The global information network Internet plays an important role in developing a modern market economy, being its essential element. In the past decade, many entrepreneurial, marketing and advertising goals would have been virtually impossible without the active use of the Internet. That is facilitated by the growing popularity of the network and the continuous improvement and development of the Internet as a marketing and advertising channel.
Culture is becoming a highly lucrative market during globalization. A joint study by UBS and Art Basel states that the global art market reached $63.7 billion in 2022 (The Art Basel, 2022). The proposed here platform will allow users to pay for a subscription to content and order it. The business idea will allow to cooperate with buyers and artists to develop income. The study aims to reveal the essence and identify the risks and benefits of the proposed e-business. The work is an overview of the e-business sphere, a SWOT-analysis of the idea, risks and the process of launching a new concept in the online world.
Similarities and Differences with Traditional Business
Today, e-business, unlike the traditional one, is characterized by low use of physical capital, as well as the transfer of the production of products and the provision of services to various external structures. Enterprises of the traditional business strive for the possession of production capacities (Senyo, Liu, & Effah, 2019). The direct delivery to consumers inherent in an online business minimizes its working capital requirements. While the accumulation of monetary assets in finished products and work in progress creates a need for working capital in non-information business sectors at a high level.
Electronic business, in the narrow sense of the word, is a way of making money through electronic devices and communications. It provides qualitatively new work technologies that allow the company to achieve a competitive advantage by improving customer service and optimizing business relationships with partners (Senyo, Liu, & Effah, 2019). Internet technologies are one of the main, but not the only key aspect of e-business. Strictly speaking, e-business is a traditional business tool.
SWOT Analysis of the e-Business Idea
- Availability worldwide. Thanks to globalization, there is a growing interest in interculturality, and art helps to reflect this. In addition, the Internet provides the opportunity to quickly and cheaply enter the international market without opening a representative office or store in each country. A website will help convey information about the service and the location of the new business, which is a significant advantage.
- Cost-effective marketing and promotions. Unlike tailored advertising in the media, online advertising is constantly integrated. It has flexibility and instant reflection on changes in pricing policy, entrepreneur’s plans, the quality composition of products or a set of services provided. Thus, creating an electronic business offers an opportunity for active growth through e-marketing.
- Increasing level of service. E-business enhances the customer experience. The Internet provides instant feedback from potential customers to the company. Thus, the idea of a new product is tested without high costs, and the expectations of potential customers and the possibility of regulating the direction of sales are determined.
- Reduced costs for costs and start-up. The main principle of e-commerce is to reduce costs by reducing all kinds of intermediaries by automating many functions and processes. The absence of the need to rent an office, and pay staff, significantly reduces the cost and simplifies the process of selling goods of a particular business.
Weaknesses
- Expensive e-business optimization solutions. For a serious online sales site, it is often necessary to invest significant resources in its creation, promotion, staff training, thinking through and optimizing logistics, and more.
- Sectoral restrictions. The main disadvantage of e-business is the lack of growth due to sectoral limits. Given the potential for an extensive reach of e-business in the arts, selling large items can be difficult. In addition, additional costs are required for the high-quality delivery of valuable goods.
- Security questions. The problems of protecting information on the Internet have not been entirely resolved, so many users are still wary of online purchases, especially from little-known businesses. Privacy and security are the main concerns of e-business. One can confidently say no company can 100% protect its customers’ data.
Opportunities
- Broad market coverage. E-business allows even the smallest seller to enter the global market and sell to more customers.
- Technological process. As purchasing power rises and prices for smartphones and computers fall, the number of people actively using e-commerce platforms is expected to increase.
- Marketing opportunities. Marketing through online portals is cheaper and easier and provides more feasible ways to market products.
Threats
- Digital fraud. Online payment systems, while safe, can easily be used to conduct fraudulent transactions. Consumers are turning away from e-commerce portals as distrust of online payments grows.
- Privacy. Many consumers refrain from sharing personal information with websites, especially less popular ones. As a result, small or start-up e-businesses cannot get the coverage they need as larger and more reputable ones do.
- Developing legislation. Since there is still no general regulation of online business, it can change significantly. Government regulations regarding online sales are becoming more stringent, and there is a strong possibility of increased taxation of online sales.
High Competitiveness of e-Business
The e-commerce market is highly competitive, where website performance and speed play an important role. Attractive offers and product selection are not enough to get ahead of the competition. Apart from these two limiting factors, user experience is also essential. In addition, since the cost of creating an e-commerce portal or using an existing one is relatively cheap, the level of competition in such outlets is much higher than in traditional markets (Visconti, 2022). Given the general availability of contemporary art, it becomes more challenging to convince a client to pay. It makes it difficult for new sellers to achieve sales equivalent to larger brands in their respective industries.
e-Market Trends
The primary trend in e-commerce is its rapid growth. In this regard, it is important today to attract and retain a potential client’s attention. Thus, brands are investing many resources in visual content in 2022. People are more likely to buy a product that satisfies their needs and captures their attention. The visual aspect is especially important when creating an art-related business.
