working together and so creating a sustainable competitive advantage. For example a physical retailer that adds the online channel to its business.

It takes a lot of effort to make money online

Mostly, money doesn’t just start flowing in because you have an ecommerce website. You may need to spend many hours a day to monitor the happenings on your, (and your competitor’s) website. You need to follow the trends in your market, negotiate with intermediaries and confront your competitors. You definitely need to create quality content for your website and also get a presence on social media networks.

Furthermore, you should manage the finance of your business and identify the risks of the business. Your online customers demand a 24/7 service – and that is what you need to deliver. For your customers, the alternative is a click away…

Concluding

Although the internet offers us billions of potential customers, anywhere at any time, it will take some time for your online business to show substantial profits. That is especially true for small retailers with a limited marketing budget…

However, if you do the right thing and do that right, with lots of patience and belief, you’re online business may be part of the 3% that make money online.

Notes:

1 Du Plessis, P.J., Jooste, C.J. and Strydom, J.W. 2001. Applied strategic marketing, Heinemann.

2 Laseter, T.M. and Rabinovich, E.  2011. Internet retail operations: integrating theory and practice for managers, CRC Press.

Images

  1.  Featured image: Pixabay
  2. Image in body: Pixabay

Instagram Marketing – Telling Stories about Your Brand with Pictures and Videos

Instagram is the fastest growing social network site and is expected to have one billion active users this year (Mediakix, November 2017). As a result, Instagram marketing has really become “essential” when it comes creating a following for your brand.

People love Instagram. They find gratification by posting photos and videos for their friends to see and react to. Also, users consume photos and videos mostly by viewing a core page showing a “stream” of the latest photos and videos from all their friends, listed in reverse chronological order 4. They can also ‘like’ or comment on these posts.

Instagram marketing is valuable tool for retailers. This is evident because retail brands are prominent users of Instagram. They frequently use persuasion, self-efficacy, relational, emotion and symbolism strategies to get users to interact with the brand by ‘liking’ or commenting on the content 3.

The more ‘likes’ and followers a retail brand achieve on Instagram, the more will users become aware of the brand. However, in order to secure online sales, retailers should make the user’s journey from ‘awareness’ to ‘purchasing’ as smooth as possible.

About Instagram

Instagram is an online, mobile phone photo-sharing, video-sharing, and social network service (SNS) that enables its users to take pictures and videos, and then share them on other platforms 1. It also allows users to add hashtags and geotags, graphical stickers, Augmented Reality objects, as well as apply multiple graphical filters to alter photos. Instagram quickly became popular because it’s not only a handy photo-sharing app, but also a social network.

What is most powerful about Instagram is that it is geared entirely towards mobile use, allowing users a simple interface to upload photos that they have just taken or captured in the past. “It’s like Twitter with followers, only instead of real-time text updates, you provide photo updates” explained Zohra Ashpari for PC World in 2012.

Instagram user statistics (Hootsuit)

  1. Instagram has over 800 million active users.
  2. 80% of Instagram users come from outside of the U.S.
  3. Instagram is used by 38% of women in the U.S. and 26% of men.
  4. 59% of Instagrammers in the U.S. are under 30.
  5. Teenagers love Instagram.
  6. Facebook and Pinterest are Instagrammers’ other favourite networks.
  7. A lot of Instagram users have pretty deep pockets.

It took Facebook not long to purchase Instagram in 2012 for one billion US$. Maybe they did it because Instagram was potentially a threat to their other business (Facebook) 2. Furthermore, Facebook  owns the social media apps WhatsApp, and Facebook Messenger. The parallel that Zohra draw between the two social media apps then is happening even more today, as was pointed out in Redcode.

Kurt Wagner and Rani Molla write in Recode “The world’s most popular social apps are starting to look a little … similar. As companies like Facebook, Instagram, Twitter and Snap have evolved, they’ve started to borrow product ideas from each other in the hope of building an all-in-one experience.”

