Everyone wants to have their own business and with e-commerce it has become easy to create your own online store. But what to sell ? People often get stuck on this thought, as it has become extremely hard to find products/services to sell. Online sales generate billions of dollars across a variety of industries: consumer packaged goods, clothing, health, etc.
Phases of e-commerce
If we analyze the more advanced markets, like the American one, we can detect repeating patterns that are reproduced in other countries who have adopted e-commerce as a growing economic model.
Phase 1: Emerging e-commerce. Users are not aware or have certain rejection of online payment methods and only shop in safe and known stores. Starting is difficult because the related systems (logistics, payments and general regulations) are not in tune with what e-commerce needs for its development. Colombia and Peru are in a transition between this phase and the next.
Phase 2: E-commerce has been in the market for some years. Online payment methods are accepted partially, although there is still some reluctance. Local regulations have started to change to promote e-commerce and users are reacting positively to online shopping discounts. Discount websites are very popular. Some logistics systems, that allow the shipping of products in a relatively secure way, are established. Chile, Brazil and Argentina are currently in this phase, moving quickly into the third one.
Phase 3: E-commerce is a part of daily life. Payment methods are massively accepted and regulations have permitted a growing competition and the appearance of new actors. Logistics systems and regulations in general are working. This allows people to massively buy online with a greater variety of different products at their disposal.
First step is to identify the phase in which your country belongs to. If it is just starting out and users are not comfortable using online payment methods and prefer safer transactions, the product or service must take these variables into account. Products with a discount or in categories that can offer a big price difference due to smaller costs structure, are a valid alternative. On the other hand, if your local market is more advanced and there is not much reluctance to use virtual payment methods and the shipping systems work at a decent cost, the array of products broadens. You could sell clothes, accessories, cosmetics, etc with a lower risk.
E-commerce is local
Many companies starting out with e-commerce have tried to make their business grow by opening their websites to other countries in the continent. This is an interesting challenge, but it fails most of the time for a very simple reason: every market is different in a cultural way, in its regulations and the e-commerce phase they are currently on. It is expected that in 2018 electronic commerce will surpass the US$100.000 million mark in Latin America, a 177% increase from 2014. While this is a tempting number for online stores throughout the continent, the challenge resides in being strongly established in a local setting and then analyze what market shows the most similarities.
Think of Logistics
Logistics is the main obstacle for many new stores and companies wanting to grow. The first thing to consider is the cost associated with logistics. In Latin America for example, there are markets with high cost logistics systems that are not well suited for e-commerce. The second thing to consider the reliability of these services. Some logistics systems can offer a good price for shipping, but in some areas their delivery rate can only be around 60%. You must also take into account the refunds and products that get lost in delivery. If 40% of deliveries are not successful, you can not risk selling high value products. You must choose items with greater margin and maybe lower cost.
The question to ask is: What are the features of the logistics systems present in my country?
Selling Products using Dropshipping
Dropshipping is a popular way to kick start an online business. It requires low starting capital, you do not have to worry about keeping an inventory and focus solely on sales and marketing. It does have flaws, refunds and returns can be complex to resolve. The business model might not be very efficient and it can be hard to be on the same page for all the players. Marketplaces like alibaba and aliexpress have made it significantly easier, and if you can find the right products to sell in your market, it can be a good way to start.
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