3rd Series: Leverage the Advantages of the Net

2.1 Leverage the Advantages of the Net

The Internet is a vehicle that has been used to
enable higher levels of communication between
people, companies and countries throughout the world. It means your
online business does not just have to concentrate on local markets –
and almost no place is out of reach! If your business has a website,
this in itself means it is accessible by the global market, and it is vital
that your business take advantage of this.
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.

2.2 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., Google 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 Audience
(hr:min:sec)
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.

2.3 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.

2.4 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.
- 64 -
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 Plug-In Profit Site service, you get an automated
back-end sales campaign built directly into the website I build for you.

Click here to learn all about it and start earning back-end sales today.

2.5 Cross-Selling
Another successful strategy similar to the ones discussed above is
cross-selling. One of the best examples of cross-selling via the web is
- 65 -
on Amazon.com. If you search for a book on the Amazon site, a
message will appear on the same page, saying “Customers who
bought this book also bought…” and will list half-dozen other books for
your consideration. This is an excellent way to cross-sell additional
services or content to your members.

You can also direct visitors to other parts of the site to consider
products and services that they hadn't previously considered.
Successful cross-selling is the result of recognizing a customer need
and meeting that need with a useful product or service. Customers
benefit from needs-based cross-selling efforts because they receive
the services they need and want.

Cross-selling can help your business realize its objectives:
providing useful services, retaining customers, attracting new
customers, and staying competitive with other websites.
In conclusion, you can offer a range of products and services on
the Internet. The key is proper research and a great marketing plan.

We’ll be talking about marketing strategies for your product or service
in the upcoming chapters. In fact, in the next chapter, we will discuss
one of the most important Internet marketing strategies – search
engine optimization.
- 66 -