The truth about commerce

by Sawab Allaladé on 25/02/2020 |

Commerce is the conduct of trade among economic agents. Generally, commerce refers to the exchange of goods, services or something of value, between businesses or entities. From a broad perspective, nations are concerned with managing commerce in a way that enhances the well-being of citizens, by providing jobs and producing beneficial goods and services.

UNDERSTANDING COMMERCE

Commerce normally refers to the macroeconomic purchase and sale of goods and services by large organizations at scale. The sale or purchase of a single item by a consumer is defined as a transaction, while commerce refers to all transactions related to the purchase and sale of that item in an economy. Most commerce is conducted internationally and represents the buying and selling of goods between nations.

When properly managed, commercial activity can quickly enhance the standard of living in a nation and increase its standing in the world. However, when commerce is allowed to run unregulated, large businesses can become too powerful and impose negative externalities on citizens for the benefit of the business owners. Many nations have established governmental agencies responsible for promoting and managing commerce, such as the Department of Commerce in the United States.

Large organizations with hundreds of countries as members also regulate commerce across borders. For example, the World Trade Organization (WTO) and its predecessor the General Agreement on Tariffs and Trade (GATT) established rules for tariffs relating to import and export of goods between countries. The rules are meant to facilitate commerce and establish a level playing field for member countries.

The disruptive nature of e-commerce is undeniable. Entirely new business models are revolutionizing the way we buy. The transformative transparency created by all things digital has revolutionized product access, redefined convenience and lowered prices across a wide spectrum of merchandise and service categories. The radical shift of spending from brick & mortar stores to online shopping is causing a massive upheaval in retailers’ physical footprint, which looks to continue unabated.

But the inconvenient (and oft overlooked) truth is that much of e-commerce remains unprofitable–in many cases wildly so–and many corporate and venture capital investments have no prospect of earning a risk-adjusted ROI.

While it was once thought that the economics of selling online were vastly superior to operating physical stores, most brands–start-ups and established retailers alike–are learning that the cost of building a new brand, acquiring customers and fulfilling orders (particularly if product returns are high) make a huge percentage of e-commerce transactions fundamentally profit proof. Slowly but surely the bloom is coming off the rose.

Despite the hype–and a whole lot of VC funding–it’s increasingly clear that most of pure-play retail is dying, as L2′s Scott Galloway lays out better than I can. We have already seen the implosion of the flash-sales sector and the collapsing valuations of once high-flying brands like Trunk Club and One King’s Lane. Just the other day Walmart announced it was acquiring ModCloth, reportedly for less than the cumulative VC investment. A broader correction appears to be on the horizon and I suspect we will see a number of high-profile, digitally native brands get bought out at similarly discounted prices. And, ironically, we will continue to witness a doubling down of efforts by many of these same brands to expand their physical footprints, some of which is certain to end badly.

The challenges for traditional retailers and their “omni-channel” efforts are even more vexing. Walmart, Pier 1, H&M and Michaels are among the many retailers that have been criticized for their slowness to embrace digital shopping. Yet I suspect their seemingly lackadaisical approach owes more to their understanding of e-commerce’s pesky little profitability problem than corporate malfeasance. Alas, more and more retailers are increasing their investment in online shopping and cross-channel integration only to experience a migration of sales from the store channel to e-commerce, frequently at lower profit margins. Moreover, this shift away from brick & mortar sales is causing these same retailers to shutter stores, with no prospect of picking up that volume online. The risk of a downward spiral cannot be ignored.

Given the trajectory we are on it’s inevitable that more rational behavior will creep back into the market. But with Amazon’s willingness to lose money to grow share and investor pressure on traditional retailers to “rationalize” their store fleets, I fear it will take several years for the dust to truly settle.

In the meantime, e-commerce continues to be a boon for consumers and a decidedly mixed bag for investors.

DIGITAL MARKETING


Digital Marketing tools

Digital Marketing is as much about making an online presence as much as it is about reaching the right set of audience. As we are sitting in digital era of 2019, every enterprise, small or big, must pursue a robust digital marketing strategy to generate more revenue and profit for its business. Unlike any other traditional marketing methods, digital marketing has a very wider scope & is measurable in both the key important parameter of quality & quantity.

