The internet breeds new and exciting ways to do business. It is easily accessible and relatively effortless to use. It makes practical sense for almost any business to take advantage of all the World Wide Web has to offer by moving at least part of its operations online. Not only can a website be an excellent source of information for customers but it can also be a virtual salesperson. Doing business online is both a valuable timesaver and highly cost effective. Despite the evident benefits, there are a few considerations to make before pursuing an online business opportunity. Companies must thoroughly analyze online business opportunities and make an appropriate match to their business model to ensure the business can win.
First, companies must understand that the online marketplace is customer-centric and driven by demand. This means that, unlike traditional offline business that are push-driven, companies must be able to provide unique value-intensive products and services that fulfill an unmet or underserved customer need. This takes careful observation of the customer and analysis of their buying behavior and attitudes. When the need is identified, companies must identify the specific target customer it will pursue. They do this through a process called segmentation which groups customers based on certain distinguishable similarities.
Next, companies must assess their competitive advantage and determine if it has the necessary resources available to deliver the product or service offering to its target customer. Companies can create alliances with those considered indirect competitors in order to complete resource gaps. In addition to ensuring they are resource capable, companies must also determine if they have the right technology in-house to deliver the offering as well as determine if their target customers have adopted and understand the technology required to take advantage of the offering. Finally, the company will develop a plan that states the opportunity in concrete terms and assess its attractiveness to determine if there is enough cross within the opportunity nucleus, it’s “sweet spot”, to be worth the risk.
Once a market opportunity has been identified and considered viable, the next step is to match it with a suitable business model. This is when a company considers how it will make money and win. The business model will need to be effective in maintaining a competitive edge by meeting the needs, wants and capabilities of its customers. The business model should be flexible and customizable, easily understandable and implementable, add high value to customers and be viable in terms of financial risk and resource capabilities of the company. The business must identify value propositions or clusters that tap into the unmet needs of the target customer identified in the opportunity analysis, develop an online offering to fulfill the value proposition, structure a unique resource system to deliver the online offering and construct an appropriate revenue model that will make the offering profitable.
Companies must consider how the business model of choice will take advantage of the way the internet has changed the marketplace. Key things to consider are that the internet is highly demand-side and should focus on customer benefits. Also, with the addition of Web 2.0 social media tools, customers can add value using community and peer-to-peer features such as chatting, videos and other multimedia content. Companies must ensure that the business model chosen can deliver on the target customers’ expectations and that it can soundly fulfill the needs identified in the opportunity analysis. If not, companies can be overcome by threats which change consistently in the online world. There can also be considerable resource drains and great risks to the stability of its infrastructures. Companies must choose a business model that brands them in a way that will increase its perceived value and add a sustainable profit margin.
Choosing to do business online is an important and often necessary step for companies to remain competitive in today’s economy. Careful analysis of an online market opportunity and choosing an appropriately aligned business model are essential to determine if the company can make money and sustain its competitiveness. The primary element to consider is that the online world is driven by customer demand. Ensuring that your customers receive value-added benefits and using them as additional resources will keep your business on the competitive edge.