The Net Enterprise: Are you Game for eCommerce?

The Net represents an exciting place to be, and the last few years have witnessed unprecedented interest and engagement both from users and entrepreneurs in India. Concomitant with this interest, the eco-system has also developed at a frenetic pace with accelerators and incubators, VCs and PE players, et al rooting themselves to the "happening" playgrounds. eCommerce as a domain, perhaps has attracted the most buzz, with at least one hero emerging annually from the hundreds of dreamers rushing to find their pot of gold. As eCommerce goes through its vicissitudes, it might be helpful for wannabe entrepreneurs, to keep this checklist in perspective:

1. Dream - If you don't have a dream that you wish to realize, the internet may not be the best place to be. While making money is absolutely desirable, a strong drive to pursue a dream to solve a real-world problem has been the secret of success on the Net worldwide so far. The time for opportunistic valuation based deals for turning rich overnight, has passed. 

2.Innovation - For a business to have long-term potential, problems don't just need solutions, they need innovative solutions. For your chosen problem, first and foremost, the Net must address the problem better in comparison to the offline. Secondly, you need to create an innovative way of solving the problem, i.e. a new way of doing things, presented for the first time. For the innovation to extend beyond a novelty, it must differentiate and be sustainable. Innovation, perhaps represents the biggest challenge for an entrepreneur and businesses that cannot innovate or fail to create a sustainable differentiation are likely to be overtaken even if they started with a first-mover advantage. Such Net enterprises must die or never start. 

3. Basics - Like any offline business, the Net enterprise is also governed by the basics of scale and profitability. How many pure eCommerce enterprises in India actually make a profit currently? Probably Zero out of the 400 odd ventures.On the other hand, one must remember Amazon.com took a decade to turn profitable. As long as you have a road map to profitability with scale, as well as the resources and perseverance, you are probably doing fine. While creating your eCommerce road map  the following facts could come in handy: 

a) While the average cost of customer acquisition is Rs. 1200, the average transaction value in a marketplace  is typically Rs. 1000 or lower. So, make sure the numbers make sense for your product range b) A payment gateway will charge 2-2.5%  but you will have to spend extra to build your own mechanisms to manage/prevent charge backs. c) While COD has helped expand the market, returns can range from 30-45%. Customers don't bear this cost, you do. You don't have a business without customers but do you really have a business with such customers? 

4. Speed - On the Net, you are virtually naked. Customers as well as competitors can see through you easily and there are no precious secrets like the Coke formula. In such a context, the survival and growth of the business is not just dependent on innovation but the speed of execution. Competitors can copy you without remorse unless you keep moving ahead faster than they can walk. While every business aims to reach the safe havens of intellectual property or grand scale, the necessity of speed cannot be ever understated.

The eCommerce market is growing rapidly. Are you game?