Business Planning for E-commerce Company

This article discusses the importance of business planning and the factors that contribute to the success of an E-commerce company. It covers market analysis, financial basics, risk management, and business decision analysis. The article also provides insights on strategies to grow an E-commerce business.

Business Planning
Business Planning
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Contents
Introduction:..........................................................................................................................................3
Business Plan of the Company:..............................................................................................................3
Journal Entry........................................................................................................................................10
References:..........................................................................................................................................11
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Business Planning
Introduction:
Business planning is a framework which defines the business strategies like marketing
strategies, financial resources, historical background, customer support etc. When the person
is going to start a new business, he has plan or vision behind it. Every organization needs
detailed strategic plan for the success of the business. In this assignment, I have a business
idea of starting E-commerce business. E-commerce business will provide the single platform
to the vendors and customers, where customers will get the desired products or services
without moving to various vendors one to one. This company has a vision of earning revenue
by providing customer satisfaction.
Business Plan of the Company:
i) Summary:
The vision of the company is very specific in the sense of generating the revenue.
The company will connect the vendors of various products and services to the
customers at the single online platform. The company is entrusted to hassle free
services to the customers so that settlement can be done on real time basis.
ii) Market and Competitors:
For the successful business operations, the market analysis is very important.
Basically, the market of the company is based on internet because the payment or
delivery is settled over the internet. The study of the Boston Group has revealed
that the online revenue of the retailers goes quadruplicate i.e. 300% which is more
than the expectation. As we all know the fact that internet is used by the most of
us and number of users is regularly being increased over past few years. The most
of the retailers have registered themselves at online portal of e-commerce
companies because of increase in online marketing.
On the other hand, the manor threat to any business is the competitors. They can
majorly affect the business of same industries. In this business, the competitors are
Flipcart, Amazon etc. But, in this scenario, we are going to provide a better cost-
effective services like real-time complain solution, effective return policies,
reduce settlement time etc. So, we have a good plan to compete with the existing
competitors.
One more important benefit of investment in our company is the return. Every
investor is looking for better investment options in the sense of better return.
Generally, the average rate of return from the online marketing to the e-commerce
operators is about 9 percent. The return percentage can be considered as good. We
are trying to provide the return to the investors around 8.75 percent on their
investment in our company. So, it is a big opportunity to them.
iii) External Environment:
As we already know, E-Commerce business involves activities relating buying or
selling of products over the Internet. In E-Commerce business, exists external and
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Business Planning
internal environment’s factors which influence the entrepreneurship. These factors
may directly, indirectly or situational affects the business activities related to E-
Commerce. The factors i.e. Globalization, Development of New Technologies,
Price Sensitive Consumers, Internet, New Distribution and Communication
Channels, political factors, Social and cultural Macro Economics etc. influence
the E-Commerce externally are briefly described as under:-
a) Globalization:-E-Commerce facilitates business worldwide. Highly Global
firms are more likely to do business to business. There is direct relationship
b/w firm globalization and performance of firm .As highly globalised firm
improves their operations through knowledge and resources throughout their
global relations. Adoption of Internet and E-Commerce are the example of
globalization (Nate, no date). There are the constant acceleration in
International commerce and trans-frontiers investments which are the signs of
globalization. Globalizations create economic networks. It also makes
available fast travelling of money. The disciplines in globe markets are also
play a great role in E-Commerce.
b) Development of New Technologies:-If a firm must adopt new technologies to
reduce its transaction costs and to improve coordination among business
partners. Due to automation of transactions online, the E-Commerce
specifically (B2B) resulted in lower cost and improved communication among
partners. New technologies lead to increase productivity and efficiency gains.
Digital distribution and Digital payments are new examples of technology
developments which lead to fast transfer of money and sales.
c) Price Sensitive Consumers:-E-Commerce facilitates online buying and selling
of products which saves time and money of consumers. The Ultimate
consumers now feel free and satisfy to buy products online as they are
provided at their door at lesser price in comparison to local markets (offline).
d) New distribution and communication channels:-E-commerce is basically an
online activity. Thus, requires an effective and safe distribution and
communication channels, so that it can provide information regarding their
products and can increase their sales. A sound and strong communication
between buyer and seller is required.
e) Internet: - Good internet connection with high speed is must to increase the
