eCommerce for Business Hits Stride
Creative Commons commercial use image by danielbroche
The e-commerce based revenue model helped businesses score record profits over the holiday season. Clearly, this is one revenue stream that entrepreneurs can’t afford to ignore. That said, startup executives need to think clearly about how this revenue model will work in conjunction with the rest of their business plan in order to entice investors.
- (Download our E-Commerce Based Revenue Financial Model. Automatically generate balance sheets and cash flow statements.)
The e-Commerce Revenue Model Opportunity
The numbers for eCommerce shopping over the holidays were staggering even before Boxing Day, according to Network World:
During the one-week period ended Dec. 18, online retail shoppers spent a record $6.3 billion. On four days of that week, the single-day e-commerce tally surpassed $1 billion dollars, according to web watcher comScore.
So far this season, consumers have spent nearly $32 billion online, which is a 15 percent increase compared to the corresponding days of last year’s November-December holiday season. The volume of sales is expected to slow as the holidays draw near and shoppers head for the malls.
For established brick-and-mortar companies, the e-Store has become an essential revenue source; for companies like Amazon and Apple (iTunes store), the online shopping cart is the most important way they make money. And during the holidays, there is an added benefit; since most entrepreneurs actually enjoy taking time off to spend with their families, letting e-Stores handle customers has obvious advantages. The revenue keeps rolling in even as you’re unwrapping gifts in your living room.
The trend is clear for entrepreneurs looking at using an e-commerce revenue model. Cyber Monday, the biggest e-shopping day of the year, recorded a 33 percent increase in sales in 2011 over the previous year. And throughout the rest of the year, more consumers are becoming comfortable with shopping online.
One note of caution: many businesses today are starting up e-stores without a clear idea of how to bring in revenue. Some will neglect other key aspects like how to market to their customers (or researching who their customer really is). It’s not enough to set up an online shopping cart. Successful startups must ask other related questions: What is the size and rate of growth of your market? What is your market share, and can it be raised? What is your cost structure? And lastly, what is your profit margin?
You will need to show a dynamic model of these financials over a period of time, based on certain market and labor market assumptions. Whatever revenue model you use, this number needs to be sufficiently high for investors to make an investment.
Thinking about developing an e-Commerce revenue stream for your own business?>/h2>
Download our E-Commerce Based Revenue Financial Model, which includes forecasting sheets and templates to automatically generate balance sheets and cash flow statements.