E-commerce has become the latest buzz word in business world. Many wannabe entrepreneurs are dreaming about opening their own e-commerce startup just because digital market has seen a boost after Jio’s entry. The thing is people only read about the funding these sites are recieving but very few try to look at the dark side of e-commerce. We are not against any startup or investor and we only want to discuss whats making e-commerce business to experience loss:
1. Spending excessive money
Excess is not apt we believe it should be burning money just for the sake of getting some attention of people. Advertising is taking a lot of money from these companies and most of them are happy to follow the trend. Big banner ads on newspapers, TV commercials are not cheap. Even after spending so much money, people tend to remember only big names such as Flipkart, Amazon, Paytm, Myntra and some other popular startups. It is not easy to compete with these giants as they can afford to loose some money for making a place in market. A less-known startup should spend every penny wisely. Digital advertising is a better option than newspaper and TV ads as they are less costly and even smallest of the points can be tracked in digtial marketing.
2. Low or no margins
Most of the e-commerce companies sell products on no profit margin even some time in the loss. Only discounts and offers are attracting buyers and they are happy to switch to new options only if they get something on a lower price than the other. Delivery service has improved immensely and it costs too much if the products are sold without profits.
3. Expanding without planning
Who doesn’t likes to expand a business? The problem with most expansions is they are not well planned and end up in making loss for the investors. Hiring employees without need and making new office and every big city doesn’t help a business rapidly. Profit making from expansion takes time, so if don’t put all of your money just for expanding your business to get new customers.
We should keep in mind that a succesfull startup is one which gives quality products and services to customers while making some profits. No business can afford to run too long with loans and we want India’s young professionals to build more capital-efficient start-ups that are not burning cash rapidly and have sustainable and profitable businesses.
There are some e-commerce websites that are still in profits. The best thing about them is that they don’t look for unneceesary fundings. This can confuse you that why fundings are not required. Think like any small business owner you know who is making profits by satisfying the customers. Such people keep a simple strategy and buy products at low prices and sell them at some margin. Don’t overthink about marketing and advertising, take small steps and eventualy if your business is serving well to the society it will get famous.
