E-Commerce Life Cycle

The stages of development that a business goes through from creation to closure are referred to as the E-Commerce Business Life Cycle. Any type of company or commercial transaction that involves sharing information via the internet is referred to as online business or e-business. The exchange of products and services between businesses, organizations, and individuals is one of the most essential components of any business.

Every business, including e-commerce, passes through stages of development that are analogous to the stages of human development. Each phase or stage presents a unique difficulty, necessitating the use of a new technique or strategy to meet that obstacle.

So, what are the stages of an e-commerce business?

1. Seed

This stage begins when an entrepreneur comes up with the idea for an e-commerce firm. This is the stage at which a new business is conceived or born. To establish an e-commerce firm, the e-marketer must create an appealing website and finish the necessary groundwork.

  • Challenge: At this point, the issue of commercial acceptance must be addressed. As a result, small business owners should seek for a niche market (ideally one product category) or concentrate on a limited market segment or location. It is recommended that they do not waste their money and efforts on a variety of items.

  • Focus: The entrepreneur must concentrate on a business opportunity that matches his or her abilities, expertise, and enthusiasm.

  • Sources of funds: Initially, the e-marketer may rely on funds that he or she already owns (funds of promoters, and borrowings from friends and family). One does not need a large quantity of money in fixed assets to establish an e-commerce firm, and hence one may start an e-commerce business with a few lakhs of rupees.

2. Start-up

The e-marketer reaches the start-up stage after laying the groundwork in the seed stage. The e-commerce firm starts to operate at this point. The initial clients come from the e-marketer.

  • Challenge: At this point, the e-marketer may be facing a cash flow problem as a result of the high set-up costs and unanticipated expenses. In most cases, the company will not be profitable at this point. The biggest issue is to stay in business and survive. At this point, the entrepreneur must determine whether or not his or her e-commerce venture is on track.

  • Focus: The key goal is to build a client base and develop a market presence. In addition, the e-marketer must keep track of and conserve cash flow.

  • Sources of funds: The e-marketer must make the most of available financial resources, such as the owner's finances, cash flows from sales, and credit from suppliers.

3. Growth

There may be a significant spike in sales at this point. Customers and sales revenues may rise, especially if the e-marketer delivers excellent customer service. The e-marketer may begin to make money. The e-marketer could be able to reach a broader audience and sell new product categories. To support the increasing sales volume, the e-marketer may require additional cash and human resources.

  • Challenge: New problems may develop as a result of increased sales. As a result, effective management and a probable new company plan are necessary. Human resources must be trained to meet the difficulties of expansion.

  • Focus: The e-job marketer is to keep and improve client relationships. To achieve a competitive edge, promotional efforts must be prioritized. Customer comments and reviews need to be closely monitored.

  • Sources of funds: Bank loans, venture capital funding, investor funding, and maximizing revenues are all options for the e-marketer.

4. Maturity

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With devoted clients, the e-marketer may have a solid presence in the market. With the available people and resources, sales growth is generally constant and controlled.

  • Challenge: Competition is fierce in e-commerce because entrance barriers are minimal. Economic conditions, competition, and changing client tastes can all have a negative impact on a company's operations.

  • Focus: An experienced e-marketer should concentrate on increasing efficiency. The e-marketer must have a solid supplier relationship. Customer loyalty must also be maintained and enhanced through appropriate supervision of outsourced services such as logistics.

  • Sources of funds: In general, the e-marketer should make the most of cash flows from sales and profits plowed back.

5. Expansion

Certain e-commerce companies may choose to enter this stage of the life cycle if they desire to expand outside their existing markets. Depending on the help of third-party logistics suppliers, the e-marketer may develop on a national and even worldwide scale. In addition, the e-marketer may branch out into new product categories.

  • Challenge: Moving into new markets is a difficult task that needs much preparation and study. Businesses that complement current experience and skills should be prioritized. Getting into a business that is unrelated to your current one might be devastating.

  • Focus: It's possible that the focus will be on new client segments. Simultaneously, the e-marketer must maintain an emphasis on current consumer categories.

  • Sources of funds: To fund the development of an e-commerce firm, an e-marketer might form joint ventures, take out bank loans, or attract new investors.

6. Decline

The fall in e-commerce sales and profitability can be attributed to a variety of causes, including fierce competition, economic conditions, changes in client preferences, bad management of business operations, and so on. The e-marketer must decide whether to resurrect the company or sell it to other parties.

  • Challenge: The e-commerce marketer faces the problems of declining sales, earnings, client base, and negative cash flows at this point. The e-marketer must put out every effort to resurrect sales and profitability.

  • Focus: At this point, the company must look for new business endeavors and possibilities. During the decline period, it's critical to cut expenditures and find strategies to keep cash flowing.

  • Sources of funds: To keep the firm running, the e-marketer must rely on retained earnings, credit from suppliers, and sales income.

7. Exit

When attempts to resurrect sales and profit income fail, the e-commerce entrepreneur must exit the firm, either by selling it to a third party or closing it down.

  • Challenge: The problem for the e-entrepreneur is to deal with the financial and psychological implications of business loss if he or she decides to shut down the firm. Before selling the firm to a third party, it must be valued.

  • Focus: Before selling to a third party, the e-entrepreneur should do a proper appraisal of the firm. The valuation is based on a number of criteria, including the entrepreneur's goodwill, client base, and so on. A consultant may be hired by the e-entrepreneur to assess the firm's worth.

To put it in a nutshell

Understanding the major stages of the e-commerce lifecycle will help you visualize your brand's growth as a cyclical process, discover vital questions to ask at each step, and see why an agile approach to e-commerce strategy is so important for long-term success. Instead of focusing on fast fixes and quick wins, this e-commerce method focuses on evaluating and updating your e-commerce strategy on a regular basis for long-term success.


 
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