One of greatest pitfalls in e-commerce is Field of Dreams thinking, notion that all one has to do is “build it (a web site) and they will come.”“I can’t think of anything further from truth,” Ron Scott, a Riverside, California web designer, says. “Even if we develop an attractive, content rich web site, that is no guarantee that our client will generate enough sales, let alone traffic, to justify expense.
“There has to be a market for a company’s products and/or services in first place, and then it has to be properly promoted”, he went on to say.
This is why firm recommends their small business clients answer a number of questions directly related to development of a sound business plan before they open their checkbooks.
1. Have you adequately defined your market reach? Do you offer products and/or services that will be of interest to an international, national, regional, or local community? The larger your target audience, obviously greater your probability of success. Could you add one or more products or services that would broaden your reach?
2. What is global demand for your product and/or service? Do you have any idea how many internet inquiries are made about your product and/or service? For an answer to this question, Scott recommends visiting .the “Pay for Performance Search” page listed under heading “Products and Services” at Overture.com. Enter a keyword or keyword phrase you might use to find information about your product and/or service in search engine suggestion window at bottom of page. In addition to finding out how many inquiries were made previous month using that keyword or keyword phrase, you may find a dozen or more related terms and number of inquiries made about them as well. Add number inquiries and this will give you an idea just how much interest there is in your product and/or service.
If your reach is local or regional, be sure to incorporate names of cities in your search terms. Pay-for-performance programs sometimes do not allow local or regional advertisers to use generic terms because their services are irrelevant to a more global audience.
3. How many of these inquiries actually come from your target market? Let’s assume you do business in Los Angeles and your target market is Southern California. If 85% of all inquiries originate in United States and that 7.1% of those live in Southern California , then potential market in Southern California represents 7.1% of 85% (6.1%) of all inquiries using any given keyword or keyword combination.
To calculate proportion of inquiries in any market area, visit U. S. Census Bureau’s web site. There you will find population projections you can use to estimate number of inquiries that are likely to be emanating from within your market area.
4. What is your likely market share? Of those consumers actually making inquiries from your market area, how many are likely to visit your site, let alone make a purchase? Assuming that content of your web site is inviting enough to motivate visitors to either purchase your product/service or to at least make an inquiry, what percentage are actually going to become customers? A 1% return is reasonable expectation if you are in a competitive market and you have a competitively priced product and/or service. Obviously, more unique your product, more higher this percentage is likely to be..
5. How many sales will you have to make to recoup cost of development and promotion, if only 1% of your visitors take advantage of your offering? For arguments sake, let us assume that it will cost you at least $100 to reserve a domain name and to secure a host, $500 to get a 10 page site designed, and that you budget at least $100 a month on promotion. How many net sales will you have to make to recover these costs? Put another way, how many sales would you need to start making a profit?