E-Commerce Business Plan Term Paper

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Updated: Nov 29th, 2023

Company Summary

ReturnIt.com will be a partnership online company registered under the appropriate laws and regulations. It will have 6 primary owners and an unidentified number of partners.

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The vision of the company is to be the leader in the provision of safe, convenient and quick return services. The company’s headquarter will be based in New York metropolitan where there is access to ready market, skilled human resource and unlimited supplementary services.

Executive summary

ReturnIt.com is an e-commerce company seeking to become the market leader in providing online suppliers and consumers with a uniform and hassle-free system of returning goods bought online.

The company provides an efficient business-to-business solution to online dealers of physical and durable goods. By using a consolidated approach in the management of returned products, the company enables online merchants to instantly correct or recover bad sales, regain consumer satisfaction and enhance consumer loyalty by stimulating sales.

At the same time, it offers consumers a convenient, effective and efficient one-stop online location to claim returns. Through continuous innovation, ReturnIt.com constantly develops new services categories, which facilitates rapid and positive growth, all the while enabling it to have a competitive advantage against new entrants and current competition.

Competitive Analysis

For any business to succeed, competition has to be identified and evaluated in order to assess its threat level. In this regard, three possible competitors to the services we offer have been identified:

  1. Direct (companies offering the same cluster of services).
  2. Internal (competition arising from partnership agreements).
  3. Channel (competition from existing companies that are used to transport or facilitate product returns).

These competitors are discussed further in the following sections.

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Direct competitors

Based on recent findings, there is no online company that primarily specializes in offering product return services to online buyers and sellers.

No company has been documented that provides a centralized online location for consumers and merchants to claim and process product returns. This situation allows ReturnIt.com to have the first-mover advantage, thereby enabling it to create barriers of entry for prospective entrants.

Internal Competitors

ReturnIt.com will have to partner and forge strategic agreements with retailers in order to provide its services efficiently. This move makes the retailers its first internal competitors.

There is likelihood that retailers may decide that their internal return procedures are adequate in meeting the demands of their clients. However, initial research indicated that there are drawbacks and significant shortcomings in the return processes utilized by most companies.

For example, Amazon.com, which boasts of an efficient return policy, currently redirects its clients to Barnes & Noble stores in order to return books.

Such a partnership may be viewed as a solution, but it does not provide the clients with a centralized location to return products. The return procedures are at times lengthy and clients cannot save on shipping costs.

Channel Competitors

As mentioned in the previous section, retailers may forge agreements with established carriers and service providers in order to simplify the return process.

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Couriers and service providers such as UPS, FedEx and Mail Boxes Etc. among others may try to join the arena. Some of these companies strike deals with retailers so that they can be appointed as the preferred channel of product returns.

This situation also creates an opportunity for competition. Some of these companies have vast resources, well established networks of facilities, shipping experience and state of the art infrastructure that may be used to frustrate our market dominance.

However, by strategically forging alliances and contracts with numerous carriers, ReturnIt.com will provide merchants and consumers with a centralized solution to their return processes.

These alliances will benefit parties in the sense that they will have a chance to choose their preferred carrier, negotiate the cost and get preferential services. This will be a competitive advantage against competitors in this category.

Feasibility study

The cost benefit analysis of the company indicates that the idea is very feasible. The cost for setting up and maintaining the website is significantly lower than the expected benefits and returns to the company, the merchants and the consumers.

Benefits to merchants

  • Increase profits by turning a problematic return process into a selling opportunity.
  • Promote consumer satisfaction and retention by providing a simplified channel for quickly dealing with returned products.
  • Ensure quality customer service by providing them with a simple and efficient means of returning products.
  • Improve inventory and logistic management by alerting the merchant whenever a consumer initiates the return process.
  • Promote company image by allowing the seller to advertise the business.

Benefit to consumers

  • Centralized online location that offers an efficient way to return merchandise in just a few simple steps.
  • A one-stop online shop from which one can buy, sell or return merchandise.
  • Summarized return policies for various merchants under one roof. This enables the client to choose the best merchant and follow up on the return process easily.
  • Cheap or jettisoned shipping costs as a result of strategic alliances with numerous carriers.
  • Efficient tracking systems to ensure clients follow up on the return process.

The services mentioned above make ReturnIt.com a feasible venture that will continue growing as it gains prominence in online businesses. In addition, the company will adopt a dual-pricing approach to ensure that revenues collected are consistent.

Online retailers will be charged an annual or quarterly fee for using the program. This fee will be based on the volume of sales, category of the product and return terms and conditions. A fixed percentage charge will also be collected on all the merchandise returned through the company’s website.

Most retailers may consider free shipping of returned products an uneconomical because such costs represent a significant percentage of the product’s price.

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However, it is financially feasible to provide such services to clients at a small fee charged to the seller. By eliminating or reducing the shipping cost hassle and establishing competitive prices for its services, ReturnIt.com will have positioned itself as the preferred online stop for dealing with merchandise returns.

Strategy and implementation

Significant human, financial and technical resources will be needed for the start-up. The main aspects are subdivided as follows:

Technology

Broadband internet connection, a website and computers will be the primary tools of operation. A Wide Area Network (WAN) will be configured and servers procured to ensure the smooth flow of business activities.

