FACTORS THAT DETERMINE INTERNET CONSUMPTION
One of the things that the entrepreneur who ventures into the internet must be clear is that his venture cannot avoid being governed by the laws of the market. The market can be local, national, Latin, American, global, Hispanic, etc., depending on the type of enterprise and the target of the company. Whatever the environment in which the company will market its products, it will always be governed by the laws of the market, even when said market is not known, cannot be quantified or cannot be fully understood.
Many e-commerce consultants have the habit of extrapolating e-commerce concepts from developed countries such as the US, Canada or the European Economic Community to Latin e-commerce. This type of point of view is usually harmful for the entrepreneur to the point of leading to failure to the venture or, in the best of cases, seriously compromising the expected goals in planning and wasting the resources provided in the plan's implementation strategy. of business.
The parameters and standards of e-commerce in Latin America differ in many aspects with respect to more developed markets with greater purchasing power, such as the US or Europe. The nuances that differentiate these markets are mainly related to factors related to the different socio-economic levels that compose them, but also cultural aspects differentiate them.
The ease of access for a European or American user to technology, as well as the lesser implication it has on their domestic economy, is a determining factor when establishing influencing factors in e-commerce. Another key aspect is the average cost that it costs a user to maintain an Internet connection through a conventional modem, an ADSL service or a Cable-Modem.
It is a mistake to try to interpret the low consumption of the Latin Internet user with respect to the American or European only as a different cultural manifestation or predisposition. I believe that the cultural factor can influence consumption but not in a decisive way. For an e-commerce consultant, this is not only a prejudiced point of view, but also based on a wrong view of the problem. The Latin consumer has tastes very similar to the European or North American because the cultural guidelines and the socioeconomic level are similar for all Internet users. An undeniable fact for the entire web is that all those who have the socioeconomic level to access the basic technology necessary to connect to the network, share a similar cultural level, although not the same economic level.And that is where the key to e-commerce consumption is jealously guarded.
When I speak of basic technology to connect to the network I am not only talking about the required hardware that involves a computer, modem and technical maintenance service, I also include the telephone cost of connecting to the network through telephony, ADSL services, Cable-Modem or connection satellite. The monetary impact that these costs imply on the consumer's economy, as well as the income level of the average Internet user, are the main, although not the only ones, responsible in Latin America for the current stagnation of e-commerce.
If a detailed analysis is made, observing the income level of consumers on the Internet, it can be seen that those with the highest incomes are those who tend to buy more through the web, like their peers in developed countries.
IS THE INTERNET A MARKET WITHOUT CONSUMERS?
There is no doubt that where there is no market it is very difficult to create a profitable industry. That key insight was ignored by consultants until the moment Nasdaq crashed, showing entrepreneurs and experts that a company needs the real world to survive and that the virtual world is just a new but not exclusive form of marketing, and one more channel. communication between company and client.
E-commerce for Latino companies does not yet represent, nor will it represent in the short term, a high enough sales volume to make commercialization areas that depend on electronic commerce self-sustaining. This, which is undoubtedly a generalization, does not apply to all cases, since there are indeed some profitable ventures in Latin America that venture into commerce through the Internet.
Nowadays, you can think of the Internet as a market without consumers, which is very similar to a market in recession, don't you think?
So, you may wonder what is profitable today on the internet? It is a good question that deserves a detailed answer.
From a consultant's point of view, the world of e-commerce should be divided into two large areas:
-The area of products and services for e-entrepreneurs
-The area of products and services for e-consumers
SERVICES AND PRODUCTS FOR E-ENTREPRENEURS
Within this area we find all the services that offer support technology for the implementation of ventures within electronic commerce. ISP's, servers, electronic billing systems, software for creating virtual stores, web hosting, CGI's services, statistics, hosting services for databases, notice boards, search engines, spam, etc.
Currently, this area is the one that offers the safest profitability within the electronic commerce sector because they are precisely required by anyone who wants to carry out an internet venture. Within this area we should locate experts or consultants in electronic commerce. This area receives support from investors of any internet project, regardless of its size. In general, this area offers products and services from Business to Business, although not exclusively.
Actually from this portion of the market originated the well-known "internet fever" that afflicted investors and traders who were advised by experts more interested in generating income for themselves rather than for investors. It should be the other way around, isn't it? I mean that the benefit should come to those who risk capital before the expert advisers.
SERVICES AND PRODUCTS FOR E-CONSUMERS
When a company tries to market its products or services by targeting the common Internet user, it can be classified within this area.
Although not exclusively, they are usually traditional companies that jump into cyberspace with different objectives, and it is here where the e-commerce consultant plays an exclusive role through their advice. It could be said that the type of undertaking that belongs to this area constitutes a high risk investment and an uncertain result.