Let us look at each:

IT WILL NOT GIVE INSTANT RESULTS

The biggest myth attached to digital Marketing is that it cannot give instant results. We cannot deny that it gives an opportunity for businesses to reach out to the right prospects instantly. Making a profit or generating revenue by reaching out to right prospects certainly isn’t a far-fetched dream. It depends largely upon how businesses quantify results and what exactly they measure; presence, existence, engagement, revenue, or the number of visitors. Once they have a stark clarity, it becomes easy to understand that depending upon the objective it may take some time for achieving the right kind of result but surely they can be achieved.

IT IS ONLY MEANT FOR BIG ENTERPRISES

One common myth that prevails is Digital Marketing is only for bigger businesses, which have a huge marketing budget and a very large bandwidth to serve customers. This is a myth, DM is for all types of business, from small mom and pop stores to big conglomerates. Although a lot depends upon the customer’s budget and aspirations, it has something for everyone. The objective can be different, while the smaller ones can harness digital marketing to create immediate leads & make their presence felt through Social Media, on the other hand, the bigger ones may target brand building, brand positioning & brand recall.

SEO WON'T TAKE YOU ON THE FIRST PAGE

SEO is science more than an art, and there is a lot to get uncovered on the concept of SEO. For a typical customer, SEO is a slow & time-consuming process & truly it is. But taking short cuts like using Black hat SEO may result in permanent loss of ranking of your webpage, while white hat SEO done in right away will bring results for you in the long run. However, the truth is that only SEO will not help, there are several other factors like website speed, content, user engagement, etc that will also determine how well your website or web-page will rank.

MY COMPETITORS ARE NOT ON, WHY SHOULD I?

Social Media is one of the most integral parts of Digital Marketing, but the customers think that if their competitors are not making use of SM platforms, why should we. In fact, the sooner you will become Social media king the more it will help you.

MY CUSTOMERS ARE NOT TECH-SAVVY

It is true that not all end-users are tech-savvy, or they might not have access to the internet. However, this should not limit a customer to restrict himself from making use of Digital Marketing. Instead, it can be a golden chance for the businesses to educate its end-users about the use of technology and add value in their life. It has a two-fold benefit, one; the end-user becomes knowledgeable and second, it generates more traffic and eventually more profit for the business owners in the long run.

TRADITIONAL MARKETING IS NO MORE REQUIRED

While DM has a lot of benefits and it is a cheaper option as compared to the traditional marketing channel, but, solely depending upon Digital Marketing cannot be a good strategy. Traditional Marketing has its own advantages. It is more people to people, therefore, more reliable & is helpful in having immediate feedback. A mix of both digital marketing and traditional marketing is a win-win situation for organizations.

ONLY TO BE PRESENT ON CERTAIN PLATFORMS

Most businesses think that it isn’t necessary to be present on all social media platforms, regardless of whether their customers use the platform or not. This is a myth because although social media presence matters and when planned meticulously, adds to a significant amount of annual revenue, it is advisable to make use of all available platforms where you think your customers are present or may come in future. Facebook is more of an “Exploring’ platform and LinkedIn is an ‘Informative’ and as well as professional relationship platform. Every platform has its own key niche audience and therefore, it is very important to be present on all platforms.

Digital Marketing is now a new way of marketing for future businesses & those who want to build a brand over a few years from today onward, the most determining factor to use digital marketing platforms & tools is to have clearly defined short-term and long-term business objectives and then digital marketing strategies for organizations benefit and future growth.

If you have any question about Digital Marketing or any aspect of the E-Commerce, please contact our web marketing agency. We are the best web marketing agency in Montreal. 



Sawab Allaladé

Sawab A, is the co-founder and Managing Partner at OSHARA. He is passionate about Branding and Marketing and he helps businesses grow their brand and reach new heights of success using simple but efficient web technologies and digital marketing. His expertise and ability to listen and execute bring an added value to any team.

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