(Wealth) Money is a Tool

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Opportunity & Choice

In a sense, money is just paper, but people regard it as much more. Some might even go to the extend of risking death, just in pursuit of money.

In 1994, a group of artists set aflame £1 million [$1.4 million] in an art exhibition. The backlash was severe. Since then, studies have shown that seeing money destroyed disturbs people, triggering a part of the brain linked to the “use of tools,” such as penknives.

To a degree, money is a tool and signifies “opportunity and choice.” Though money represents a “future reward”, you must exchange it to get what you want but the brain processes it as an immediate reward.

People assume that they can identify good value. Yet when bidders in an auction see an object sell for a high price, they submit larger bids on subsequent unrelated items. Shoppers do hours of research to save a few dollars on a small purchase but won’t try to save the same amount on a large one. And expensive prices easily fool consumers, as a wine-market fraudster proved in 2006. He filled empty vintage wine bottles with a blend of vintage wine and cheaper wine and resold them at high prices. His scam fooled even wine experts.

Moreover, test subjects said that Nurofen, a branded painkiller, delivered quicker headache relief than a chemically identical generic drug. Though higher costs provoke a greater neural reward response, you shouldn’t automatically choose the costliest option, or even the seemingly mid-priced one. Merchandisers know that placing an extremely expensive item next to a high-priced and a low-priced option triggers the “compromise effect,” causing consumers to settle on the middle option, in actuality high-priced.

Cognitive biases that prevent smart decisions include the “optimism bias,” where people assume that they will save more, spend less and otherwise do better in the future. People make the best money decisions when they’re cranky and not “desperate for money.”

One study showed that humans respond to scarcity with poor judgment and even a drop in IQ.

“Money changes our thinking, our feeling and our behavior. But when it’s scarce, it can have even more of a hold over us.”

Does wealth bring happiness?

Some lottery winners have found otherwise, and society overestimates the happiness that income can bring.

The Easterlin paradox explains that although the rich are happier on average within a country, this doesn’t hold true when comparing nations. After a certain threshold, income no longer improves happiness.

For greatest happiness, buy experiences, not material goods, and spend on others. As Tony Robbins always said, the secret to living is giving.

If you offer financial incentives to people, craft them with care. They can produce unintended outcomes, such as crowding out people’s natural goodwill or raising their suspicions. Be clear about what you want recipients to do and how you want them to do it.


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(Wealth) 8 Principles of Wealth Management

Eight Principles of Strategic Wealth Management

To protect your family’s assets and make them grow, follow these guidelines:

  1. “Take charge and do it early” – Determine the values that will guide the family’s wealth management. This means digging into the details of the family’s financial condition, structuring goals that complement each other and devising a long-term strategy.
  2. “Align family and business interests around wealth-building goals and strategies” – Unified families can achieve some economies of scale, but that depends on both shared history and a shared view of the future. Aligning business and family interests will help ensure that any hired financial advisors work to advance the family’s common goal.
  3. “Create a culture of accountability” – Carefully define the wealth strategist’s responsibilities. Establish metrics to guide and assess the strategist’s performance. Objective metrics help take the sting out of criticism and keep peace in the family.
  4. “Capitalize on your family’s combined resources” – Pooling funds allows the family to access investment opportunities that would not be available if people managed their money in smaller bundles. Nepotism isn’t all bad because members of a family may have resources, networks and influence that can benefit everyone.
  5. “Delegate, empower and respect independence” – Insist that younger relatives take opportunities to grow outside the family, so they will be able to stand on their own feet and add value to the family through what they learn and accomplish. Empowerment helps members of the wealth management team and family office do a better job. Make expectations, goals and strategy clear – but don’t micromanage.
  6. “Diversify but focus” – Diversification is a prudent risk management strategy. Because most family fortunes began in one business, and such concentration is extremely risky, it is crucial to diversify. The family’s wealth managers should focus on money management so they become more competent than the professionals they might otherwise hire.
  7. “Err on the side of simplicity where possible” – Keep a strategy simple to make its strengths and weaknesses more understandable. When families opt for complex strategies, at least keep everything transparent and visible to everyone so no one has doubts about anyone else’s motives or performance.
  8. “Develop future family leaders with strong wealth management skills” -Pursue a multigenerational approach to wealth management. Nourishing and developing successors takes time and effort. Anyone entering the family business should have at least 10 years of successful performance outside so they add something of value to the family firm.