Some items, especially related to articles and services in the sexual area and piracy, can become profitable and self-sustaining ventures, but in other traditional areas of commerce and industry, it depends on very dissimilar factors and particular to each case.
This area of products and services is the one that has not evolved in the expected way after the internet boom of '95 and is actually highly dependent on the economic factors that I mentioned above. As long as this area cannot develop and expand, electronic commerce in Latin America will not take off and will continue to be a feedback game between:
-Experts and advisers in e-commerce
-Providers of products and services for electronic commerce
-Investors
Needless to say, this triad is the precursor to so many recycled experts selling their "buy my advice and get rich online" magic recipes. I say recycled because once they saturate the market in their capture of dupes, they create new recipes, books or advice to explain the flaws of their previous theories and invent new answers to the same problems. The truth is that, my dear friend, you cannot get new answers when you invent recipes that always do the same thing. Without a consumer market, there is no e-commerce.
Latino e-commerce will not take off until genuine income reaches the pockets of investors in this area of products and services. Business to Consumer. When that happens, we will be at the doors of a new and renewed stage of electronic commerce that will allow the creation of more enterprises for the common Internet user.
IS THERE A FUTURE?
Currently, there is a long discussion about the factors that prevent the definitive takeoff of electronic commerce in Latin America. In my opinion the decisive factor is the consumer's money availability. The higher the income of an Internet user, the greater his purchasing power. There are other influencing factors (*), but the determining factor of a virtual or real purchase is whether the buyer has the money to purchase a product or service or simply does not have it.
In my role as a consultant, I usually advise companies in this way:
-If a company wants to venture into the internet, I recommend that it open up to world trade with bilingual pages and offer its products locally and internationally. For this, requirements that are directly related to the resources available in each case must be met. The strategy implemented to increase traffic and presence will depend exclusively on resources.
-If the client's products cannot be offered to the world, I warn that the e-commerce undertaking is probably not profitable and that expectations should focus on post-sale support and the presence of the commerce on the web as a marketing policy. In these cases, it should be sought to minimize costs and implement a medium and long-term traffic strategy (*).
After this panorama, the key question is, is there a future on the internet for Latino companies? The answer is rather simple and comes from the common sense that any entrepreneur should have: the internet should be treated as a market in recession (since it behaves as such) and pricing policies have to aim to lower costs in order to lower the price of the final products.
The cost policy of an internet venture depends on many factors, but basically it has to reduce everything that affects the final price of the product or service sold but not affect the technical viability of the venture. Why am I mentioning this? Because in an e-commerce venture, the costs that depend on the implementation of technologies and software required by your company to implement the e-commerce area can be drastically reduced.
THE 10 GOLDEN RULES
As a conclusion to this introduction, it should be clear that in order to carry out an e-commerce venture, one must not be pessimistic, but rather have a great sense of adaptation and an appropriate perception of the environment that allows us to exercise our ability to adapt to change. In any business, and much more in the virtual world, you have to be perceptive to anticipate problems and implement possible solutions.
In these small rules, you will find a summary of tips that take into account the real possibility of lowering operating costs for your venture, taking into account the amount of free resources that can be found on the web and that will help you reduce your costs with the object to lower the final price of its products or services.
On the internet there are many resources that are not of poor quality because they are free. Sometimes, it is common to see consultants and design companies charge internet entrepreneurs for offering services that they process for free. There are companies that go further and usually charge not only for the design of an internet site, but also for the inclusion of counters, redirects, hiring servers, hosting, registering with search engines and other items that they in turn get… free. I have witnessed the hiring of companies that undertake to generate the much desired "traffic" for the web and that they achieve by manually or automatically increasing the counters in order to create the illusion that after a few months they visit them they accumulate by the thousands. On the internet, not everything you see is real.There are sites that increase their counters in order to increase the cost of their advertising space. Companies that sell web hosting managed on free servers. Sites that have advertising from large brands that never hired advertising space, but that is placed in order to make their advertisers believe that your site "sells". There are many illusion sellers on the net. Remember it.
It is clear that when money is not a problem, you can go to hire paid services, but only when justified by the existence of some advantage over free services. It is in these chiaroscuro points that the e-commerce advisor takes on real importance in your venture. Good advice will tell you when and where you should inject money into the project, what you should modify on the web to interact with your visitors. What can you expect from your investment and how to improve the projection of your company on the web.
Let's now look at these little tips.
1 - First rule of thumb: Allow an advisor to plan your venture.
