From stay at home moms to unemployed retirees, people online have been looking to the Internet, by selling there wares, in order to make pocket change to a full time income. The formula is simple, sign up to one of the top online retail markets, take good pictures and list your ad. Then, the money should come. However, this doesn’t prove to be a simple as it seems. There are many contributing factors to why online retail fails every day. Competition, convenience, and cost can all be factors that make this endeavor unreasonable and unprofitable. Here are a few things to consider.
1. High competition factor. According to Suzanne from Everyjoe.com, eBay reported 84.5 million active users in 2008. Even if there were only about half of those users that were sellers, that would be around 40 million users that you would have to compete with. The odds that at least one million of these sellers are selling the same thing as you, makes the competition even more stiff. Also, listings on the Internet can get shrouded by those with lower pricing, who can pay more for online marketing, etc. Your goods may not have a chance.
2. Accessibility of items online. While there may be millions of online shoppers, the Internet may not prove to be as convenient as it looks. When you shop locally, you are able to simply ask the clerk for the item and it is at your home within a few hours. You can even go back to the store and return it if you aren’t satisfied. This is the opposite of online retail. Online, you have to find a retailer who sells this item, understand their payment options, research their retail credibility, and arrange a shipment that you may not see for the next 5-10 business days. This proves difficult for retailers because it results in shoppers purchasing only a limited type of items, which normally consists of niche items they can’t get anywhere else, leaving the more generic retailers in the dust.
3. Social aspects of shopping online. When you go into a store where you live, you may see people’s carts filled with items, purchases going left and right, and cars being stocked with recently bought purchases. This is not always the case with online retail. Because the Internet, is generally free to use, most people don’t go with the sole intention to shop. Someone may blog about your product, write a review on how attractive the pictures are and even like your website on some social media website. They may do everything but buy your item. This creates a false interest in your item because you aren’t a photographer, blogger, or a graphic design artist, you are a retailer who wants your items to be bought not just blogged about.
4. Cost of retailing online. While the costs for the online retailer are negligible compared to opening up a brick-and-mortar shop, the costs really fall on the consumer at this point. Shipping is a very big aspect of the online retail business. Shipping a book, small game or toy could cost the buyer anywhere from $5 to $20 in shipping. If an item were $5 with $5 shipping, the item would have to be twice as valuable in order for someone to purchase it. Even with free shipping offers, buyers can easily see through the mark-up scheme and defer most of their shopping to the local market.
Online retailing is a tough market to break and although there are millions of people involved, it doesn’t necessarily guarantee success for those who participate.
Suzanne. Fun eBay Facts from Quarterly Report Q2 2008. 2008 July 31. Retrieved from http://everyjoe.com/work/fun-ebay-facts-from-quarterly-report-q2-2008-645/