marketing and productivity. The base for E-Commerce is Internet which
provides access to far flue international markets.
Likewise, Political issues, social factors cultural macroeconomics are other
external environment factors which provide a great impact on E-Commerce
business.
iv) Business Strategy:
To get success in the business, we have to develop the business strategies. In the
company, we have developed the following strategies:
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a) We are trying to focus on existing customers to provide our services. In our
business our customers are the both vendors and real customers. When we get
more orders and we have sufficient vendors to serve them, then our company
will grow with increase in its reputation.
b) We are also providing the discount on various products or services in
comparison to others. The discount will be available to the customers as well
as vendors. Vendors will get the quantity discount based on net sales and
customers will get the discount and coupons according to their slab of online
purchase.
c) We are trying to reach at the small e-commerce operator to join him with us so
that we can approach to more customers or can use their services.
d) Customer satisfaction is another most important business strategy. Without the
customer satisfaction no one can get succeed. In the e-commerce business
customer can only view the product and select the product without touching
the selected products. So, it is become necessary that customer get the right
product as per their choice. We are providing the facility of physically select
the product by paying the minimum fees which will be refunded if the product
is selected (Kilonzo, no date).
e) We have also detailed the products which are mostly sold or purchased online.
We are associating the vendors of these products with attractive bonus and
discounts so that we can lead in selling the products online.
f) We are also associating the manufacturers of new products directly with us.
This can help us in terms of economical price of the products due to removal
of margin of vendors. It will also help in customer reach to our platform for
the new type of products.
g) We are also made policies of rewarding our premium customers or vendors.
We will reward them not only in terms of discount and vouchers but also
physical invitation for greeting them.
v) Financial Basics:
The vision of the company is very clear but to implement this plan, we are looking
for initial funding from the investors. The initial expenses need to be incurred to
come into existence and initiate the operation of the company. The details of
initial expenses are as under:
Initial Expenses Amount $
Consultancy 50
Insurance 20
Stationary 25
Rent 600
Research 350
Capital Expenses 1350
Total 2395
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As explained above, total initial expenses will be incurred of $ 2395. In addition
to that we need liquid money i.e. cash or equivalent of $ 53000. As such, total
requirement to initiate the operation is $ 55395. The two promoters of the
company is contributing $ 25000. Thus, balance $ 30395 is required to be funded
from public. It will be fulfilled through Initial Public Offer (IPO).
vi) Profit Scenario:
The expected revenue of the company in very first year will be moving around $
67 million and will increase correspondingly in the upcoming year. This
projection is based on recent market research and trend in the online market. As
the study shows that online marketing is increasing regularly and use of mobile is
also increasing which lead to the positive indicator to the e-commerce companies.
The profit percentage of the company in first year will be around 22% which is a
good amount of percentage of net profit. We give assurance that our net profit will
increase correspondingly with the increase in revenue.
vii) Risk Management:
Financial uncertainty, legal liabilities, strategic management errors, accidents,
natural disasters etc. are the threats which influence the capital and earnings of an
organisation. Risk Management is a process of identifying, assessing and
controlling these threats.
E-Commerce is a highly digitalised, thus IT Securities and Data Related threats
and risks are major components for assessing risk. Thus for an organisation Risk
Management process must create value.
Risk Management process follows these steps:-
a) Risk Identification:- identify the potential risks such as network breakdown,
database loss, data interruption, manipulation of data’s related to sales and
figures.
b) Risk Analysis:-once risk is identify, it’s odd to occur and impact is analysed.
c) Risk assessment and evaluation
d) Risk mitigation
e) Risk monitoring
Risk management is conducted in repetition basis. More than one iteration are
requiring for identifying and analysing the risk.
Risk management examines security policies, information systems security
policy, asset management, human resources, physical and environmental
security, access control, operation management, regulatory compliance etc.
There are 80 best practices for managing risk in E- Commerce market placed.
These practices include practical step by step details which facilitate e-
Commerce planning. While selling goods and services through the Internet
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Risk management process identifies best ways to reduce risk exposure. It starts
its work vary from setting up E-Commerce program, to developing web Site
and sales –order functionality, to establishing data security and fraud control
tools.
The key areas in E-commerce for risk management are:-
a) Website sales Functionality
b) Customer relationship
c) Website content
d) Customer service access
e) Card validation
f) Transaction data field
g) Sales order processing
h) Authorisation
i) Tracking facility
j) Data security
k) Chargeback handling and loss recovery etc.
viii) Business Decision Analysis:
The business plan is going to be executed soon but business decision become
important in this regard. Decision to be taken based on various data analysis or
simulation etc.
ix) Business Plan Presentation:
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BUSINES
S PLAN –
E-
COMME
RCE
BUSINES
S

