Why Ecommerce Startups Need to Go Beyond Eric Ries’ Lean Model

At NextBigWhat, we receive a minimum of 8-10 startup submissions per day, out of which 40% is still ecommerce.

Ecommerce industry is currently going through its own settling period and while there are very few Series A rounds that are happening, the truth is that a lot of ecommerce startups are shutting down.

So why are entrepreneurs still willing to do an ecommerce startup?

Taking the leaf from my reply to this Quora question, here is why early stage entrepreneurs are still gung-ho about ecommerce:

  • Simple. It seems easy to start off (get an open source product and you are good to go).

  • It satisfies a nerd’s vision of the world : sit in the room (or office), but don’t go out and sell. All digital.

  • Building a transactional play is much more gratifying than building a product that brings revenue (hopefully) after 2 years.

Plus, Ecommerce early stage ventures fit beautifully into Lean Startup Model.

That is:

1. Build a MVP.

2. Have Actionable Metrics.

3. Do Customer Development Early in the Cycle.

4. (3) will validate the hypothesis behind (1) and (2).

And this is precisely why Lean startup model isn’t applicable to Ecommerce companies. Why? Because Magento install gives you a nice MVP implementation and a few 1-20 customers in the first 3 months of the launch gives you a sense that the hypothesis is validated (tick mark *customer development*).

Ecommerce (in India) currently is running in a different gear and is a lot about scalability. Being a niche player (which sells only one category) is a good fit to plug one’s product into an already existing marketplace, but you can’t build another destination site like Flipkart/Snapdeal/Infibeam by following the same model.

So if you are an ecommerce entrepreneur, please don’t get overwhelmed by 100 customers buying from you in 4 months of your existence. The game has changed. It’s no more a lean model for ecommerce in India.

Get ambitious or Go Home. The in-between status is already taken.

For reference, do watch Sachin Bansal talk about the NextBigWhat for Ecommerce Industry in India.

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