Planning a website is easy and simple. It is enough to know how to build web pages, work with some graphic programs and know what free resources are on the net. Anyone can do it. But planning a true ecommerce startup is more complex than that. Calculating costs for the first 24 months of your startup can give anyone but your e-commerce advisor headaches. The costs have a direct impact on your final prices. Regardless of the numbers, it is not easy to make technical decisions regarding the hosting service, assignment of domain names or business e-mail. If your venture starts with an e-mail and then decides to change provider, you will have lost all the work of registering in search engines, contacts, emails sent, etc.
Analyzing the strategies to follow to achieve stable traffic on your website will depend on your resources and the skill of your advisor. If you want to contract advertising on the web or create advertising campaigns by email, you must carefully analyze the impact it will have on the image of your products or services.
From a financial point of view, in the first months you will find the need to invest most of your resources in hiring of various types. Planning when to stop spending money on useless resources or when a project reaches the "death line" is your advisor's job.
There are countless resources that you must put in place to get your business off the ground. Someone should know the benefits and drawbacks of the services offered, analyze when it will be convenient to hire a paid service or choose a free one. Elucidate the technical pros and cons that a new resource can cause when implemented. Knowing when a product or service will leave you at the mercy of an unscrupulous supplier that technologically speaking can leave you captive and with no other option is the task of your advisor. Although it may seem like a paradox, in order to save profitably in your venture, hire a good e-commerce advisor.
2- Second golden rule: Plan ahead, because no internet venture is profitable in the short term.
An enterprise on the web takes time. A lot of time to generate traffic or visits and even more to generate income, which are an indirect reflection of the number of visitors that your site accumulates. Do not plan for the short term considering, for example, that you can create a good business for a specific date such as Christmas or the end of the year. Consider that e-commerce startups take six to twelve months to generate the average traffic your site will have in the long run. Don't be too hasty in hiring advertisements on fashion sites. If you contract advertising in the form of links or spaces, make sure you are hiring space on a prestigious website. Be careful with search engine registration. The most popular ones offer you free registration in several months and fast registration with a payment.Quick registration in search engines does not guarantee income generation. Rather, income is related through capturing the profile of your visitors and adapting your website to that profile. If you have delegated to a company the creation of the website and the generation of traffic… be careful with the counters, as they can be modified at the will of the webmaster.
If after a reasonable time they do not "take off", it must be clear that you need to interact with your visitors in some way that allows you to analyze their profile to adapt the content. Within your possibilities, try to adapt your website in such a way that its content is not local. That your page has at least two languages: Spanish and English. That way you will increase your chances of generating income. Not necessarily all your website must be in English, only the content that is of interest to the international public.
3- Third golden rule: Do not be tied to any paradigm, sell everything you can and cover everything possible.
On the Internet there are no dogmas or paradigms. Work on the internet as in a conventional business. Everything that you can sell on your site must be offered to the public. The idea of a business, in addition to being a showcase, is to generate constant income. Small sales are what feed the daily cash. The coins are what feed the internet entrepreneur. It is proven that the sales of small amounts are the easiest to achieve (*). Big sales of several hundred dollars may come, but the small amounts are what will pay the costs. Constantly analyze your pricing strategy on the web. Set competitive prices on your products, be flexible and adaptable. Stay informed regarding your immediate competition.
4- Fourth rule of thumb: Be perceptive about the tastes of your visitors.
The internet storefront can be a blind spot for you from your visitors. Your visitors know what they want, but you can't perceive their tastes if you can't find a way to interact with them. You should try to know their points of view, their tastes, ages, sex, interests, hobbies. Knowing your customers is the starting point to find products and services to offer them. There are various ways to interact with them, such as surveys, giveaways, offers, newsletter subscriptions, etc.
5 - Fifth golden rule: Adapt the content of your website to the taste of your visitors.
Be flexible with the contents of your website. Once you know the profile of your visitors, you will know which topics they like and which they don't. If a content, a product or a service does not adapt to the profile of your visitors, do not waste any useless time. Discard it and don't waste time trying to build a business with something that is not accepted on your website. Business is a business… hobbies at home. Leave only what is profitable. In the event that a product or service has some special value for you and you do not want to remove it despite not being able to make it profitable, transform it into a free product or service that can be given to your visitors.
6- Sixth rule of thumb: Analyze the possibility that, despite your efforts, your venture is not profitable on the internet.
Even despite all the monetary, technological and human effort, it may be that your Internet venture does not generate enough income to consider it self-sustaining. With patience, over the months your advisor will have to find a point of equilibrium in which he will have to actively "stop trying" and allow the internet to be integrated into his company without involving more and more resources.