Business Planning
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ABOUT US
In today’s
environment E-
commerce sector
needs no introduction.
A fast growing sector
which has reported
multiple growth in
past & will maintain
the same in future.
Earnings:
Standard Earning
Rate of this sector is
around 20%. Average
industry rate of
earnings are around
12%. E-commerce
industry is showing
multiple growth. In
the starting phase
investments in Assets
are high as compared

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to the expenses.
Growth:
In the food sector,
Growth Opportunities
are huge. Standard
Average Growth rate
of this sector is
around 40-50 % per
annum.

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Financials of the
E-commerce
businesses are
as Below:
For the funding
of an e-
commerce
business, we
need to analyse
the present
financials as
well as
forecasted
financials.
Analysis of
financial will

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show the
financial
position as well
as financial
performance.
We can see the
financial
projection of e-
commerce
businesses as
follows:
Firm will grow
with the average
growth rate of the
food industry then
financial
projections of the
firm are as below:

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We can see that
the industry will
grow with the
multiplier growth
rate.
Return on the
investment of the
e-commerce
business will be
grow with the
higher rate as
compare to the
industry standard
as the industry is
working with the
innovative idea.
In the coming
days, demand in
the e-commerce

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sector will be high
so the return also
will be on higher
mode.
Industries
Projected
Financials are
showing growth of
the e-commerce
business with the
standard average
growth rate of the
industry.

Business Planning
Journal Entry
We have learned lot of things from this module. First of all, we have learned about the
business planning. Business planning is very important for initiating any business. Without
planning any business cannot get success. In addition to that, we have got an understanding
about the business model. The business model is the dummy structure which can help in
determining the possibility of success in business and reason of failure. There are some
factors which are identified for the success of the business.
We have mostly affected by the marketing strategies of the above discussed business plan. I
learned that how an enterprise can satisfy their customers. We have to provide the better
service and goods for the satisfaction of the customers. In addition to that, we have to
compete with the competitors because we need to provide the better service to the customers
in comparison to the competitors.
As far as career is concerned, we found more career option in the e-commerce business.
There are number of reason which ensures the success of the business. First is the use of
internet worldwide. The internet is being used by every person. When the number of products
is available online they will prefer to choose the desired product over internet and book order
for the same. In addition to that, there are number of offers and services are available which
are generally not available at the sale outlets. So, the number of customer over the internet is
increasing over the period of time. Second, our customer base is not limited to a particular
location.
It is very clear that risk is always exists in the business but trend in the online marketing
reduces the risk of failure. The return to the investors is very high in comparison to the other
investment options. Thus, e-commerce business is suitable to us from different angles either
it may be from start-up or investors side.
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References:
Nate, H. (no date), E-Commerce Start-up Business Plan [Online] Available from:
https://www.bplans.com/e-commerce_start-up_business_plan/executive_summary_fc.php
[Assessed 09 February 2019]
Kilonzo, R. (no date), 7 Strategies to Grow Your E-Commerce Business [Online] Available
from: https://www.osiaffiliate.com/blog/7-strategies-to-grow-your-ecommerce-business/
[Assessed 09 February 2019]
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