3 tips for an effective e-commerce business plan
You have an e-commerce site and you are looking to raise funds? You will have to go through an important step: the drafting of a business plan. The business plan is the key element that allows the investor to understand why you need financing, what the potential risks of the project are and the potential profitability. Here are some tips to make a convincing business plan for your e-commerce site a success.
1 The traction
Traction consists in proving that your project is already of interest to stakeholders: suppliers, customers, investors, etc. In short, it is important to highlight the results already obtained. A potential investor will be more reassured if he knows that your project has already proven its worth.
If your e-commerce site is already launched, you can indicate the number of customers who have purchased products, the number of subscribers to your newsletter or the number of pages viewed per month. If the numbers are high, it is an indicator of the potential of your e-commerce site.
Other criteria that can highlight the traction of your project:
- A good conversion rate on Adwords,
- A Facebook page that naturally attracted a lot of people,
- A first crowdfunding fundraiser,
- The growing number of visitors every month,
- Press articles
2 ROI
ROI measures the amount earned against an investment. The ROI is calculated as follows: (Profit of the investment/cost of the investment) * 100.
For example, if you buy $1,000 of advertising space for a product that brings in $1,500 through the promotional campaign, then the ROI is (500/1,000)*100. That’s 50%.
ROI is important because it allows you to compare the different investments made. In the context of an e-commerce site, the proportion of investment dedicated to advertising is significant. The ROI makes it possible to verify that the investment you make is really interesting. By indicating the ROI of your marketing campaigns in your business plan, you show the investor that you have thought about your expenses carefully and that they will be profitable.
3 Have a clear and coherent business model
In your business plan, it is important to detail how you intend to earn money. It is not enough to say that you will sell a product through your site. You must explain how you will proceed. Here are some examples of templates used by e-commerce sites.
- Affiliation: you do not sell the products yourself, but you promote them. For each product you present, there is a link that redirects to the seller. You receive a commission on each sale made through this link.
- Group buying: this is the model used by Travelzoo. Travelzoo negotiates with service providers for discounted prices for certain services. In exchange, Travelzoo guarantees the service provider a minimum number of customers. To be able to benefit from the offer, it is, therefore, necessary that the minimum number of sales has been reached. Customers and service providers are therefore supposed to be satisfied.
Ultimately, you must be precise when writing your business plan for e-commerce. It is necessary to argue and quantify as much as possible, to show that your project holds up: use the ROI for your investments, and indicate everything that can be used as proof of previous success.