Subscribe to our mailing list

* indicates required

Build An Online Community First!

Posted on May 5, 2000

by Patrick Tan
of aloha-city.com

Net retailers' days may be numbered, according to a recent report by the Los Angeles Times. It reported that the amount of venture capital funding going to e-tail businesses has plummeted to about one-fourth of what it was six to eight months ago.

As companies continue to suffer deeper losses with little hope of turning a profit soon, some e-commerce experts and venture capitalists are beginning to question whether costly promotions and business-building in the name of building Web traffic was worth the hit to profits.

As a result, industry experts believe that many e-tailers will soon run out of capital and throw in the towel. "Many of those that do not will be snapped up by Web conglomerates such as Microsoft, Yahoo! or America Online, which have the financial muscle and cross-selling ability to create a profitable Web merchant," it reported.

The last statement hinted at the importance of building a large online community, or more commonly known as a web portal, to support e-retailing in the long runs.

Both Yahoo! and America Online started out as an information portal providing value-added information and resources to millions of users who flock to their sites every month. Online shopping was offered at a later stage to capitalize on their ability to reach out to a large group of online citizens.

The logic is simple. People want to belong to a community, and commerce will flourish in places where a community settles in, regardless of whether these places exist in cyberspace or in the real world. So, contrary to the business models adopted by most e-tail businesses, we should first focus our effort on developing an online community before taking the plunge into e- retailing.

An ideal community or web portal should cater to a particular lifestyle or appeal to a specific age or social group. We can offer free services, information, games and entertainment as well as an avenue for members to participate in community's events and social activities. The list can change all the times, as long as it achieves our main objective of getting members to return to our site regularly.

E-commerce should only be introduced when we meet two conditions. First, we succeed in attracting a regular flow of traffic to our website. Second, our website has evolved into an effective medium for reaching out to a specific target audience and many advertisers are keen to tap this market. There are several advantages in taking this approach:

  • We can start small without incurring a sizeable amount of investment in human resources, inventories and logistics support.

  • We can use our advertising revenue to help finance our e- tail operations.

  • We can market our products to an existing market without having to rely on aggressive advertising and promotion to bring in the traffic.

    An online community dedicated to a specific target audience can play a very important role in arousing its members' awareness and interest in specific products and services. These highly qualified prospects will then be more receptive to seek information about related products and make purchases subsequently.

    Most people refrain from shopping and will consciously avoid visiting a shop unless they have unlimited money to spend. They buy on impulse when something catches their fancy unintentionally. If this observation is correct, then a sole e- tail business is less appealing than an online community with an e-tail operations.

    As you can see, the development of a vibrant online community is a very important prelude to the success of e-retailing. It is no wonder then that large corporations are now spending millions of dollars to develop huge portal websites. These mega- portals offer almost everything under the sun to appeal to every possible Internet user in cyberspace.

    Nevertheless, there are still plenty of rooms for niche players despite the onslaught of the mega-portals. We can specialize in a specific market niche and fine-tune our information, services and product offerings to serve our target audience better. In other words, size does not matter if you have the right strategy and business model in place.



    Patrick Tan, a former journalist and entrepreneur, offers a complete range of services and resources to help you build a successful career online. Visit his site at http://www.aloha-city.com for more information. He publishes a free newsletter to share his experience and business know-how. Subscribe Now! Mailto: basics@aloha-city.com.

     

    blog comments powered by Disqus
  • Trellian Direct Search Network Keyword Discovery - Keyword Research Tool
    Domain Parking Manager - Make more from parking Buy Traffic
    Submit your website to 20 popular
    search engines for FREE!
    Directory Submission
    Start promoting your business! A directory listing can improve visibility to your website. The AddMe Business Directory is one of the fastest growing business directories offering quality, SEO-friendly listings.

    Join our free bi-monthly newsletter full of tips and advice to better succeed online!

    Need help improving your website's organic rankings in the search engines? Our SEO experts are ready to jumpstart your campaign to increase traffic and sales on your site.
    Poll
    Do you rely on Google Local Search for your business?
    1. Yes
    2. No
    to see the Poll results!