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(Wealth) keep up with the Joneses

Money Identity

Economic reality often clashes with how people identify themselves.

A Pew Research Center study found that 90% of Americans ranging from those near poverty to those making $100,000 a year identify themselves as middle class.

Why?

Because being poor is uncomfortable while the rich want to seem modest. Actual middle-class citizens are scared that economic factors like flattened incomes and rising health care and college costs will force them to downscale.

Nowadays, typical American families earn a little less than they did in 2000. People seem more restless and discontent as they challenge the notion that money and possessions ensure happiness.

But money can’t buy you, or anyone, happiness.


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Though money provides life’s necessities, some measure of freedom and more personal options, pursuing cash can become habitual. Among the reality that we need to consider is that a larger paychecks typically bring more responsibility and stress.

The Great Recession caused many people to reassess their view of money in relation to quality of life. People form their “money identity” during childhood, so how you regard money depends on what you witnessed at home. One man remembered having to cover for his parents when debt collectors came to the door because they had overindulged on Christmas presents.

As a result, he was careful with his finances when he became a father. He passed that trait along to his children, who grew up taking pleasure from secondhand clothes and inexpensive beer.

In trying to “keep up with the Joneses,” people give little thought to how the Joneses actually live.

Do their perceived material advantages make them happier or more secure?

Do they enjoy meaningful relationships?

Do they have time for fun?

The odds are that the Joneses, like many others, work longer hours and take less vacation than other people in most of the industrialized world. Which could be at the expense of our family life, or even health. Everything does indeed comes at a price. The question is how much do you ready to pay?

According to a 2010 survey of roughly 450,000 Americans, “money has no measurable effect on daily contentment” once you reach $75,000 a year. The US Census Bureau says roughly 34% of Americans earn at least that amount, yet the belief persists that additional income ensures additional happiness.

Generally speaking, society does not support introspective examination of personal values or quality of life in relation to money.

Besides, when it come to money, I believe there’re 2 ways to be rich. One is to have everything you want or the other is to want everything you have.


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(Wealth) Changing Economy

The Changing Faces of Work

As the economy regains its health, hiring naturally is increasing. But many full-time jobs that vanished during the economic downturn are gone forever. Far fewer people have conventional office jobs; many more are independent contractors or temporary workers.

“As the workforce becomes increasingly individualized, we’re forced to become more intentional and imaginative about how we come together and support one another.”

Freelancing

Freelancing has its advantages. You can choose your projects and, in many cases, the people with whom you want to work, although finding your gig at first would be hard at first.

Telecommuting has created more employment options. According to Global Workplace Analytics, “half of the US workforce now telecommutes at some point.” The number of people regularly working at home increased 103% from 2005 to 2014. And these trend would only increase, giving the fast development of fast internet connection and the overwhelming increased of millennial in the workforce.

Freelancing can be scary. Yet a 2014 US national survey conducted by Freelancing in America revealed that roughly eight of ten freelancers find that their earnings equal the income they made as employees and four in ten made more. Acquiring health insurance and other benefits is challenging for freelancers, but they have flexibility and can generate income from multiple sources instead of relying on a sole employer. Freelancing is a viable alternative for those with childcare obligations and other responsibilities outside of an office. Although as mentioned before, starting off could be a daunting tasks.

Honestly, in our world today, you’re likely not all that safe no matter what your job.

