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Lessons in E-Commerce Development for Todays Entrepreneurs
E-commerce development has seen a series of revolutions in its relatively brief history. The global recession is precipitating yet another wave of e-commerce upheaval, and the outcomes carry lessons for everyone from the largest web-based companies to the newest e-commerce entrepreneurs.
E-Commerce Development: A History of Change
Its easy to think of e-commerce development as a function of technological innovation, but the pace of that innovation has been fueled by social and economic developments. As a result, in a little over a decade, e-commerce has gone through four distinct phases:
- Well-fertilized growth: The late 1990s were the gold rush days, as any business with a Web site could attract a flood of investment dollars. Many of the business models seem laughable now, and its sobering to think of the high percentage of the dot-coms that went bust. Still, while its easy to focus on the wreckage that ultimately resulted from this boom, the fact is that all that investment money did produce a few winners, create a generation of web-oriented entrepreneurs, and accelerate the development of Internet technology and business models.
- Survival of the fittest: Of course, the bust that followed the boom served a function as well--it cleared away much of the nonsense, leaving for the first time a clear vision of what viable, e-commerce business models looked like.
- Users come inside: Call it social networking, Web 2.0, or any other catchphrase, but the popularity of user-generated content--whether it be blogs, wikis, or personal profiles--has generated a huge wave of new Web site traffic. Along the way, they have also solved one of the earliest challenges faced by Web site owners: how to generate a sufficient volume of fresh, original content.
- Recession forces e-commerce to grow up: Most recently, the global recession has forced even the most cutting-edge of e-commerce entrepreneurs to focus on the nuts-and-bolts of running a business. As margins compress, sound business practices become essential.
Where does this leave us today? There are three lessons that anyone interested in e-commerce development should take from this history.
- Thinking globally, acting digitally: A Web site can give a business virtually unlimited geographic reach. This is advantageous under any circumstances, because it helps boost the return on the initial investment in web design. It is especially important during a recession, when businesses have to cast a wider net to find viable consumers.
- Keeping a dynamic attitude toward content: One of the most common mistakes in e-commerce remains setting up static Web sites. Not only does todays content have to be fresh, but the concept of the Web site has to be such that it encourages visitors to check back frequently to see whats happening.
- Minimizing overhead: Two ironies come out of the dot-com era. First, a certain degree of decadence, in the form of lavish employee accommodations, resulted from all the money being thrown around. Second, a number of the business models were e-commerce in name only, ultimately relying on labor-intensive execution. The dot-com bust and now the global recession have reminded everyone that even in cyberspace, cash flow is king. Margins matter, so e-commerce businesses need to take advantage of the opportunities the Internet creates to run a lean operation.