Business Plan for Online Retailer

Sections I: The Value Proposition

Our online retail store offers consumers a mixture of convenience, cost-efficiency, choice, and speed. Consumers can now enjoy quick and convenient shopping for a wide selection of quality electronics and accessories, such as laptops, tablets, and wearables, from our online store and receive them at their doorsteps within the least time possible. Besides, our online retail offers free shipping for orders of $25 and above and a small added fee for international orders; thus, helping our clients save more and get more value for their money.

Section II: The Business Model

Our business model describes the approaches and the plan we intend to use to generate profits and create value for our clients. Morris et al. also describe the business model as an architecture, strategy, framework, and structural template that an entity plans to use to create and deliver value (Peric, Durkin & Vitezic, 2017). Below is a business model for our startup retail business.

Section III: The Market Analysis

Industry Trends

Market reports show a promising trend in the consumer electronics and accessories industry, a pattern that is expected to foster the success of the startup online retailer. For example, a Research and Markets report indicates that the consumer electronics and accessories industry has experienced phenomenal growth in recent years and is expected to grow further in the coming years (“Global consumer electronic accessories market,” 2018). Market reports also show that some consumer electronic segments such as smartphone sales have increased significantly over the years, with sales in the United States growing by two percent and reaching 201.3 million units in 2017 (“Global consumer electronic accessories market,” 2018). This growth is driven by several factors: the increasing demand for electronics among various markets and changing consumer lifestyles. For example, a Statista report shows that while the pandemic adversely affected several global sectors, the consumer electronics market remained resilient due to changes in people’s lifestyles. Notably, increased demand for comfort and security through smart devices spiked as people began spending more time at home (Ward, n.d.). Besides the recent changes in consumers’ lifestyles triggered by the pandemic, it is evident that rising demand for AI, smartphones, and voice recognition technologies have increased consumer electronics consumption in developed and developing countries.

Apart from consumer electronics, the consumer accessories industry has also grown significantly. Researchers attribute this growth to the increasing demand for consumer electronics, the former’s complementary products. Despite the promising market for consumer electronics and accessories, there are concerns of potential decline in other product categories in the near future. For example, reports show that camera accessories such as tripods are expected to experience a hit in demand, triggered by a decline in DSLR camera sales (“Global consumer electronic accessories market,” 2018). This information implies that while the consumer electronic and accessories industry is a lucrative business, the online retail store should invest in products exhibiting considerable growth in the coming years.

Further analysis of this industry reveals that the most significant customer segmentation comprises both B2B and B2C consumers. On the one hand, Internet growth has created a vast consumer base of consumer electronic clients, mainly between the age of 25 to 54 (“E-commerce statistics for individuals,” 2021). Besides, entities in the business environment have also been highly receptive to growing technological innovations and digitalization, making them a considerable market for consumer electronics and accessories.

Competition

Essentially, the consumer electronics and accessories product category is crowded with numerous competition from domestic and international online retailers who ship globally. This competition mainly stems from e-commerce giants such as Alibaba, Amazon, and Walmart. Like our retail store, our competitors distribute their products online and partially in brick-and-mortar retail stores. However, one of the critical aspects that lack among these competitors is specialization in consumer electronics and accessories. Notably, the competition stocks a wide variety of items such as groceries and other household items. The lack of specialization in these stores creates a gap in the offering that our store may leverage to provide a comparative advantage.

General Industry

Essentially, the consumer electronics and accessories industry is relatively big and is expected to grow further in the coming years. For example, a Statista report shows that the industry was predicted to have a market size of 301 billion US dollars in 2019 (Vailshery, 2021). Besides its massiveness, this industry’s growth is also a promising trend and a motivator to invest in the product categories. Market reports show that revenue in the consumer electronics segment is projected to exhibit an annual growth rate, a CAGR, of 11.98 percent between 2021-2025 (Ward, n.d.). The anticipated growth in the industry in the coming years makes this the right time to enter the consumer electronics and accessories market.

Opportunities

The B2C market is the core sub-segment poised for future growth. As the literature shows, consumers are experiencing a considerable lifestyle change and increased disposable income, which triggers their consumption of consumer electronics and accessories (“Global consumer electronic accessories market,” 2018). This trend creates an opportunity to sell and maximize profits in this sub-segment.

Customer

Our retail store target consumers are individuals and organizations utilizing consumer electronics in their daily activities. On the one hand, our primary consumers are people aged between 24 and 54, who exhibit a high demand and consumption of the product categories (“E-commerce statistics for individuals,” 2021). Besides, with the increased globalization, the store also targets international consumers who can shop and have their goods delivered at a small shipping fee. On the other hand, the store also targets other businesses such as profit and not-for-profit organizations, who are also significant consumer electronics and accessories consumers. An analysis of literature and recent trends in consumption shows that consumers are comfortable purchasing this product category online. For example, Svobodova and Rajchlova (2020) state that 11.5 percent of the total retail sales of consumer electronics are conducted in e-ecommerce. A Statista report also indicates that 29 percent of the total market revenue in the consumer electronic segments will be generated through online sales by 2023 (Ward, n.d.). This information implies that online retail purchases are poised to grow, notably because of changing lifestyles. This growth also means that consumers are more receptive to online purchasing and comfortable buying different product categories such as consumer electronics and accessories online.

Section IV: Marketing and Sales

The online retail store mainly targets tech-savvy international consumers aged between 25 and 54. This customer base comprises individuals with different educational attainments such as high school, bachelor’s, and Ph.D. who rely on technology in their social and business lives. The target population also has a medium-high income level; thus, they can afford basic electronics such as smartphones and wearables. This customer base may also be price-conscious; therefore, their price point is mainly low to premium-priced products.

