Only the large number of ecommerce businesses that die in the same period rivals the large number of ecommerce businesses taking birth each quarter. Why do ecommerce businesses die so soon, so often, so easily? Here are my thoughts:
When I am called upon to evaluate an ecommerce business I feel a little lost. What is it that I should measure? When I try to evaluate an ecommerce startup on the basis of its customer traction, the entrepreneur tells me that these are early days and they should be evaluated on the basis of their rather cool technology. When I try to evaluate technology, I am told that ecommerce technology is cookie cutter and I should focus on the un-serviced customer segment that the entrepreneur has unearthed.
When you buy an ecommerce business, what do you really buy? The answer to this question can range from technology, to customer list, to new product category, and more. But unless your sole objective in buying an ecommerce business is to vulture it, you are always buying the human resource of the company. Underemphasizing this aspect of your acquisition is perilous, and can lead to disastrous consequences.
In online retail, people are far more likely to hard sell than when they are in face-to-face situations. Probably when faced with real human beings, sellers adhere to an unwritten code of decency. However, in the anonymous online medium it is easy to be extremely self promotional. But that will not work. Here’s why: