It’s not all shoot for the stars and IPOs when it comes to eCommerce. Of course you’ll hear of the likes of Amazon and Asos worth billions but as was proven this week no company no matter how “successful” they may seem is safe if they don’t focus on the customer.
Missguided, a huge UK online fashion retailer collapsed last Monday, when you consider only a year ago they were shouting about £400million in revenue and aggressive global expansion plans to me this is beyond reckless. Tons of people lose their jobs, loads of suppliers lose millions, customers getting screwed and the investors and owners lose everything.
In eCommerce there are loads of innovations that are just crazy and much of the nonsense is because historically investors have poured money into eCommerce for no reason except the fear of missing out. Business plans, logic or even an idea are all secondary.
I’m sure everyone will blame the pandemic and a slowdown in online sales since opening back up for Missguided's demise. But look back over the last 8 years Missguided have accumulated losses of £46 million. They’ve lost money every year since 2016. To me the plan seemed to be to grow revenue and customers as fast as you can and sell before anyone notices the business is a black hole for cash.
What if I could guarantee you a business idea with €100 Billion in revenue. Sounds great - Okay setup a simple one page website offering a €10 transfer for only €5. Now sit back and watch the “customers” flood in.
Online sales as everyone knows, especially the poor delivery drivers went mad over the last 2 years. This caused a little bit of a gold rush mentality with tons of new websites and offers and innovation. Well since opening back up online sales have stayed high historically but have fallen back from the madness of lockdown as shoppers return to the high street.
Unfortunately many of the new entrants and some of the older hands are hitting the brick wall of the reality of operating an online business post pandemic. They fell into the trap of chasing revenue and eyeballs with the hope that never ending growth would allow them the time to figure out how to make profit and survive.
Running an online business is really no different to any other business, the key is to focus on the customer and day to day tasks that will incrementally grow the business. We are talking about fulfilment, picking, packing, returns, customer services, sourcing, stock control, refunds, staff, new products, social media, Ads, supplier relationships and on and on.
You can be as innovative as you want but at the end of the day you need to source products customers want at a price they are willing to pay that allows you to make some profit, all the while keeping the focus 100% on what you can do for the customer. If you lose sight of this you may grow to a billion dollar valuation like Missguided and if you are super lucky you may even sell and some other poor sucker gets the old maid but your business is doomed.