In terms of marketing, the retail store will mainly rely on social media and search engine optimization (SEO) because of their associated benefits and easy consumer reach. As the literature suggests, it is very easy to capture consumers’ attention at any given point using social media marketing and SEO (Nyagadza, 2020). This aspect is the case because of the rising social media and internet use among individuals in different age brackets and economies. For example, Sherif and Senja predicted in their research a rise in the global number of mobile users by 7 billion due to increased internet connection and more social media usage (cited in Nyagadza, 2020). Essentially, SEO and social media marketing are cost-effective and have a promising capacity of reaching a vast consumer base at any point in time and location.

Besides SEO and social media marketing, the retail store will also rely on content marketing to build trust among consumers, enhance consumer conversion rates, connect with potential clients and generate more leads. The core content marketing strategy that the store will rely on is blogging. The store will outsource expert blogging services to create content about its product categories. Some of the best-known blogger networks in the consumer electronics and accessories that the store may rely on include Engadget, Gizmodo, Joystiq, Kotaku, 9to5Mac, BGR, and Pixiq. The content roadmap that will be used in content marketing contains articles on:

• How to navigate the online store
• Benefits of shopping with us
• What makes us unique from others
• About us
• Our roadmap to creating consumer value
• How to enjoy our massive discounts and affordable prices
• How to shop online and apply for free deliveries
• A glance into our product categories and price points
• Consumer testimonies about shopping with us
• Facts you need to know about our online retail store

Section V: Technology

As an online store, several technologies are required for the effective running of the business and creating a seamless shopping experience for domestic and international consumers. Among these technologies is a shopping cart, which is software that facilitates online shopping. This technology fits the online startup because it would allow consumers shopping from e-commerce platforms to compare and choose products from a large number of products, add to the cart and proceed to purchase (Jiang, Zhang & Wang, 2021). The store would also require a payment processor, a technology that manages credit card transactions between vendors and purchases. This technology best fits the online startup because it would allow easy transactions between the entity and consumers during product purchases. A fulfillment center, a warehouse for incoming, received, and processed orders, would also be vital for the online startup. Notably, the store intends to sell all its products online; therefore, it requires a warehouse to store goods bought in bulk from manufacturers before shipping them to consumers. The other technology that the store would need is social media planning tools because of its heavy reliance on social media marketing. These tools would help the store handle social media promotion creatives and scheduling to manage all the marketing campaigns and blogs effectively.

Section VI: Products and Services

The online retail store intends to sell consumer electronics and accessories to domestic and global consumers. The core products that the store plans to sell are mobile devices, wearables, laptops, tablets computers, printers, TVs, and scanners. The store also intends to offer free delivery services among domestic consumers and shipping services at an added fee to global clients. Some of the secondary products that the store may introduce in the future include kitchen appliances and white goods.

Section VII: Sales, Expenses and Net Income Forecast

Essentially, the business intends to generate a minimum income of $10,000 per year, less operational and other administrative expenses. To meet this income goal, it must sell an average of 2,000 products every year and generate a minimum of four percent margin for each product. Apart from the margins, the business is anticipated to create customer lifetime value which is the net profit it will generate from its future relationship with each customer. On average, it is expected that the lifetime value will average $40, which is a product of the total revenue divided by the order value and less the repeat purchase rate.

Apart from generating margins and income, the store will also spend considerably on acquiring customers. Some of this spending may stem from social media marketing and outsourcing expert blogging services. Based on the projected sales, it is likely that the business will spend approximately ten percent of the average expenses on acquiring customers.

Fundamentally, the core aim of the business is to create customer value while also maximizing profit. The retail store may improve its gross margins by making more orders from suppliers, thus allowing it to enjoy economies of scale. Notably, purchasing products in bulk may enable the business to enjoy huge discounts and charge lower prices than competitors; thus, generating more sales and profits in the long run.

References

“E-commerce statistics for individuals” (2021, June). Eurostat. Retrieved from https://ec.europa.eu/eurostat/statistics-explained/index.php?title=E-commerce_statistics_for_individuals

“Global consumer electronic accessories market size, market share, application analysis, regional outlook, growth trends, key players, competitive strategies and forecasts, 2018 to 2026” (2018, July). Research and Markets. Retrieved from https://www.researchandmarkets.com/reports/4615186/global-consumer-electronic-accessories-market

Jiang, D., Zhang, G., & Wang, L. (2021). Empty the shopping cart? The effect of shopping cart item sorting on online shopping cart abandonment behavior. Journal of Theoretical and Applied Electronic Commerce Research, 16(6), 1973–1996. doi:10.3390/jtaer16060111

Nyagadza, B. (2020). Search engine marketing and social media marketing predictive trends. Journal of Digital Media and Policy, 5(1), 1-29. doi:10.1386/jdmp_00027_1

Peric, M., Durkin, J., & Vitezic, V. (2017). The constructs of a business model redefined: A half-century journey. SAGE Open, 7(3), 215824401773351. doi:10.1177/2158244017733516

Svobodová, Z., & Rajchlová, J. (2020). Strategic behavior of e-commerce businesses in online industry of electronics from a customer perspective. Administrative Sciences, 10(4), 78. doi:10.3390/admsci10040078

Vailshery, L.S. (2021, January 22). Wholesale revenue consumer electronics (CE) shipments in the U.S. from 2009 to 2019. Statista. Retrieved from https://www.statista.com/statistics/272115/revenue-growth-ce-industry/

Ward, H. (n.d.). Consumer electronics. Statista. Retrieved https://www.statista.com/outlook/dmo/ecommerce/electronics-media/consumer-electronics/kenya

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