The perfect business model would be one in which all expenses and efforts were focused on the companys unique value proposition. Nothing would be wasted on infrastructure, administrative overhead, or indeed anything outside of the companys core competencies. Sound impossible? Well, as e-commerce development continues to accelerate, it is possible to get closer and closer to this ideal.

E-commerce is already big business, with spending estimated at $44 billion at 2008 and growing at a double-digit rate. However, e-commerce represents more than just a major new market. From a business model standpoint, an e-commerce website represents the ideal point of sale, requiring no real estate, maintenance, or sales staff. With hosted solutions, even IT overhead is avoided, as everything from data storage to Web design can be outsourced. E-commerce providers can also handle transactions and payments. In short, a business can be boiled down to its essence: its unique value proposition.

Todays Lean and Agile Business
Businesses today have particular reasons to be lean and agile. In a volatile economy, keeping overhead at a minimum is an essential survival strategy. Especially with business capital scarce, getting the most return on investment is crucial. Also, international competition and the Internet have increased pressure on margins, so overhead has to be kept to a minimum.

Looking toward the consumer, market preferences can be fickle, meaning that todays business has to be able to alter product mix and advertising on a moments notice. Also changing rapidly are technology and Internet usage practices, so Web design has to be kept current. Hosted e-commerce solutions help achieve all the goals of a lean and agile business.

Hosted E-Commerce: The Website and Beyond
Of course, the most visible aspect of e-commerce is the website. This is both the storefront and an advertising medium, so Web design is a critical component of what e-commerce solutions providers bring to the table. However, hosted solutions go much further than that. They provide the storefront and advertising, but also all the IT and administration that go on behind those elements.

In a nutshell, hosted e-commerce providers can replace much of a companys IT and accounting overhead. They can also handle the advertising, and some even warehousing and inventory management. This is how a business can best focus on its core competencies--all the operational and administrative logistics can be outsourced.

E-Commerce Development and Recession
Rather than being stunted by a challenging economy, e-commerce should gain relative strength in a slowdown or recession. From the companys point of view, there is no time when it is more important to drive costs down to a minimum. From the consumer standpoint, the Internet is where people tend to turn when they are bargain-shopping and comparing prices. E-commerce companies are likely to provide better deals than retailers with expensive physical overheads. E-commerce even saves consumers the cost of fuel involved in driving around to shop.

Significantly, even as 2008s economic environment soured, e-commerce was expected to grow at a 12% rate for the year. Thats a stunning achievement in a year when most businesses are just hoping to minimize revenue losses. In fact, performance in a recession might signal that e-commerce has really come of age--and that age can be expected to last for a long time.

Sources
E-Commerce-Guide.com
MarketWatch.com