It is a widespread myth to believe that online businesses sell short-term. An e-commerce startup can take 12 to 24 months before it becomes profitable, and even then, the revenues may not offset the costs of implementation and set-up until after 36 months.
Many startups must settle for generating income that covers only part of the maintenance costs. Your advisor must carefully plan all the alternatives and be clear about the economic and technical guidelines necessary to transfer paid resources to free (and vice versa) without causing trauma to the system or stoppage of services.
I honestly think that currently companies have to be on the internet with four minimum objectives (*):
-Answer emails from visitors
-Give permanent business presence
-Offer technical support or advice to clients
-Allow courtesy inquiries
7- Seventh golden rule: Keep costs as low as possible by planning for the future.
Your advisor will need to plan the venture as an inverted cost pyramid. Start with minimal costs because there will always be time to hire paid services that improve the quality of your services. It is more traumatic to part with paid services than to scale from a free one to a paid one. Anticipating profitability periods, cut costs as much as possible so that the implementation of your work plan is not traumatic. Obviously, some costs cannot be avoided, depending on the type of undertaking you carry out.
Of course, if money is not an issue, your advisor will advise you which services can be hired immediately and which cannot. This is just trying to give you an objective look:
• Do not contract maintenance of web pages. Work yourself (or your employees) on the maintenance of the website. Don't be afraid to pay for a course to build web pages. With current programs it is easy and simple.
• Do not hire credit card collection services or expensive software to manage an e-commerce. Currently there are easy and cheap options that allow the management of an e-commerce website. Even an inexperienced programmer can implement software that allows him to manage his orders via email. With regard to credit card collection systems, there are companies that offer low-cost and even free services in exchange for small commissions. The time when webmasters broke their heads to develop e-commerce systems is long gone. No more dependency on large corporations or headaches.
• Don't pay for spam because it just doesn't work. Or it is for the one who charges it, not to increase the company's sales. Market research indicates that the negative impact on your brand, product or service is more damaging than the revenue that spam can generate. On the other hand… who assures you that the emails were sent?
• Do not pay to be included quickly in search engines to those who offer to include your website in 200 or 500 search engines for a sum of money. If you want to pay, it is preferable that you do it directly in the key search engines so that they include it within the directory quickly. We all know that only a few search engines are operated by almost all Internet users. In case you do not know them, I will mention them: Yahoo, Google, Altavista, etc.
• Website hosting service is a decision of your advisor. Much depends on the cost, because since there is free hosting, you have to carefully think about the action to follow. Many free hosting services outperform paid services. Do you want examples? Freeservers, Geocities, etc.
• Pay by domain name? Did you know that in some countries the domain name is granted after a free procedure? Processing domain names is the great booby trapper in Latin America. Sometimes it is not even necessary to process a domain due to the existence of redirection services of the highest level. This is a decision that your advisor should make.
8 - Eighth golden rule: Do not depend on third parties or remain captive of a service or product
Do not depend on third parties to implement a web page unless this type of contracting is justified. Use technologies that can be implemented by yourself or your employees. At some point the page must be finished and you must assume its maintenance in order to reduce costs. Beware of technologies that can make you dependent on third parties. Some new technologies like Flash, for example, can be used to generate very attractive pages but they can be counterproductive. Recent studies indicate that Internet users wait only a few seconds before deciding to leave a website that has them waiting too long. I always advise that the loading time of the initial page does not exceed 20 to 30 seconds. In case of implementing animations or video displays on initial screens,I recommend that there is always a button that allows you to skip the screen.
9 - Ninth golden rule: Know the technologies that support your business.
Once your business is up and running, you will need to learn about the technologies that support it. Not only know what they are, but also have the necessary knowledge to modify settings, program it, etc. If you purchase some type of software for your business and obtain some training along with the product, do not miss the opportunity to take the course or obtain the training for yourself or one of your employees in order to foresee the moment when you will take full control of your venture.
10 - Golden Rule 10: Be Efficient
Whatever field you operate in, be efficient. If you want to see profitability in your venture, you must not only be good in your field and efficient in your performance, but also demonstrate it to your clients. Only that is what will give you a name and a presence on the web. On the internet as in life, what is most difficult to achieve and what most influences your customers is a good name.
CONCLUSIONS
Running a web venture is not easy or simple. If so, everyone would make money on the web and obviously that is not true. It is not true that by buying magical consultancies, work breakfasts, e-commerce books or paying to go to conferences you will have the key that will make you rich in an instant. If you want to spend your money that way, do it knowing there are no magic bullets.
The Internet is a reflection of real life. Making money requires 90% effort and 10% luck. It would help a bit to have a good advisor by your side. But just a little. The rest is up to you.
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