Back in the 80s, the dream of virtual reality promised daring adventures and out of this world experiences all from the comfort of your living room. You wouldn't even need to put on your shoes to travel the globe.
Outside of some dystopian science fiction stories, not much of the fantasy featured one of the major uses of technology: e-commerce.
E-commerce, or online retail, has streamlined our lives. We no longer have to spend our days traveling from store to store, hoping our desired items are in stock. Now, we can shop for products from multiple stores across the world while we're still in our pajamas at home.
Globally, there are approximately 3 million e-commerce companies and 20 million e-commerce websites. It's no wonder that worldwide online retail sales surpassed $4.2 trillion in 2020.
With so many e-commerce stores out there, it can be hard to stand out and be successful. Only 650,000 online retail stores generate an annual income of more than $1,000.
Here are three trends business owners can try to leverage to stay on top of the rapidly evolving e-commerce world:
- Influencers - From actors to athletes, politicians to podcasters, and even pastors, there are all kinds of influencers in the digital world. Not to mention so-called professional influencers, whose large social media followings and highly active posting behaviors make them valuable ambassadors for some brands. Anyone with an engaged community of followers can help or harm an e-commerce business. If a brand gets on the good side of an influencer on the rise, they could experience a valuable boost in visibility and sales.
- Personalization - Customers are done with "what you see is what you get" shopping experiences. Many WYSIWYG businesses have had to shift to offering the tailored experiences that were once exclusive to mom-and-pop shops. Customized merchandise, alterations, generous return policies, and attentive customer service are more favored than simple point-and-click interactions.
- Artificial Intelligence - Small businesses don't have to mean small valuations. Some of these five-person outfits can be $10 million businesses hiding in plain sight. But hiring fewer people means utilizing more automation and AI. Not only does AI allow a handful of employees to grow a business, but automation can also be purchased, adjusted, and canceled with the push of a button. Hiring, training, and managing employees is an entirely different skill set which many new business owners have not learned.
E-commerce businesses are like the futuristic robot butlers of sci-fi tales. Customers respond to brands that they see "organically" in their social media, that seem to know them by offering personalized service, and that respond to their every request with speed and efficiency.
But offering all these features does not guarantee a profitable business. It's difficult to state the value of an e-commerce business because that depends on the quality of earnings, the stability of traffic, and the efficiency of operations. However, there are ways to maximize the value of an online retail business.
- Prioritize the customer experience. Virtual is reality. Your customers want the same personalized experience they would get in a brick-and-mortar store from your e-commerce business. The more your website and customer service can feel like an in-person shopping experience, the better.
- Utilize partnerships. Drop shipping, returns, and add-on services will create repeat customers. You want shoppers to come back to your website again and again. That means steady monthly customers and recurring revenue for you.
- Reduce owner involvement. You want a company that can run smoothly in your absence. That means you need to automate processes, hire remote customer service representatives, and work with suppliers and vendors who will value your customers ahead of their own bottom lines. If you're working fewer than 15 hours a week, you have built a company. If you're working more than that, you've given yourself a job.
Successful e-commerce doesn't require you to build the Matrix. The key to creating that virtual reality experience in online retail is communication and building community. The more you can make your customers feel connected and heard, the more you are replicating the in-person experience. We can't travel around the world at the touch of a button just yet, but we can shop that way. For more on e-commerce valuations, see Veristrat.