eCommerce
is the trading in products and services using computer networks such as
the Internet or online social networks. The term eCommerce was brought
to popularity by the emergence of Alibaba and Amazon, the two giants in
the eCommerce world.
Today,
the eCommerce world has become more and more competitive due to higher
number of players in the market. The Malaysian eCommerce sites are
Lelong, Lazada, 11street, Mudah, Rakuten and etc.
Good news for the consumers!
eCommerce
sites are competing aggressively between each other to get more buyers
and sellers but at the end of the day, it is the consumers that will
benefit. Why?
How
do eCommerce sites maximize their earnings? It is by engaging with more
sellers so as to increase their product offerings. More product
offerings and better deals will attract more buyers, which will then
result in more traffics and transactions. Hence, more commissions will
be made by the eCommerce sites!
Thanks to these eCommerce platforms, online sellers can view directly in the Internet as in what is the pricing strategy of their competitors who are selling the same products. Therefore, you can often find cheaper deals online. Besides, most of the online sellers do not own physical stores, which require significant cash outflows like rental and utilities expenses. These will not only be beneficial to the business in the sense that tremendously costs will be saved but most importantly, part of the cost-savings will be transferred to their customers, like us!
When
the rivalry between eCommerce sites AND eventually the sellers who
compete directly with one another gets heated up, more discounts and
cheaper prices will be offered. This is exactly why the end consumers
will become the ultimate beneficiary.
This is exactly why you should take eCommerce into account before you invest in certain types of businesses.
Retail Sector Hit Hard ...
For
instance, retail sector is one of the sectors that has significantly
felt the impact of the emergence of eCommerce. However, it is not the
retail sector as a whole that are affected, only a few of them. So which
retail group in particular felt the impact? - I would say those that
are selling smaller size and/or lower price range goods.
Retailers
that are involved in retailing of phone & tablet, electronics &
appliances, cosmetics, books and etc. are the ones affected the most.
My Family Business
Hence, I wish to relate this to my family's business.
Trimas Auto Electrical Sdn Bhd
is principally engaged in the manufacture and retailing of automotive
wiring products, automotive accessories and spare parts. We were the
pioneer in the manufacture of automotive wiring products. Additionally,
we are proud to have certified ISO 9001:2008 and is SGS Test Compliance.
With
the emergence of eCommerce, automotive repairers and end users do not
have to travel to spare part shops to look for products anymore. Better still, they can compare and get the cheapest prices possible! (remember online sale price is often cheaper?)
Since
we are one of the few that are very specialized in automotive
connectors, most of the automotive repairers find it hard to look for
these kind of niche items. What if they are located in other states?
As such, Lightman Tan, my eldest brother, has been the key person in our eCommerce venture. He has set up a website (www.e-trimas.com) with more than 5,000 SKUs (stock keeping units) with competitive pricing.
This
online store was established to solve the inconvenience faced by most
of the automotive end users who have difficulty in looking for rare car
spare parts and connectors. With this platform, we are able to leverage
on a better distribution network to target more customers that are
either not within Klang Valley or in overseas.
Conclusion
The
message that I wish to convey is that eCommerce has started to change
the way businesses compete. It has either worsened a company's
performance (not using eCommerce) or helped a business to propel further
(those that use eCommerce in their business).
For
the fellow investors, please think twice if the company you wish to
invest in is engaged in pure retailing business and has yet to invest in
an eCommerce platform.
http://www.valueinvestingstock.com/single-post/2016/08/12/How-eCommerce-Affects-Retailers-like-Aeon-Bonia-Parkson-Padini