In addition, telephones and e-mail addresses will also be availed in a bid to promote efficient communication and supplement the computer-based systems.

In regard to choice, the best of technological infrastructure will be used to ensure that services offered are consistent and of good quality.

Using the latest in internet technology from renowned brands will ensure that the company can effectively deal with challenges inherent in e-commerce.

Customer value

To retain our clients, we have to ensure that our quality of service is unmatched. To this end, the prices of our services will be affordable and we will strive to provide them with a wide range of quality services.

The company provides a simplified and streamlined service in regard to product return procedures. By accessing the company’s website, consumers can process their product return claims in a quick and hassle-free manner.

The website will only request the retailer’s domain name, item’s order number, the client’s last name, grounds for return and proposed solution (refund, exchange, or replacement).

ReturnIt.com acts as a central point where consumers and merchants can resolve issues regarding their transactions in an easy and quick manner.

The company will also provide generate and print return labels in order to ensure that its clients do not experience shipping problems associated with misplacement or loss of commonly used labels.

Scope/Marketing

Based on current statistics, online businesses attract billions of dollars each year. As such, being able to attract a large market base will ensure the success of the enterprise.

The company will offer a business-to-business service to clients dealing with physical and non-perishable merchandise.

Considering that merchants and consumers will deal directly with each other through ReturnIt.com, it is important to clearly inform clients that the company offers customer service and customer satisfaction programs for it clients.

Push and pull strategies as suggested by Pinson and Jerry (2006) will be utilized to promote the services offered by the company. Direct sales force and industrial marketing (push strategy), will be used to introduce the company’s services to online traders.

At the first stage, the direct sales force will target internet service providers since they host numerous online merchants. Forming strategic alliances with such companies will ensure that ReturnIt.com is recognized by many merchants as the preferred program for solving merchandise return issues. In addition, portals such as Google, Bing and yahoo will also be approached in a bid to forge business agreements with them and subsequently; their clients.

Large online stores such as Amazon.com among others will also be targeted by the direct sales force. This is because they have large volumes of sales and therefore a significant volume of returned products.

Such companies may view the proposal as a possible solution to their merchandise return procedure issues. As soon as the push strategy has proven to be successful, large-scale advertising will be used as the pull strategy.

This technique will promote awareness of the company’s existence, all the while building up consumer demand. The pull strategy will include print, radio, internet and TV advertisements.

The internet will be the primary instrument used to distribute and inform the market about the company’s services. Consumers who lack internet access will be provided with toll-free telephone numbers that they can use to facilitate their return process. Strategic alliances with renowned carriers and package service providers shall be used as a marketing tool.

Pricing

Pricing of the company’s services will be based on the volume of sales (0.7%), the category of the products and the specificity of the conditions of return. A fixed percentage charge (9%) will be imposed on all products returned via ReturnIt.com.

Based on the proposed pricing structure, the cost of using ReturnIt.com will not exceed 1.4% of the merchant’s total sale.

Revenue

The business will require a start-up capital of $1.3 million dollars. The money will come from loans, grants and personal savings from the six owners. 40% of the total capital will cater for computer and communication equipment, 20% will satisfy the software and technology needs, 25% will cater for promotion and marketing, and the remaining 15% will be used to recruit the necessary human resource for the first 6months.

After the first six months, revenue received from the fixed charges and transaction fees shall be used to maintain the business until it breaks even. Profits will be pooled and reinvested to facilitate the company’s expansion.

Another source of revenue will be from advertisements posted on the company’s website. Based on the financial projections, the company will become profitable after 28 months.

The dual-pricing strategy guarantees a steady income and eliminates financial risks. By the end of the 6th year, the $1.3 million investment is expected to generate an estimated $70 million in annual revenues. If the company goes public by the fourth year, its financial standing should support a market capitalization of over $900 million.

Conclusion

ReturnIt.com will be a great avenue for online traders to solve issues related to returning merchandise. The company offers a variety of services that will see both merchants and consumers interact with ease, solve their issues quickly and effectively, and enjoy numerous benefits associated with transacting at a centralized location.

Reference

Pinson, L., & Jerry, J. (2006). Steps to Small Business Start-Up. USA: Kaplan Publishing.

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IvyPanda. (2023, November 29). E-Commerce Business Plan. https://ivypanda.com/essays/e-commerce-business-plan/

Work Cited

"E-Commerce Business Plan." IvyPanda, 29 Nov. 2023, ivypanda.com/essays/e-commerce-business-plan/.

References

IvyPanda. (2023) 'E-Commerce Business Plan'. 29 November.

References

IvyPanda. 2023. "E-Commerce Business Plan." November 29, 2023. https://ivypanda.com/essays/e-commerce-business-plan/.

1. IvyPanda. "E-Commerce Business Plan." November 29, 2023. https://ivypanda.com/essays/e-commerce-business-plan/.


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IvyPanda. "E-Commerce Business Plan." November 29, 2023. https://ivypanda.com/essays/e-commerce-business-plan/.

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