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Thursday, July 10, 2014

Six Sustainable Steps for E-retailer Businesses



Developing successful online businesses is important for entrepreneurs, investors, and industry stakeholders. A multitude online businesses fail to reach a sustainable level for comfort-zone and growth-oriented companies. Research by Ashworth, et. al. (2013) helps in understanding how a six-stage approach describes the development of e-retailers and differentiates those that are successful from those that are not. 

It should first be understood the differences between comfort-owned businesses and growth-oriented business.  Comfort businesses are developed around the needs of the owner while growth-oriented businesses seek to maximize revenue. The two are fundamentally different businesses based upon the personalities and goals of the founders. 

A comfort-business may never reach full maturity as it is focused as a lifestyle or personal income generating of the owner. We may find an example in a boutique clothing store started by a person who enjoys fashion, a small garage that focuses on car customization, or a fish & tackle shop oriented around the owner’s love for fishing. The owner and his or her lifestyle take precedence in business decisions and an intensive business was never the goal. 

A growth-oriented business is designed to reach maximum growth potential through adding product lines, improving business services, and seeking additional opportunities for revenue.  Some of these businesses are run by serial-entrepreneurs that continuously add businesses and products to reach financial milestones. The strategy and design of the business are expansion driving.

Stages are used to describe how typical e-retailers develop and reach a sustainable level. Online businesses should not try and race ahead of their natural development to ensure they are fulfilling proper platform building that creates stability. Likewise, they should not become stagnant in their development or be confined to comfort-business models that are subject to the lifetime of the owner.

The stages of development for e-retailing businesses are:

Stage 1-E-retail Launch: The launch of the business, inclusion of high demand lines, and organizational learning to meet immediate needs. 

Stage 2-Competence and Development: The website is improved, functionality and control are matched and search engines begin to crawl the site.

Stage 3-Market Development and Value Integration: Customer feedback, creative adjustments, customization, improved product reach, and market development.

Stage 4-Integration Intensification:  Intensified strategic planning that enhances internal operations and external relationships.

Stage 5-Experience Leveraging: Using gained experience to create add-ons, improve customer service, and fine tune the business.

Stage 6-Sustainability: The maintenance of multiple revenue streams, regular business adjustments, and maximum sustainable performance.

Ashworth, C. (2012). Marketing and organizational development in e-SMEs: understanding survival and sustainability in growth-oriented and comfort-zone pure-play enterprises in the fashion retail industry. International Entrepreneurship and Management Journal, 8 (2).

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