Internet
selling is on the rise. There are many research
studies
and statistics that support this statement. A study conducted
by the
Ipsos Reid market research firm in February 2003 concludes
that in
the year 1999 only 28% of worldwide Internet users purchased
a product or service online, whereas this figure rose to 62%
in the year 2002 and about 70% in the year 2005. And these
numbers continue to climb. Nielsen/NetRatings supports this
finding with its own research.
The Internet is a huge marketplace that has attracted businesses
with its potential for big-time revenues. Dizzying success
stories of
ventures started in a basement that grew to become stock market
darlings are constantly celebrated in the media. Small businesses
came to the Internet, tentative at first, and then in droves
- eager to
sell everything from fake jewelry to handcrafted tapestries.
You can sell just about anything from soup to nuts, as long
as you
have a product that has a market.
What
Businesses Are Succeeding on the Net?
After the settling down of the dot-com bubble, sanity checks
have
brought realistic expectations to the fore. Initially, a backlash
was
seen, forecasting the doom of the Internet. Finally, merits
have made
the Internet gain its rightful place. In breakthroughs that
show the
promise of ecommerce wasn't all smoke and mirrors, many dot-coms
including eBay Inc., Amazon.com Inc., Yahoo! Inc., Expedia
Inc.,
FindWhat.com Inc., E-Trade Group Inc., and others have
successfully re-defined the landscape of Wall Street.
There is a growing tendency amongst Internet users to pay
for valuable content along with quality products and services
offered online. Hundreds of paid content and product-oriented
websites have already proven this unmistakable trend. The
discerning buyer values her time and is willing to pay for
access to quality information and the convenience of purchasing
products and services online.
However, not all products can be sold on the Internet. Some
products may be better suited for online sales than others;
others
simply will not work online. According to an Ernst and Young
study,
the most popular online purchases are computer related products
(40%), books (20%), travel (16%), clothing (10%), recorded
music (6%), subscriptions (6%), gifts (5%) and investments
(4%).
Businesses offering paid services have also prospered enormously.
The top three categories (Business Content/Investment, Entertainment/Lifestyles
and Personals/Dating) consistently account for 62% of all
paid content revenue. One statistic indicates that 85% of
all money spent by U.S. Consumers for online content goes
to the top 50 sites in most categories.
In terms of “stickiness” of different categories,
Business sites -
especially finance and investment rank the highest. In other
words,
users are more likely to spend more time surfing through a
business
website compared to other categories as illustrated below.
Category Time per person
(hr:min:sec)
Audience
Business – Finance and Investment 0:21:33 51,586
General News 0:15:47 64,822
Entertainment 0:14:32 45,922
Source: Nielsen/NetRatings
According to the above figures a person spends about 22 minutes
on a finance website on average.
Should
you be selling a product or a service?
The Internet is primarily used to communicate, entertain,
educate
and research. It is thus no wonder that nonperishable, information
intensive products - including computers and software, books,
travel,
consumer electronics, magazine subscriptions - are the most
popular
online products at present. Content-rich sites, subscription-based
sites
to advertiser-supported sites focusing on a wide range of
topics, have
been sprouting up all over the Internet.
Services such as hotel reservation, air travel and investments
have successfully transitioned themselves to the Internet.
Unique
services such as online driving schools have been prospering
too. In
fact, many states in the US have already set up online payment
sites
for Government services. Residents can now get online to pay
most of
their bills and other expenses including parking tickets to
local courts.
However, all kinds of services cannot be run entirely on the
Internet. The Internet is less effective when face-to-face
selling is
needed to close a deal.
The Internet
can give lots of preliminary
information that's useful in setting the scene for the closing.
But the
actual closing takes place offline - i.e., not on the Internet.
Products can also be marketed and sold successfully on the
Internet. The kinds of products and services that sell best
on the
Internet are those that take advantage of the convenience
of the Net.
Remember that convenience is the primary reason consumers
flock to
the Internet in the first place. People can shop at any hour
of the day
at most sites. They can avoid crowded stores, irritating sales
clerks,
and even avoid pickpockets.
Offbeat or unusual products and services often attract online
attention and sell strongly. You would generally not try to
sell items
people can get at the corner store. Thus, few toothbrushes
are sold on
the Net; the same thing with daily food and beverage purchases.
But
special cheeses, rare cigars, Turkish plates, long-aged wines,
even
diamonds, can and do sell well on the Internet.
Most products sold by catalog and mail order also sell well
on the
Net. However, people tend to buy only those products that
can be
shipped at a reasonable price. Higher shipping costs diminish
the price
competitiveness of online products and turns-off a lot of
potential
buyers. In fact, high shipping costs is the primary factor
that
discourages some people from buying online more than any other
given reason. An Ernst and Young report shows that 53 percent
of
online shoppers are concerned with shipping costs that are
too high,
compared to only 19 percent who are concerned with credit
card
information being stolen.
As an online merchant, you have to work out the advantages
as
well as disadvantages of selling either products or services
online. If
you choose to sell a product or service online, you must evaluate
your
offering to ensure that the total costs of the product or
service
including shipping are not much higher than what is offered
elsewhere.
Importance
of Back-end Selling
Considerable effort is required to get customers for your
products.
You might design stunning web pages, work hard for high search
engine rankings (or pay for them), submit classified ads,
etc. but still
not manage to sell enough to make the kind of profits you
desire. This
is where the concept of back-end sales is useful.
Most marketers are successful because they apply back-end
selling into their marketing efforts. Back-end selling is
when you sell
other products or services to your existing customers after
they have
purchased an initial product.
It is always easier to sell products or services to your existing
customers because you have developed a relationship with them
when
you sold your first product or service to them. You will find
it less
expensive to sell to old customers as compared to selling
to new
customers.
Your conversion ratio will be dramatically higher with existing
customers. In fact, to increase your online profits dramatically,
you
should continually locate or create new back-end products
and services
to recommend (sell) to your existing customers.
Many businesses sell their front-end products (initial products)
at
almost zero profit in order to generate back-end profits.
These
businesses do not care even if they lose money on the front-end
products or services; they want the back-end profits.
How do you make backend sales? There are several ways. When
you order a product from a mail-order company, they'll send
you a
catalog along with your order, or put you on a mailing list
and send
you new catalogs from time to time. They might also send you
a sales
letter for another product. This may be related to the first
product in
some way. Many companies implement such a strategy.
To implement this technique online, you can put the sales
pitch
for your backend item in the email to the customer that confirms
their
order. If you have an online catalog, you could include a
link to it, or
even include a coupon or special offer "for all valued
customers".
For a faster response, you should put the backend offer on
the "Thank You" page that is generated by a credit-card
sale. The customer just bought something from you and has
a credit card in his or her hot little hand! Why not ask for
another purchase while they are in the mood to buy. In case
you do not sell more than one product or service, affiliate
programs might come in handy.
Back-end selling can also be integrated with “Up-Selling”
wherein
you introduce more expensive products or services to your
existing
customers in similar ways as those mentioned above. This will
almost
instantly raise your sales and profits.
TIP: With the Afqam
Earn Money Site service, you get an automated
back-end sales campaign built directly into the website I
build for you.
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