The E-Commerce Playing Field

Posted June 22, 2006

E-commerce is not a solved problem. Sure -- the concept of putting products online, charging for them, and shipping packages is relatively straight forward. You could do that in the late 90's without too much trouble, and today you can build a pretty good looking storefront with free tools and a little elbow grease.

It's great because the barrier to entry is very low and it's relatively simple for any mom and pop shop to get online ... but that's also a problem: how do you get noticed when your competitors also have sites? And if you do get noticed, how do you manage the growth?

This is the first article in a series about marketing, technology, and the day to day operations of a successful e-commerce shop. This isn't about a specific shop, but drawn from my experiences over the last ten years of helping small businesses get online and compete against larger, better funded, better equipped corporations. It's also about my start up: we're building a better way to do business on the web.

But first, let's set the stage. What is e-commerce?

E-commerce is easily defined: buying and selling things over the Internet. It's usually broken into two categories: B2B (business to business) and B2C (business to consumer). B2B is manufacturers and wholesellers selling to retailers and other business consumers. B2C is people like you and I buying things off Amazon and eBay.

In 2003, people and businesses spent $1.6 trillion over the Internet, in the United States. That's the latest figure from the US Business Census, and although it's a bit dated, independent firms say that e-commerce has grown steadily at 20% to 35% per year.

The vast majority (about 93%) of that business was B2B. The remainder, about $106 billion, is accounted for by about 80 million people who need books, iPods, and collectable bowling pins.

Any way you slice it, that's a lot of product, a lot of people, and a lot of money. FedEx and UPS are pretty thrilled about it.

What's next? Well, I'm going to skip over the bit about setting up an e-commerce shop -- there are a few thousand articles out there about choosing the right platform, and I don't have anything particularly meaningful to add (yet). We're going to get straight into the meat of it: how do you attract customers to your site, and how do you handle the load?

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