So if Facebook is similar to Instagram, and all the other social media apps appear similar to each other, how on earth can retailers decide what social media app to advertise their products with?

However, with more pictures and videos that are used to share stories and experience, retailers may first consider “how to market” rather than “where to market” on these social media apps.

Cadbury’s use of Instagram

Developing an Instagram marketing strategy

Instagram marketing is derived from social media marketing. Therefore social media marketing can formally be defined as “The utilization of social media technologies, channels, and software to create, communicate, deliver, and exchange offerings that have vale for an organization’s stakeholders.” 5

Alicia Johnson writing in SproutSocial.com suggests the following to create an Instagram marketing strategy:

Step 1: Determine Your Objectives

  1. What will Instagram allow you to do that other platforms don’t?
  2. Who is your target audience and which members of your audience are active on Instagram?
  3. How will Instagram integrate with the other networks in your social media strategy?

Step 2: Develop an Instagram Content Strategy

Content is the foundation of your Instagram presence. For that reason, many B2C businesses use Instagram to make their product the star of the show.

  1. Build content themes – review your objectives and determine what aspects of your brand to showcase in your Instagram content.
  2. Determine content medium and ratio – consider a balance of content types that will work best for the resources you have and the engagement you want from your audience.
  3. Set a (flexible) content calendar – to establish and maintain an active presence on Instagram, determine the frequency with which you will post.
  4. Curate user-generated content – it allows you to foster audience engagement and create an incentive for your audience to share posts.

Step 3: Establish Clear Team Guidelines: Style, Publishing and Workflow

On a visual platform, the need for a clearly defined aesthetic is key.

  1. Maintain a brand aesthetic – review the existing visual representations of your brand: your logo, website, graphics, stock photography and other collateral.
  2. Understand your brand’s composition – to create a sense of visual harmony when a user looks at your profile.

Step 4: Foster engagement and set guidelines for community management

Instagram offers huge potential for engagement.

  1. Optimize your bio and link – focus on what’s important about your brand. Your bio is also a good place to educate.
  2. Follow industry accounts and Instagram influencers – what kind of content do you want to keep a pulse on through Instagram?
  3. Use Instagram stories to test content – make this content easy to read, view and understand so users don’t skip you the next time you publish a story.

Step 5: Analyze Your Results

Tracking how well your content performs and your follower growth will allow you to adapt your Instagram marketing strategy over time. For that reason it allows you to deliver more content that your audience will respond to while helping you optimize for future campaigns.

Concluding

As digital communication technology improves, and we can communicate with speed and download quality images while moving, the visual content will become more import for retail brands. For that reason Facebook and Twitter are moving towards the business model of Instagram by incorporating more pictures and videos on the sites.

But we need to be reminded about the value of text: “Whereas a single picture may convey a thousand words, a single word may stimulate vivid images that may move consumers to attend, prefer, or buy 6.”

Notes

1 Sheldon, P. and Bryant, K. 2016. Instagram: Motives for its use and relationship to narcissism and contextual age, Computers in Human Behavior, 58:89-97.

2 Andrew Apostola and Simon Goodrich, 2013. Taking Back Retail, Transforming Traditional Retailers Into Digital Retailers, ©Portable Australia Pty Ltd.

3 Hassan, A. 2014. Do brands targeting women use instamarketing differently: a content analysis, In Marketing Management Association 2014 Annual Spring Conference Proceedings, 62-64.

4 Hu, Y., Manikonda, L. and Kambhampati, S. 2014, June. What We Instagram: A First Analysis of Instagram Photo Content and User Types, In Icwsm.

5 Tuten, T.L. and Solomon, M.R. 2014. Social Media Marketing, SAGE.

6 Wedel, M. and Pieters, R. eds. 2012. Visual marketing: From attention to action, Psychology Press, Taylor & Francis Group, LLC.

Images

Pixabay.com

Flickr.com (Ell R Brown)