The Business of E-Commerce

Ecommerce includes any commerce which happens on the internet, be it buying and selling of any products and services. This includes a host of online business industries like online travel, retail, business/consumer services etc. Also the business can be conducted between 2 businesses (B2B), a business and an individual consumer (B2C) or between 2 individuals (C2C).

During my work in Beveragewala, I have seen multiple models of ecommerce existing in the market.

Inventory Model: The seller buys and maintains inventory and sells it online. The benefit is that the seller controls product/service quality and all logistics around it. On the other hand, it also means a higher capital infusion required to buy inventory. Private labels of goods/services, online travel tend to work on this model.

Marketplace Model: The seller simply acts as a platform for commerce between buyers and vendors registered on it. It provides all logistics and payment support around the sales which happen on it’s platform. The benefit is lower capital required as no inventory is maintained. Big ecommerce companies like Amazon, Flipkart etc. tend to work on this model.

Drop Shipment Model: The seller takes an order and passes it onto the vendor. The vendor directly ships the product directly to the buyer. The benefit to the seller is no inventory and logistics required. However, the buyer’s experience, and hence the seller’s brand, is totally dependent on the vendor. This model has not found much acceptance and has been replaced by the Marketplace Model in most cases.

My next attempt... Beveragewala!

This was my most recent attempt to start up. I am a big tea enthusiast and love having my 3-4 cups of tea in a day. When I went to the supermarket to buy tea (for the first time I think), I saw so many brands of tea and was confused which one to buy. There I felt the need to set up an online store for selling teas and coffees where a user can not only discover which teas and coffees are better and popular, but also buy them from there itself. This is how Beveragewala came about.

Beveragewala.com was officially launched in August 2014 and started off selling only premium teas and coffees initially. We wanted to make users aware of the various brands and varieties available and also wanted them to make their purchases through us. We started off with 35 odd brands and over 250 SKUs. Our teas and coffees had origins from different regions of India, like Assam, Darjeeling, Nilgiris etc, and some parts of the World as well. We experienced constant growth in terms of number of SKUs and brands and also users visiting and purchasing from our portal. By July 2015, we had over 7,000 lifetime users serving around 100 orders per day. Also we had more than 1,600 SKUs and around 100 brands of teas and coffees.

Although we saw constant growth month on month with very minimal a marketing budget, we finally decided to close down the venture in August 2015 primarily due to the following reasons:

- When we analysed Beveragewala, we realized that the startup was, despite seeing growth, not panning out to be a sustainable venture. With the big players like Amazon showing some traction in the tea/coffee categories, Beveragewala was competing directly with them in these categories. We did not have any competitive advantage in terms of customer experience, logistics etc. and we felt sustainability would be a concern in the long term.

- The burn in ecommerce is a concern especially for smaller companies looking to scale up. We were burning more than INR 2 lacs a month in July (when we did 3,000 orders in the month). Our savings and budget was exhausted and we could not raise money to carry on further.

On looking back now, Beveragewala was probably the startup which has given the maximum to me. The experience and learning from this has been amazing. I realized that a startup must have or aim to have a competitive advantage to enable it to compete with other competitors in the segment it operates in. Not having any advantage makes it difficult for a startup to sustain and compete with the biggies due to the difference in the resources they possess.

Along with that, a startup must have a solid business plan in place and in that, a financial plan is also key. Great ideas, a lot of times, do end up dying because of a lack of financial planning to sustain the venture. Also the lack of solid business plan makes it hazy for the founders to assess whetere their journey is headed in the right direction. 

Hello!

Hey guys, welcome to this blog.

I am Manish Hada. I have done a B.Sc, MBA & M.S and have founded 2 startups till date. I have also worked on a host of ideas which never saw the light of the day.

I have been trying to start and sustain a business for the last 10 odd years now. I've started a few, scaled up in some and have had to exit all :( I may not have the bank balance to show what I've done, but through this blog, I want to share what I actually have gained in this journey and also in the times ahead.

Hope this helps :)))))))))))))