From the outside, starting an online business seems pretty simple, all you have to do is source some products, throw up a website and then just sit back and watch the dollars roll in. Simple, right? As someone who has worked in, founded and advised multiple online start-ups the actual reality couldn’t be further from the truth.
While everyone wants to build the next Amazon or Facebook, in reality only a few will have what it takes.
Online marketing is complicated
SEO, PPC, CRO, CPM, CPA, CTR, Programmatic – Do these words mean anything to you?
Most first time business owners face an extremely high-learning curve for online advertising and find it difficult to balance running their business with finding the time to learn and grow their business online.
The main platform for online advertising is currently Google with other platforms such as Bing, Facebook, Instagram and Snapchat grabbing market share daily. The problem with online advertising is that the landscape is constantly shifting, therefore small businesses may not have the resources to stay on top of all the changes compared to larger companies with dedicated marketing departments.
Online marketing is expensive
These days competition online is fierce and everyone is fighting tooth and nail for consumer attention.
In Australia, companies spent over $6.8 billion on general display advertising last year up a whopping 29.7 per cent from the previous year. Small-business owners often find it difficult to compete against the larger companies who have higher budgets and are willing to spend more acquiring customers. This means that even if you have an amazing website and great products it can be difficult to drive the traffic required to have a sustainable business. For example, in my current start-up Ozen which operates in the hearing aid space, it’s almost impossible to run a cost-effective campaign in Google given the fierce competition. Business owners need to be creative and constantly be looking for avenues where they can drive customers and sales at a reasonable price.
Online competition is tough
Amazon recently announced that they are planning to launch in Australia in 2017. This means that many online retailers, who rely on selling other companies’ goods, may be forced to compete against Amazon’s famously low prices and excellent customer service. In the United States, a recent study showed that 55 per cent of consumers started a search for a product on Amazon compared to 28 per cent who started on a search engine such as Google. This means that small businesses who rely on price to compete are going to find it very difficult with Amazon around.
So should I start an online business?
It’s not all doom and gloom, there are significant advantages to starting an online business.
One of the main advantages is that you can start out online with just a few thousand dollars and a great idea; no need for an expensive shopfront and associated overheads. Successful online businesses can also scale much faster than their non-online counterparts because they don’t have any geographical limitations. An online business can go global from day one and therefore the ultimate pay off and rewards are significant.
As an online business owner you need to be constantly learning and keeping track of your competition while focusing on growing your business and ensuring excellent customer satisfaction at all times.
Brought to you by Akiva Szental, Co-Founder, Ozen