I say choose challenge.

Choose beauty.

Choose love.

Choose passion.


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(Money) Step-by-Step guide on building your saving

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Saving money could be a very hard task indeed. Therefore, here’s a quick and simple to follow guide on how to do so, effectively.

In summary,

  1. Develop Savings Goals
  2. Decide on Best Budgeting Method
  3. Choose a Financial Institution and Accounts
  4. Automate Your Finances
  5. Establish a Budget-conscious lifestyle
  6. Make More Money.

Step 1: Develop Savings Goals

Like any other goals, your savings goals should be well-defined, properly milestoned.

Therefore, your first move should be to set specific measurable saving goals for yourself. And practice delayed gratifications and resist them temptation to spend your money on other stuff.

Also try to think both long term and short term.

Determine what exactly do you want to save money for?

How much will you need?

And order of priorities of what you need?

  • Short term : On top of 3-6 months of your living expenses. Think of saving for your next family vacation, your next anniversary presence or even holiday gift. I’ve spent more than RM 16,000 in December last year for gifts, holidays and some family emergencies. So, make sure your emergency funds are solid and plan your holiday well in advance.
  • Long term : This my friend would require much more big forward thinking. For example, saving for your children education fund, retirement, or even house(s).

Reality Check (Analyze your Income)

Since you have set out your goals, now try to figure out how much you can realistically save for these goals of you. Now, here’s the priority list comes in.

Simple way to do this is to write down all your income and expenses. Try to minimize non-essential ones, for example, eating out, movies nights (I substituted movie night with Netflix).

There are a lot of wonderful free apps which you can download to track your expenses. I personally used ‘Finance Manager’.

After this exercise, you could at least free up-to RM 300 – 500. Now, you can either use the money to build up your savings accounts or pay-off bad debts.

Read more : The Richest Man in Babylon (Book Review & Summary)

Step 2: Decide on Best Budgeting Method for You

I usually use zero-based or Debt Snowball budget which I’ve learn from Dave Ramsey to pay off my debt first. Although that might not be the easiest nor the most appropriate budget for you.

Here are some budgeting methods that you should really consider.

The 50/20/30 Rule

This one was popularized by U.S. Sen. Elizabeth Warren, a bankruptcy expert, and her business-executive daughter.

Break down your income and split your spending into three categories: 

  • 50% goes to essential bills and expenses, 
  • 20% toward financial goals, and
  • 30% to personal spending (all the stuff you like to spend money on but don’t really need).

Best for: People who worry they won’t have a life if they’re on a budget.

Debt Avalanche

Helps those who have debt. It starts with the highest interest rates first (most likely your credit cards).

It helps you in the long run, saving money over time on interest repayment debt.

Best for: Those with lots of credit card debts.

Debt Snowball

Money management guru Dave Ramsey champions the debt snowball method. Pay off your debts with the smallest balances first. It based on the premise that small victories will likely to push you forward for more.

This allows you to eliminate debts from your list faster, which can motivate you to keep going.

Best for: People who owe a lot of different kinds of debts — credit cards, student loans, etc. — and who need motivation. I personally used this method. Although I actually don’t have that much debt.

Envelope Method

Is a traditional cash-only budget which actually uses envelope where to store cash to be used for the particular category listed on the envelope.

Best for: Those who need help with self-control. If there’s nothing left in one envelope toward the end of the month, there’s no more money to spend on that category, period.

Zero-Based Budget

The way you draw up this budget, your income minus your expenses (including savings) equals zero. This way, you have to justify every expense.

Best for: People who need a simple, straightforward method that accounts for every dollar. 

Step 3: Choose a Financial Institution and Accounts

I personally uses Tabung Haji for my emergency funds. It usually earns me around 4-7% dividends each year.

While for saving accounts, I uses ASB, that usually earns me around 6-8% ROI each year.

You also need to choose your financial institution wisely.

