The correct investment can result in wonders! Our memory is still fresh when we recall Softbank’s intelligent move. In 2000, Softbank’s founder Masayoshi Son invested in the world’s leading e-commerce giant Alibaba. Jack Ma never expected such a large investment of $20M. Masayoshi bought 34% of the stakes in Alibaba. Son made an accurate forecast of the future rise of the internet in China. He met with two dozen prospects and later saw potential in Alibaba. Not only Alibaba, but Son made quite a few wise forecasts and invested accordingly. In 1995, Softbank invested in Yahoo and Yahoo Japan. Three years later, Yahoo became very profitable in the US, and Son made sure that he conquered the Chinese market equally to balance his shaky financial condition. In an interview, Son explained his reasons to have a solid record of beneficial investments. He stated the importance of analyzing the market first and the growth drivers. Currently, Softbank is one of the largest investors in private companies, and its stakes are worth $130 billion.
One cannot measure the potential of e-commerce. Recently, due to C-19, E-commerce saw a tremendous growth of $26.7 trillion in sales revenue. The dramatic rise of e-commerce resulted in mixed fortunes. When the demand for essential products increased, the sale of luxurious products decreased. Not only the sellers but every stakeholder of a company faced loss. Investors who put their money without analyzing the product capacity too faced a huge loss. Therefore, it is crucial to determine the potential of every market before making a monetary decision. A good way to determine the industry’s potential is to analyze the growth drivers.
Mapping the two historical events it won’t be wrong to summarize that the investors who have sharp eyes and the correct understanding of both product and market are most likely to get profits. What makes an investor tick, what are the factors they look into before putting the money in the pot? Based on how we perceive a business, we have gathered a set of broad level pointers. Read on
Market Credibility and High Returns
Investors sailing in the ship of e-commerce follow Pareto’s principle of 80/20. They usually believe that 80% of gains come from 20% of master deals done. Honestly, this principle stands correct from every angle. It takes more than a million to invest right. Following the above example of Softbank, Son aimed right at Alibaba’s pre-business model and future trading capacity of China and the US. This created history! That not only gave Son high returns but also increased the credibility of his company.
As compared to other industries, e-commerce has proven to be the most promising because of its growing demand. More and more traders and sellers have shifted to e-commerce, and they pay a good commission for it. These big giants like Amazon and Walmart benefited the most from sellers and traders. Therefore, these firms earn the most through commissions, marketing, and listing charges. In turn, the returns of an investor get maximized.
Technology Stimulation
The streamlined process and excellent customer service is no option but a necessity. For that, one of the most vital e-commerce delivery drivers is technology. According to BDO global, 70% of CFOs say they plan to increase their investments in IT to accelerate their success. Among these, 64% plan to increase the investment in e-commerce due to technology. It is because the digital consumer demands digitalization at every step. Therefore, from chatbots to Phygital stores, every platform is transforming due to the profit involved.
The robust mechanisms adopted by marketplaces like eBay, Amazon, and Walmart made the infrastructure and operational system easy. Therefore, an investor would prefer to invest in a system that operates flawlessly and has a high sales potential in the future.
What are the Top Investment Areas?
Digitalization has triggered the growth of many product categories in e-commerce. The rising demand of today favors consumer electronics very clearly. Due to massive marketing efforts and enhanced user experience, the demand for electronics has gone high. As we discussed earlier, technology is no longer an option, which explains why mobile phones, laptops, and the latest gadgets are profitable investments. A venture capitalist can choose to fund a platform dealing with the same product category as shortly they are most likely to gain.
Single Page Applications
The wise investor knows that a strong product alone won’t be enough. They tend to focus on all aspects and what a user would prefer. In the same context, a single-page application is a feature designed to make the user experience time-saving. The demand for this interface is increasingly profitable as this pattern interacts with a user by rewriting the current page. Rather than creating a new page and wasting users’ time, it presents the page dynamically.
The e-commerce platforms using this feature are most likely to get clicked by the customer. Therefore, investors have the best chance of getting a great return on investment since single-page applications are commonly used.
Third-Party logistics
While investing in e-commerce, one can widen the arena and go beyond sellers or e-tailer. The rising demand for third-party logistics has grabbed the eyeballs of investors. According to Food Logistics, this support sector of e-commerce is all set to become one of the largest sectors by 2026. With a forecast of $1.8 trillion revenue, increasing consumerism will attract market opportunities.
The returns earned through third-party logistics and shipping are very high. This sector is always moving, and e-commerce is directly dependent on it. Due to the increasing trade activities and forecasts, this can be a prominent choice for investors.
EndNote
Investment isn’t an easy walk. Particularly in an industry whose dynamics change every minute. Nevertheless, the ones who have the correct idea of the right industry are close to receiving profits. Furthermore, with the increase in market growth and M&A activities, we expect to see a rise in investment. But it all depends on the correct money pushed at the ideal time. Investments are becoming more competitive. Investors are willing to buy the stocks of e-commerce firms in countless numbers. Therefore, the increased competition is a determining factor for an investor to make a timely, accurate, well-measured, and efficient investment decision. Well, to accomplish this profit factor, it is best to consult the experts. At Ergode, we showcase the best way to e-commerce. Contact us now!
