E-Commerce.

Is it all it’s said to be?

On one hand, the internet is never going to be “switched off”. The digital age is suffusing life with an online mentality that’s now mainstream. In fact, people who weren’t “on the internet” now seem quaint to remember.

Of course, global lockdowns shoved many reticent consumers online, whether they want to be there or not.

Unfortunately, while the Covid 19 pandemichas devastated economies across the globe, it would be hard to design a better coercion campaign for e-commerce than what happened in 2020.

So, is e-commerce the trillion-dollar arena it was touted to be years ago?

The short answer is, yes – and as far back as 2018, the arena was worth a staggering $25.6 trillion.

However, if you’re looking to get into the action or considering investing in an e-commerce development company, that’s not a good enough answer.

On that point, only those with a big appetite for high risk should be looking at startup e-commerce businesses as investment vehicles. There are exceptions－household name brands pivoting online are a pretty safe bet－but by and large, anyone hoping for gains from e-commerce will either need to do significant research and development of their own store, or stick to investing in those showing healthy figures.

Ask any reputable IT concern like Computers In The City how large e-commerce companies are in their average workload, and it quickly becomes apparent that e-commerce has already become a way of life. While the arena was dogged for years by concerns around consumer experience (believed as being governed by demands for immediate gratification), that hasn’t been proven.

Consumers accepting that an online purchase will now only take a moment to be delivered is mainstream, and it seems the value of shopping infinitely online has offset the lack of immediate possession.

Very often, too, the products and services tailored towards consumers in a particular demographic are pretty much exclusively available via online purchase – another big factor pushing for majority e-commerce consumerism.

Mainstream or emerging markets?

If you’re looking to build your own online store, there’s a sea of information, best practice guides, and template platforms like Shopify to make it all come true. Copious market research, diligent analysis, and a commitment to a healthy marketing budget will be essential ingredients for success, and that applies to branded stores as well as drop shippers.

If you’d rather invest in the e-commerce boom and simply glean profits from other’s online success, the same applies –without the need for a marketing budget.

Have a taste for emerging markets?

In that case, the e-commerce investment arena shows some interesting statistics for you, such as developing market consumers in Africa, Latin America, and the Middle East are (by and large)mobile consumers, making e-commerce almost a default behaviour in these areas. Anywhere landline services lag is a good place to look for emerging bulls in e-commerce.

Investing in cryptocurrencies by way of yield farming or HODL strategies might differ significantly from legacy investments, notwithstanding the obvious similarities that overlap between those arenas – but this isn’t so with e-commerce.

If you’re looking to invest in e-commerce entities, the same due diligence applies as in the legacy arena. Don’t be blinded by the relative novelty of e-commerce－sound investments in both the legacy and online arenas display the same characteristics. There’s no substitute for doing your own homework, and evaluating a potential investment vehicle along the same stringent requirements as a land-based business.

Are there bombproof e-commerce investments?

A better question might be, are there bombproof investments period?

To which the answer is always a resounding no.

Nothing is sure with investments－it’s speculation, after all－and in our digital age where disruption has become a mandated, positive attribute, that applies double.

That said, there are likely candidates for giant e-commerce success.

Payment gateways, slow burners

Logically, one can conclude that payment gateways are likely strong performers since e-commerce hinges on some form of payment protocol at checkout. Symbiotic with the growth of e-commerce, the emergence of ever sleeker and smarter payment options online mean that investing in card issuers like Visa and gateways like Ozow or PayPal are a relatively safe bet.

Anything essential to e-commerce’s continued growth is likely to grow itself.

Another e-commerce investment strategy comes straight from the legacy playbook, and centers on mass consumption “slow burners”.

Food, medicine, and clothing are essential to everyone on earth, and companies selling these goods online have a genuinely global audience. While that’s not a guarantee for success, it’s certainly a fundamental value in the legacy arena, and the consideration applies to e-commerce, too. Investors often paid a high price for shares in these companies, not only because they were rock solid dividend payers, but because everyone alive could justify needing their merchandise at some point, usually regularly, and without complaint.

Building or investing in e-commerce: do your due diligence

Building a store or hunting for an e-commerce investment vehicle, either way, diligence is paramount. The arena is growing, by trillions of dollars by all accounts, and there’s no doubt that it’s a vibrant and dynamic, growing space. That alone makes e-commerce attractive, but those who profit from their investment here, whether by building a store or by investing in one, will be the ones who look for fundamental value, not novelty, and who exercise the same commonsense caution any land-based investment would require. You may need some aid from a business broker if you find you want to sell your business and start fresh with capitol towards a new idea. There are so many ecommerce concepts and platforms!

Photo by Mark König on Unsplash