Conversion optimization helps to make the process of online shopping on marketplaces the most comfortable, due to which customers form a positive opinion about the suppliers of goods and the company that owns the marketplace. Conducting various research and analytics helps increase profits, reduce the risk of making wrong decisions, and gain customer loyalty. The mobile app trend is also growing. There is an option to create a PWA (progressive web app), a combination of a website and an application, that one can install on the phone and visit without an Internet connection (Dutta, et al., 2022). It is crucial for the buyer to be able to choose a payment system. If clients do not find a suitable payment method for the order, they will go to another service. In 2022, the situation with a variety of payment options is very relevant.
e-Business Launch
Launching an e-commerce start-up can be divided into the standard cost and the cost of implementing a key business idea. The former include hosting, equipment, website development, marketing, and more. Given the variety of possible business ideas, these costs take time to determine and calculate. However, since there is a common base for starting an e-start-up, it is possible to decide on the average price of creating an e-business.
Standard costs include registering a company and a domain name, buying hosting and building a website or application. Each item includes additional costs, such as obtaining a license, possible rent, and processing money transactions (Visconti, 2022). In addition, marketing is essential to the success of a new business, especially in a competitive web-environment. The next expenses for launching an e-commerce start-up are employee remuneration and related costs: pension and insurance premiums, bonuses, overtime, and vacation pay (Visconti, 2022). When developing an e-commerce product, almost the entire budget is spent on these payments. Thus, on average, it takes about $5,500 to start a small business. See the Table 1 below for more details; costs vary by location and industry.
Table 1. Average Standard Cost Level.
Income Model
In an e-business environment, there are many ways to generate and increase revenue beyond direct customer interaction. A start-up business can support ads, resulting in the host charging a commission for placing their ads on the online marketing platform (Bonina, Koskinen, Eaton, & Gawer, 2021). For example, a contemporary art business might partner with artists to advertise their profiles. From this model, one can also build a subscription income model that will allow to receive a stable monthly income.
The proposed idea has the potential to expand, so in the future, it is possible to create additional content that can be provided for a paid subscription. Charging customers to access and process payments at regular intervals can establish a long-term relationship with their customers, who will continue to pay even if they do not use the product or service often (Bonina, Koskinen, Eaton, & Gawer, 2021). However, the main e-business revenue model is the sales revenue model. It may include not only the sale of goods and services but also advertising, collaborations, sponsorships and more. In general, this takes into account any direct interaction with the customer and the business’s product.
e-Business Funding
A wide range of sources is used to finance start-ups. It includes funds from public and private venture funds, investment companies, private strategic investors (“business angels”), resources collected on special Internet sites through crowdfunding technology and more (Bonini & Capizzi, 2019). Attracting venture capital is one of the most common ways of financing in the world. In addition, such financing technology as equity crowdfunding has recently been developed (Bonini & Capizzi, 2019). It is a public offer and sale by means of specialized Internet services of securities representing a share in the equity capital of investees. Given the specifics of the e-business under consideration, another way of financing can be patronage and cooperation with artists who will be interested in selling their works.
e-Business Risks
First of all, starting a business is associated with a large number of financial risks. There is a possibility of not getting the expected income, not repaying the loan, or even going bankrupt. Although the field of art always remains relevant as part of the cultural component, it may require additional time to develop. In addition, the risk may be an incorrect definition of the target audience; a business idea can be profitable but not reach its client (Haenlein et al., 2020). In turn, this increases the risk of insufficient audience activity. Thus, an unsuccessful business idea and a model for its implementation can lead to the destruction of e-business.
Feasibility of the Idea
According to experts, interest in culture will steadily grow in the coming years, which is facilitated by the introduction of AI and widespread robotization. Thanks to them, more free time appears every day in people’s lives, which can be filled with interest in art. In this regard, the proposed start-up is feasible in terms of trends in society. In addition, as more and more artists today seek to monetize their work, this opens up great potential for cooperation in the first stage of e-business development. That, in turn, will save on the search for project financing.
Conclusion
As a result of the project, I realized that the e-Commerce industry is constantly changing and developing, so it is necessary to monitor current trends and build business strategies based on them. Before determining the features of implementing an idea in the electronic market, it is necessary to decide on the basic concepts of electronic business that have developed to date. By analyzing the features of the global network economy and studying the experience of enterprises and firms in the field of e-business, I was able to develop a business plan for a modern online organization. While e-business is still a business and shares many of the traditional ideas, crucial differences will affect a start-up’s success.
References
The Art Basel and UBS Survey of Global Collecting 2022. (2022). Web.
Bonina, C., Koskinen, K., Eaton, B., & Gawer, A. (2021). Digital Platforms for development: Foundations and Research Agenda. Information Systems Journal, 31(6), 869-902. Web.
Bonini, S., & Capizzi, V. (2019). The role of venture capital in the emerging entrepreneurial finance ecosystem: Future threats and opportunities. Venture Capital, 21(2-3), 137-175. Web.
Dutta, P., Chakrabarti, S., Bhattacharya, A., Dutta, S., & Piuri, V. (2022). Emerging Technologies in Data Mining and Information Security: Proceedings of IEMIS 2022. Singapore: Springer Nature Singapore.
Haenlein, M., Anadol, E., Farnsworth, T., Hugo, H., Hunichen, J., & Welte, D. (2020). Navigating the new era of influencer marketing: How to be successful on Instagram, Tiktok, & Co.. California Management Review, 63(1), 5-25. Web.
Senyo, P. K., Liu, K., & Effah, J. (2019). Digital Business Ecosystem: Literature Review and a framework for future research. International Journal of Information Management, 47, 52-64. Web.
Visconti, M. R. (2022). The Valuation of Digital Intangibles: Technology, marketing, and the metaverse. Basingstoke: Palgrave Macmillan.