The Startup
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The Startup

Startups that failed: what’s the lesson?

Failure is one of the most efficient channels of knowledge. Thus, the agility and viability of your business depend on your speed of recovery from the wrongdoing.

Picture drawn from: https://goo.gl/xPk7Rw

I offer you a more merciful way to learn at the moment that is by investigating the failures of others. Particularly, I would like to focus on the slippery slope matters of the e-commerce business while referring to the interviews of the failed business founders.

Main Insights (if you’re in a hurry)

This small piece contains reflections upon the following:

1) Market research, digital marketing, and SEO if not attended by the professional in the long-run could spoil business success radically.

2) Logistical and inventory costs of e-commerce (like shipping and sourcing) would rather be accounted for at the first place when you start growing.

3) Seek partnerships that cover your weak points, have enough time for their responsibilities, not ‘capital only’ and are really enthusiastic about your business idea.

4) Start small, validate and then scale things up. MVP is vital for the expansion.

Each of the bullet points is based on the unique story of the failure. You can access those 4 here.

Startups that Failed

Vivalatina was the e-Commerce to resell the sterling silver from Mexico at the French jewelry market.

Argument for business: the low price of the item.

Problems faced (hecks): to code the e-Commerce site using the OScommerce platform; SEO (Search Engine Optimization).

Solutions: Shopify made possible the getting shot of the manual coding. SEO experience of the founder was Panda-hit before the quality of the content had to be readdressed. The whole business-model was rebuilt switching the business from the reselling the jewelry to its manufacture. CAD software for the jewelry design was introduced for the clients. New Viva Latina e-Commerce for international orders was launched.

ADDITIONAL TOP INSIGHT

The reasonably less risky intention to grow under the ‘low-price’ concept can be the most detrimental way to succeed.

Why?

Fear of the high prices, small churn, and poor revenue projection are what business owners stumble upon. The solution is one: just count. You will end up with a confidence that your model is flexible and predictive enough to cut off the unimportant doubt of risk.

Picture drawn from: https://goo.gl/TCcYoL

ToyGaroo was a “Netflix of toys”. The rental e-Commerce business for the toys industry.

Argument for business: US families spend like 1200$ a year on toys which is too expensive, the rental of toys (subscription) makes for a beneficial way out.

Hecks: shipping pricing and toy sourcing; not relevant USP because of the unadjusted investment obligations; going to the Shark Tank show.

Failed solutions: The hope for our “shark-tank” investor Kevin O’Leary to get us toy sourcing given that he had cooperated with the toy company Mantel was never materialized. Our free shipping model that hadn’t accounted for the size of different toys and had been highlighted as our USP appeared to be our executioner. It resulted in spiraling costs. The draw is that ‘Netflix of toys’ should have been built organically, without going on Shark Tank.

ADDITIONAL TOP INSIGHT:

Investors can be fiercely motivated to see your business grow for the sake of their money, but very often you should try and get the steering wheel to fend off the failed outcomes of their suggestions.

How to avoid this?

You can refer to the financial model when arguing for the business strategy you suppose will enable better procurement. You can also dismiss the investors’ options proving with the e-Commerce financial arrangements their unviability.

Picture drawn from: https://goo.gl/MhK7BM

Howell market was an online e-Commerce store where individual sellers could benefit from selling products of their own.

Argument for business: lower price than usual (some T-shirt would sell for $25 normally, but they would only need to sell for $17.26 at the discount for the items to be drop shipped by Howell).

Hecks: the futility of Facebook ads; reluctant partners.

Solutions: They utilized Instagram instead of Facebook (85% of their sales eventually came from organic Instagram). They should have included Pinterest as a marketing channel too. For the good marketing start, you can use influencers (in social media, f.e.) to fuel interest to your brand. Strategic and passionate partners patch the weaknesses. Choose your partners carefully with regard to their impact on your business.

ADDITIONAL TOP INSIGHT:

Staying in one niche and not rushing the high-profit margins will guarantee low overheads and more of your commitment to the business.

Why?

Step-by-step strategy not only nurtures the understanding of your market and stable COGS but also cultivates your vision of how to approximate your current business to the one you desire to have.

Picture drawn from: https://goo.gl/bXgoxj

Ropero (literally Wardrobe) was an online e-Commerce, the t-shirt marketplace inspired by Threadless.

Argument for business: 2005 — the year of the growing popularity of e-commerce.

Hecks: working solo; starting too big; having no validation from the customers for the need of Ropero platform; lack of trust of Mexicans to the e-commerce; relying on the third-party payment processor (PayPal).

Solutions: New business requires at least half-time focus, rather than few hours. You should pre-arrange your business plan as well as financials in order to estimate the amount of the inventory needed to avoid overdoing or underdoing.

ADDITIONAL TOP INSIGHT:

If you sell B2C, you are long way of the convincing and selling to breakeven. If you sell B2B, you have fewer customers but you are better off and easy knowing their requirements. Doesn’t mean though that you should prefer B2B for the B2C, but it’s a message not to fall unrealistically with the expectations for each of the business types.

Picture drawn from: https://goo.gl/XBzUem

For the bottom-line, e-commerce business can be a gravy train as well as a bitter pill to swallow. Most commonly, the latter is more knowledgeable and effective. Well, little effort doesn’t provide for big evaluations.

It is Failure that keeps entrepreneurs Fit.

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