Online markets a boon for enterprises
Mar 14 2012, 11:14 | By Infomedia18
Online marketplaces provide global access to the smallest companies.
Image: SME Mentor
Enterprises planning to expand their business locally as well as overseas require cost-effective ways to compete with big companies. If used efficiently, the Internet can prove to be an important tool to advertise and market products and improve business prospects.
With ruthless rivalry Indian small businesses spend large amount of money on advertising and marketing to differentiate themselves from others and improve business prospects. However, the high cost of marketing confines small businesses from innovating and competing with big players on fair grounds.
World Wide Web to the rescue
Small businesses in the food processing industry in India are doing just that, and flourishing. Shanaya Modi, director of Mazda Ltd, is one such entrepreneur. Mazda started its food & beverage (F&B) division with the help of Alibaba.com’s platform, an online international marketplace that connects buyers and sellers around the world. The company claims that its revenues have increased 120 percent, since sourcing on Alibaba.com.
Today, all its business comes from e-commerce. Without e-commerce, it would have been too expensive for a small company like Mazda Ltd to engage in global sourcing, export, domestic wholesale and retail, but it is doing it all efficiently with a small team based in Ahmedabad. The Internet also offers a myriad of marketing tools to market their products effectively and efficiently.
While web sites can be expensive to develop and maintain, and not necessarily bring any sales, banner ads are a more cost-effective solution. Banner ads are usually placed in prominent places on a web page. With the rising popularity of rich media in recent years, banner ads can be made more interactive and attractive, embedded with audio, video and animation, allowing advertisers to create the so-called ‘wow effect’. A downside, however, is that banner ads cannot always reach the advertiser’s target audience. It also matters if products are targeting end-users or not. Many banner ads are relatively more effective when they are consumer-oriented. Yet, they tend to have a high exposure rate without a correspondingly high click-through rate.
The emergence of search engine marketing complements the inadequacy of banner ads. Unlike banner ads, which may be shown on unrelated web pages, search engine marketing shows an advertisement only on designated search results pages based on the keywords chosen by the advertiser, so they are highly targeted. Advertisers bid on keywords that their target customers may use as search terms when they are looking for a product or service. Search engine marketing services, such as Adwords provided by Google, offer a pay-per-click fee structure, where advertisers only pay when an Internet user actually clicks on an advertisement.
Look for specialised portals
Search engines are good for mass marketing and accessing individual consumers, but for advertisers there are pitfalls. A search engine’s traffic is general and there is no budget guarantee, so costs can accumulate without any reasonable assurance of sales.
Further, there is a serious global issue of click fraud, whereby competitors click repeatedly to increase one’s pay-per-click advertising costs. Search engines crawl the web but their keywords are usually bought on a per-country basis. If a supplier in India wants to sell goods in the UK, the supplier could buy a few keywords on a search engine targeting UK buyers. But if buyers in the US, Australia or Europe are also among potential customers, one will have to allocate a separate budget for each market.
What if the target customers are not from the mainstream market or if the products are not being sold to consumers but to other businesses? In that case, e-commerce and specialised online marketplaces can be a good choice.
E-commerce means buying and selling goods and services via the Internet. Some interactive online marketplaces target business people interested in B2B trade, and that is a more effective online business tool that businessmen should use. They can provide Indian small businesses with a cost-effective way to establish their presence on the Internet to promote products directly to potential buyers in India and around the world 24x7 and to interact with potential trading partners.
A standardised supplier storefront on an online marketplace has many of the same functions as a corporate Web site and can be updated at any time by the registered member. Besides aggregating a huge online community and providing buyer and supplier matching, a comprehensive e-commerce platform is equipped with real-time communication tools, trade resources, industry news, community message boards and forums. It also has third-party services like authentication and quality control. Because of their huge scale, these virtual marketplaces offer a one-stop solution for domestic or international trade and can provide huge benefits to users with limited or no investment.
It is also essential to determine market and target customers, assess the different online promotional channels and choose the one that fits best, and soon people will be enjoying the fruits of the Internet. It is advisable that small businesses getting started with online marketing should keep it simple and outsource what they do not understand. The most important criteria in making the selection should be ease of use, return on investment and manageability.
E-commerce is the business tool of the future and hence businesses, both big and small, should reap maximum benefits of the Internet by marketing through the right channels.
Sandeep Deshpande is country general manager (India) of Alibaba.com, an online marketplace that connects buyers and sellers around the world.
Source: Modern Food Processing Magazine
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