I was invited to speak at a breakfast briefing hosted by Clearwater Corporate Finance by Jackie Naghten on “What makes a successful online business”. The presentation was to a group of Clearwater’s clients and contacts in the private equity space – either investors, investment managers or entrepreneurs (pre- and post-funding). Given the short time and the knowledge of the audience I focused on what I see to be the fundamentals involved in appraising a business for investment or in running an online business with a ruthless focus on value and growth (or, in today’s challenging climate, value and surviving long enough to be able to realise that value!).The presentation covered:
- The retail context – continued growth in online, but no longer ‘free growth’ nor a ‘rising tide floating all boats’. We discussed changes in consumer buying patterns.
- “There’s no middle in eCommerce” – average, “OK” and ‘sufficient’ businesses have no place online
- Sustainable competitive positions: customer insight (if you know viscerally what your consumers want, you have a chance to survive where other companies would flounder); product (whether exclusive access or unique knowledge, presentation or pricing); and Operations (the best sausage machine). Unfortunately, there are now companies who excel in all areas, so the ‘no middle’ comment above is reinforced
- We considered the origin of ‘retail’ – slicing and dicing, retailoring and fitting to the customer, and draw from this an origin founded in service and closeness to the customer
- I emphasised that ecommerce lives as part of a multichannel world: even pure-play businesses have contact centres, logistics, sometimes print and increasingly consider shops…
- Service is fundamental to customer retention and profitability. We considered at a high level service issues from contact centres through delivery and returns and how failure in these areas is costly – and unnecessary.
It was a great session and my thanks again to Jackie and Clearwater for the invitation.