  • Choose credit cards based on your needs, and special advantages such as cashback, rebates, or low interest rates.
  • Try not to use credit card, unless it’s absolutely necessary.

Step 4 : Automate Your Finances

Make technology do the work for you.

  • Just check on your financial institution service provider. Nowadays, there are a lot which can be automate.
  • Among the finances which you can automate includes your bill payment, loan payment, savings, etc

Step 5: Budget Conscious Lifestyle

Spent less, save more. You just have to be smart and strategic. Here are some of our best tips to help you spend less:

  • switch off your electrical appliances when not in use.
  • sell your used items. I personally sell them on Shopee.
  • Don’t buy stuff you don’t need.
  • Find free entertainment. Legally I cannot tell you how, you should be able to figure it out yourself.
  • Cut your food budget. Try fasting.
  • Optimizes on your insurance and its coverage. Don’t under spend either.
  • Optimizes on your auto insurances. Most country reward good drivers with a discount on their auto insurance premium.

Please share in the comment section if you have any other tips.

Step 6: Make More Money

Increase your income. I’ve tried online business and it works well for me. Although eventually I stop once customer service bore me.

You should try though, might work well for you too.

Another option is blogging and affiliate marketing. Although not as easy as it sound. I’m still learning how to well in blogging and affiliate marketing myself.

Read more: How to start a Blog

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(Wealth) 9 Rules of Wealth for building investment portfolio

“If we want to grow rich on a middle-class salary, we can’t be average. We have to sidestep the consumption habits to which so many others have fallen victim.”

To become wealthy, says investment adviser Andrew Hallam, heed nine rules about managing your money. He offers sound, basic, practicable advice.

And here are a quick summary of his 9 rules of wealth when building your investment portfolio.

1. “Spend Like You Want to Grow Rich”

If you want to become wealthy, promise yourself to “do no harm.” Create “assets, not debts.”

You should spend wisely, but you don’t have to scrimp.

“We should all make a pledge to ourselves much like a doctor’s Hippocratic oath: above all, do no harm.”

Growing wealthy requires a strategy. You must carefully watch how you use your money so you will have some left over to invest. If you consume less than you earn, you will dramatically increase your odds of becoming financially secure.

Change the way you look at your life, so you can be happy with what you have and less inclined to spend recklessly. As you build your savings, you’ll be able to make long-term investments in the stock market. With the right returns, you could create a healthy portfolio.

“The surest way to grow rich over time is to start by spending a lot less than you make.”

Even the Holy Qur’an remind us not to spend wastefully (217:26-27)

2. “Use the Greatest Investment Ally You Have”

You might have discovered something valuable hidden in the boring pages of your school textbooks: the incredible benefits of compound interest. Warren Buffett bought his first stock at age 11 and jests that given the benefits of compound interest he should have begun investing much earlier.

As Buffett says, planning can make all the difference.

If you invest $100 and it grows at 10% compounded annually, your investment becomes $161.05 in five years and $78,974.69 after 70 years. Stock markets can move dramatically up or down, but since the 1930s, the US stock market has provided investors a return of more than 9% annually.

To start, make a note of all your expenses for three months. At the end of that period, calculate how much it costs you to live every month. Make that the basis of your fiscal plan. Pay off any high-cost loans. The sooner you begin, the better off you will be.

“Before we learn to invest to build wealth, we have to learn how to save.”

And one of the best financial advise anyone could give is

“Do not save what is left after spending, but spend what isleft after saving.”

3. “Small Fees Pack Big Punches”

You probably wouldn’t be able to compete with an expert in his or her field. But you might find one exception: the area of money management. Some financial advisers won’t guide you to the right investments. Many just want to sell you products that make the most money for them.

For example, instead of suggesting that you buy an index fund – “a single product that has thousands of stocks within it” and typically charges low fees. An adviser might recommend that you buy an actively managed mutual fund with multiple transactions and fees.

