Big black skies over my E-comm town. Tra la la la.

Been thinking for few months to write this but have never found time although I am jobless and I mean literally jobless. That is another long story for another time.

About two years ago, I came across Fashion & You and I loved it. I was getting so many products that were either not available on in my shopping space or if they were available then they were way cheaper. And thus went on my monthly indulgence on clothes,shoes,perfumes and the likes and with a decent experience too. Then one day I went to my Tech-Wiz friend Manas and told him, lets sell online. Manas was little skeptical and we kept on mulling on the same and I got a new job and life went on but the idea stayed right where it was – ZILCH. And like my good friend Manas says – Idea have no value till executed.

And then suddenly as they started, they started collapsing. FIFO= Fast In Fast Out. They were all selling the same categories and same brands. All selling at similar prices with similar propositions. Posting unrealistic revenues and sky high valuations. Funding stopped and shops shut and the dream was fast fading. Gloom and doom. But I still feel all is not lost. Here s my list of Do’s & Do not’s for the e-tailers or e-commerce or e-shops, whatever we may call them:

1.Product Differentiation – This is very important to move away from the clutter.A different product proposition helps brand recall and also maintain reasonable price levels without getting into price wars. Also e-commerce is misunderstood to be synonymous with discounts. If your product is different then you can charge full price. There are too many deals-a-day & apparel/accessories e-tailers with most of them selling similar brands & categories.

2.Unique Proposition – The website needs to have a USP. You need to offer a service or product that stands out. Like magazinemall- manage & buy online subcription for magazines or playgroundonline-sports goods. They sell at MRPs or very low discounts. They offer a different product category/comfort of online buying/selling brands not available in your immediate vicinity/unique service of managing your subscriptions online. A premium can also be charged for the same.

3. Free Shipping myth busted – I have read many a reports and papers on how free shipping adds to higher sales. They all said few things that free shipping means: less people abandon carts due to high shipping costs, higher average billing amounts; higher transactions at free shipping sites; and thus more revenue. So making 100 bucks on shipping costs will not make you achieve your break-even but analyzing whether shipping costs are costing you sales will.

4. Why people buy online: Unavailabilty or cheaper – So we need to realize why customers ae buying from us. Are we giving them the products that they are not getting in their cities? Or are we giving them products easily available at cheaper prices? This analysis will help build our product,marketing & CRM strategies. If everyone is selling Levis denims then let me offer them at a steeper discount or better deal. If I am one of the few selling Apple i-pads and many people cant buy them offline then I should charge a full price on that or even premium.Like my i-pad stylus broke and I cant find one at any apple store and thus will pay extra to buy it online and have it delivered at my doorstep.

5. Logistics & IT Costs– Before we go ahead and spend on an in-house logistics system with a huge backend, warehouse, in-house distribution team etc and an ERP or IT integration throughout the organization, we need to stop and think. Is my capital situation good enough to sustain that investment which will give returns in the long run? Should I not be happy with using third party logistic partners which are good (if not best) for the time being? Do I need the funds for other purposes like building a better user interface, continuous cash flow for OPEX, invest in product categories or marketing expenditure? Agreed that The above two costs are helpful in the long term and provide economies of scale and better service but is this the right time for it? One year old companies and they are spending money on huge warehouses and own fleet of delivery centres etc. There is a time and phase in the business lifecycle for all.

6. Focus on selling the experience and not product alone – Shopping online is an experience which should be made easy, exciting & pleasurable. It should be a journey filled with new & mysterious products, guided by experts , backed by product info , aided by you would also like and delivered at my doorstep. That’s a fairytale  ending. Sites should be attractive easy to use. Browsing should be fun. Daily changing themes and colours. Compliment what you sell with how you sell it and the consumer like me is hooked for life.

7. Realistic Valuation – A friend has a short-term goal of setting an e-commerce portal, selling it in a year and spend the money on a US MBA.He told me that most e-commerce companies are valued 20 times their revenue. Now I am confused whether its bottomline or topline but I assume revenues mean bottomline (would love to be corrected). The figures are insane and to top it people are buying it. I would keep my valuation realistic and have the last laugh.

8.Hire good talent at decent packages for long term – Another aspect to look at. I heard of people who joined at astronomical salaries and were also quickly fired. Ofcourse we cant find people from the similar industry as it’s a new industry. Thus new talent needs to be built and people should be hired from diverse industries. They can all contribute to newer processes, breakthrough ideas that are required for any new industry or business model to work. 

Ok. Thats it. Looks like a research paper rather than a blog. Blah.Comments invited. (Also posted on my blog. Link shall be shared once am little more regular filling it up)