How to Stop Your E-commerce Startup from Becoming a Failure
Silicon Valley is accustomed to “tech bubbles” all too well. The most popular of them all, the dot com bubble, left an important message for entrepreneurs that how crucial it is to grow & solidify your business before a tech bubble bursts.
Currently, many technology pundits are terming e-commerce as the next technology bubble, which will burst soon. This may seem like an overstatement, but there have been several instances in recent times that indicate something similar.
There have been startups that showed impressive growth but end up shutting their business in the course of a few months; startups that were funded with millions of dollars but never attain profit; and so on.
Not so long ago, that was a question for Wall Street analysts and venture capitalists to debate among themselves. That was before recent investors valued Uber at $50 billion and Airbnb at $25 billion. Are these unicorn startups really worth that much? If the tech bubble bursts, will these hugely valued startups be able to sustain the crash?
The answers lie in their business model and how sound is their market dynamics. It is all about finding e-commerce sectors that have immense growth potential. And it all boils down to recognizing which sectors only look to be doing well and which ones are actually doing well.
Not born to solve a problem
Most entrepreneurs think that ecommerce is all about taking an existing offline market online. However, the reality is not that simple. Although now is one of the best times to launch an online business, you first need to have your fundamentals in place.
Only those online businesses are successful these days that aim their business model at solving a problem. For example, Uber became successful because it helped bridge the gap between cabs and consumers, streamlining the transportation sector.
Let’s analyze all the factors that make a startup incompetent to survive the onslaught of a tech bubble burst, and how to fix them.
Flawed logic of user base
Nowadays many entrepreneurs tend to believe that if they manage to accumulate enough users on their platform, their startup will be successful. This logic is flawed and does not ascertain the success of a startup. The only thing it assures is getting acquired by a bigger company.
When Yahoo acquired Tumblr and Foursquare for close to $2 billion, it did not result in these startups growing further. All these startups had, was user base, and that user base did not result in better returns.
Investor’s money eventually dries out
If you do not have a sound revenue model, then there is no guarantee that having a user base will allow you to sustain yourself. Most startups these days initially expand using investor’s money, but when the same dry out, they are unable to increase sales, revenue and stay profitable. This is where the bubble bursts for them.
So, before a startup commences its journey, the revenue model must be in place. Whether it is ads, commission, subscription or just sales, online businesses need to ensure they have a solid revenue channel in order to bring better returns.
Choosing the wrong business model
The biggest predicament clouding the minds of the aspiring entrepreneurs is, “which business model should I choose?” There are several factors at play, ranging from the maturity of the market, and growth perspective. For example, if someone had launched Uber a decade ago, when smartphones were not mainstream, it would have been a total failure.
This is where you need to ensure that you choose a business model, which is not only in-demand but also has good growth prospect. Mark2fashion Tech regularly keeps an eye out for emerging online business models and keeps its audience informed on the latest business ideas that have good future potential.
The first one does not always take the whole pie
There is a global misconception that the first comers tend to capture the bulk of the market irrespective of the quality of product and services they are offering. In the rush of becoming the first player in the niche, some entrepreneurs bring a half-baked product to the market, which is unable to sustain over a longer period of time. And if a better product or service comes into the market in the meantime, then the consumers flock to it, which eventually diminishes the advantage of being the first player in the market.
Featureless Turnkey Solution
It is the age of ready-made software solutions, where entrepreneurs prefer to launch their online business using a ready-made solution, rather than building one from the scratch. This is not only time efficient but also saves entrepreneurs a lot of money. However, choosing a ready-made solution is not an easy task. You need to have a robust solution that can easily scale as per the demand of the market.
A lot of startups have fallen on their heels in the past as they were unable to expand as per the demand of the market – all because they did the mistake of choosing an incompetent turnkey solution. Also, a feature-less platform will not yield any substantial results and will only hinder the growth of your online business.
Mark2fashion Tech has built several robust ecommerce solutions that have helped numerous startups create a niche for themselves. The customization and flexibility offered by these solutions make them ideal for startups and aspiring entrepreneurs who dream of making it big in the ecommerce industry.
The bottom line is that creating a unicorn out of a startup requires several building blocks that you need to carefully arrange for a lasting effect. These above-mentioned points often prove to be the death bed for startups. By keeping your fundamental corrects and developing a sound business and revenue model, you can ensure your startup stays in the race over a longer period of time and manages to capture the market