To earn better returns than most experts can provide, invest in three index funds: one from your country, a global stock market index fund and a government bond fund.

Paul Samuelson, the first American to win the Nobel Prize in economics, says that purchasing an index fund provides you with the most effective way to diversify your investments.

If you could ask Warren Buffett where you should invest, he’d suggest that you buy index funds. He has instructed his estate’s executors that he wants his heirs to invest in index funds.

“If we want to grow rich on a middle-class salary, we can’t be average. We have to sidestep the consumption habits to which so many others have fallen victim.”

Studies show that you can’t pick the best-performing mutual funds based on how they did in the past. Mutual funds that achieve outstanding results in one period can perform dismally in the next. However, you can boost your chances of success by investing in indexed mutual funds. You won’t be able to opt for an actively managed mutual fund that outperformed stock market indexes, and you could make a serious mistake if you choose a mutual fund based on its past performance. Always remember that advisers make money when they sell you actively managed funds. That’s why they counsel you to buy them.

“If we want to grow rich, we need a purposeful plan. Watching what we spend so we can invest our money is an important first step.”

4. “Conquer the Enemy in the Mirror”

If you understand how your feelings can torpedo your strategy, you’ll be able to invest more sensibly. Consider a mutual fund with average returns of about 10% over the last two decades. It might have underperformed in certain years and done well in others. That’s why it’s called “average returns”.

If the fund had 1,000 investors, you might think they’d all get about the same return. But, in fact, they don’t, because most investors pull their money out of poorly performing investments to chase better returns elsewhere.

If you don’t want to live with the stock market’s gyrations, invest in an index fund over the course of 25 years, and add the same amount to it every month.

“Sticking with index funds might be boring. But it beats winding up as shark bait, and it gives you the best odds of eventually growing rich through the stock and bond markets.”

Many people invest under the delusion that they can get into the stock market and cash out of it at just the right time to earn a big profit. Professionals call this “market timing,” and it’s difficult.

Most financial advisers stand a better chance of beating someone on the level of Roger Federer at tennis than they have of growing their portfolio by timing the market. The Vanguard Funds’ John Bogle – Fortune magazine’s choice as one of the four “investment giants” of the 20th century said that in his 50 years of investing, he didn’t know of anyone who systematically made money using market timing.

“Gold has jumped up and down like an excited kid on a pogo stick for more than 200 years. But after inflation, it hasn’t gained any long-term elevation.”

When you buy a stock market index fund, you come to own, in effect, a part of several businesses. Through them, you may own real estate, manufacturing facilities and consumer products. Understanding this gives you an edge as an investor.

A company’s earnings and the growth of its stock price may diverge at times, but they are inextricably linked. The share price of a company typically reflects the growth in its profitability.

Over the short term, stock markets can act in a variety of wild ways. If they seduce you while they’re surging upward in price, you could become much poorer when they drop.

“As far back as we have records, at least once every generation, the stock market goes bonkers.”

5. “Build Mountains of Money with a Responsible Portfolio”

You can benefit from owning an index fund, but you must balance your portfolio so you can absorb market fluctuations. If the market falls, the value of your investments will drop by an equivalent amount. That’s hard to take, especially as you near retirement.

“Every generation, it happens again. Stock prices go haywire…many people abandon responsible investment strategies. The more rapidly the markets rise, the more reckless most investors become.”

With bonds, over time, you may make less money than with stocks. However, their value fluctuates less, and that could protect you if the stock market tumbles sharply.

When you buy a bond, you’re lending money to the government or to a company. As long as that organization can pay your interest and return your money, your investment remains secure.

You can have confidence about purchasing bonds from governments in developed countries. You take on more risk when you buy corporate bonds from leading companies and even more when you buy bonds from smaller companies. They usually pay higher interest rates, but you may face a greater chance that they could default.

“A Chinese proverb [suggests] that wealth doesn’t last more than three generations.

There’s a generation that builds wealth, a generation that maintains it and a generation that squanders it.”

6. “Sample a ‘Round-the-World’ Ticket to Indexing”

“Warren Buffett famously quips: ‘Preparation is everything. Noah did not start building the Ark when it was raining’.”

Index funds relate closely to exchange-traded funds (ETFs). Both are made up of a certain amount of stocks representing a particular market, but ETFs trade, just as equities do, on the stock market. The fees for ETFs are higher than those for index funds.

Countries all over the world have index funds, but the United States offers the most. Citizens of most countries can buy index funds or ETFs listed overseas. If you live in Canada, you can evaluate the Canadian bank TD’s actively managed funds alongside its e-Series index funds; over a decade, you will find that the index funds provide a higher return. In the United Kingdom, financial institutions offer index funds with fewer benefits and they charge greater fees.

To take just one example, investor Paul Howarth didn’t want to entrust his money to an index fund, so he opened a brokerage account. He put about 30% of his funds into an iShares global bond ETF and the remainder in Vanguard’s global stock ETF. Once a year, Howarth evaluates his portfolio. If global markets rise, he cashes in his global ETF and adds the money to his bond ETF, so he can retain a balanced allocation.

“You’ve inherited a windfall. Should you invest it all at once? Or should you add the money to the markets, month by month…Nobody knows for sure. But earlier lump sum investments usually win.”

7. “You Don’t Have to Invest on Your Own”

Often, investors don’t want to expend energy in investing or they aren’t sure about their choices. They would rather someone else did it for them. Americans have to spend far less money than anyone else in the world for financial advice. As a result of Internet access, many people now understand that Wall Street professionals make money by selling actively managed mutual funds.

Consider Vanguard funds. John Bogle set up Vanguard as a nonprofit enterprise to help ordinary investors. Those who buy its funds become its owners. When you buy, you must sort through Vanguard’s list of index funds or ETFs. This makes some investors nervous and leaves them seeking guidance.

Today, “intelligent investment firms” can help you manage your finances for a low fee. Or you can build a portfolio of index funds.

8. “Peek Inside a Pilferer’s Playbook”

Even if you decide to buy an index fund, your financial advisers may produce a range of reasons for advocating against it. For instance, they could say you take on greater risk when you buy an index fund. They would note that an index fund commits all its money to the market, so if stock prices plummet, you could face greater losses. To prevent such losses, active fund managers do not invest fully in the stock market.

Your advisers could suggest that active managers can liquidate their holdings before stock market crashes and buy shares back once markets become less volatile. Such ideas theoretically denote good opportunities, but they assume that managers can successfully time the market. Consider any manager’s fees before you make a decision.

Your adviser may offer to show you mutual funds that outperformed stock market indexes.

However, research shows that mutual funds that did well in the past may or may not do well in the future. They rarely match their previous performance. Be wary of advisers who suggest that, because they understand the economy so well, they can help you outperform a collection of indexes.

The financial industry grants brokers and financial advisers a relatively low status. Some financial advisers train for only two weeks in financial planning, so be sure the advisers you select are well educated and well trained, with sound reputations.

9. “Avoid Seduction”

Keep your eye out for scams.

You can outperform most investors by participating in index funds. You open yourself up to making mistakes when you seek unconventional investments. Some people look for index funds that suggest they can outdo the market. Never succumb to sucker claims that you’ll make “easy money.”

For instance, emerging markets often offer sensational returns, but they can turn down sharply and quickly. If you don’t like this kind of volatility, choose a “total stock market index” rather than investing excessively in emerging markets. And gold can turn out to be a poor investment. If you invested $1 in gold in 1801, by 2016 your investment would have been worth only $54. 


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The Power of Ecommerce

When it comes to eCommerce, I’ve got quite a lot of experience having tried Shopify and EasyStore. Although honestly it haven’t work well for me, its a great experience as well as a steep learning curve. In term of pricing, shopify is significantly more expensive relative to EasyStore. And the features are almost identical.

So, if you’re thinking about starting a side-hustle in the field of eCommerce, you should consider using either shopify or EasyStore. I’ve used both, and in my experience, EasyStore have better interface while with shopify, you can sync products from aliexpress as dropshiping business model. In truth, I’ve made quite a lot from shopify by dropshipping ex – aliexpress. Using shopify, you can get your store set-up in matter of hours and have it running in no time with easy aliexpress sync feature.

In case of EasyStore, you can customize your store outlook and product presentation better since the interface is much user friendly.

1. Overcome Geographical Limitations

If you have a physical store, you are limited by the geographical area that you can service. With an ecommerce website, the whole world is your playground. Additionally, the advent of mcommerce, i.e., ecommerce on mobile devices, has dissolved every remaining limitation of geography.

2. Gain New Customers With Search Engine Visibility

Physical retail is driven by branding and relationships. In addition to these two drivers, online retail is also driven by traffic from search engines. It is not unusual for customers to follow a link in search engine results, and land up on an ecommerce website that they have never heard of. This additional source of traffic can be the tipping point for some ecommerce businesses.

3. Lower Costs

One of the most tangible positives of ecommerce is the lowered cost. A part of these lowered costs could be passed on to customers in the form of discounted prices. Here are some of the ways that costs can be reduced with ecommerce:

• Advertising and Marketing Organic search engine traffic, pay-per-click, and social media traffic are some of the advertising channels that can be cost-effective. 

• Personnel The automation of checkout, billing, payments, inventory management, and other operational processes, lowers the number of employees required to run an ecommerce setup. 

• Real Estate. This one is a no-brainer. An ecommerce merchant does not need a prominent physical location.

4. Locate the Product Quicker

It is no longer about pushing a shopping cart to the correct aisle, or scouting for the desired product. On an ecommerce website, customers can click through intuitive navigation or use a search box to immediately narrow down their product search. Some websites remember customer preferences and shopping lists to facilitate repeat purchase.

5. Eliminate Travel Time and Cost

It is not unusual for customers to travel long distances to reach their preferred physical store. Ecommerce allows them to visit the same store virtually, with a few mouse clicks.

6. Provide Comparison Shopping

Ecommerce facilitates comparison shopping. There are several online services that allow customers to browse multiple ecommerce merchants and find the best prices.

7. Enable Deals, Bargains, Coupons, and Group Buying

Though there are physical equivalents to deals, bargains, coupons, and group buying, online shopping makes it much more convenient. For instance if a customer has a deep discount coupon for turkey at one physical store and toilet paper at another, she may find it infeasible to avail of both discounts. But the customer could do that online with a few mouse-clicks.

8. Provide Abundant Information

There are limitations to the amount of information that can be displayed in a physical store. It is difficult to equip employees to respond to customers who require information across product lines. Ecommerce websites can make additional information easily available to customers. Most of this information is provided by vendors, and does not cost anything to create or maintain.

9. Create Targeted Communication

Using the information that a customer provides in the registration form, and by placing cookies on the customer’s computer, an ecommerce merchant can access a lot of information about its customers. This, in turn, can be used to communicate relevant messages. An example: If you are searching for a certain product on Amazon.com, you will automatically be shown listings of other similar products. In addition, Amazon.com may also email you about related products.

10. Remain Open All the Time

Store timings are now 24/7/365. Ecommerce websites can run all the time. From the merchant’s point of view, this increases the number of orders they receive. From the customer’s point of view, an “always open” store is more convenient.

11. Create Markets for Niche Products

Buyers and sellers of niche products can find it difficult to locate each other in the physical world. Online, it is only a matter of the customer searching for the product in a search engine. One example could be purchase of obsolete parts. Instead of trashing older equipment for lack of spares, today we can locate parts online with great ease.


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