E-Commerce Start-Up Business Plan
E-commerce is growing rapidly, and with it comes the challenge of processing returns for merchants and manufacturers. Internet-based companies have an average return rate of 9%, resulting in $1.5 billion worth of returned merchandise. This creates a significant burden for businesses, as it involves financial processing and physical shipping of goods.
Solution
NoHassleReturn.com aims to be a strategic partnership between online merchants, Web hosting companies, shipping companies, and online payment agents. By aggregating demand, the company will offer reduced or free shipping of returned merchandise to consumers. This unique feature will increase consumer acceptance and generate more revenue for all parties involved. The service will be designed to be wireless-friendly, allowing consumers to easily use it on their phones and other wireless devices.
Market
E-commerce continues to grow, with online revenues quadrupling during the past holiday season. The number of online orders increased by 270%, and annual online sales are projected to reach over $36 billion. Returns for Internet-based companies are expected to reach $1.5 billion in the coming year. This represents a significant opportunity.
Competition
The company anticipates three types of competition:
Direct: Other companies may follow our lead, particularly delivery and courier services partnered with companies like UPS or FedEx.
Internal: The first competitors are online retailers themselves, but their return procedures often fall short. NoHassleReturn.com offers a centralized location for returning merchandise and significant cost savings on shipping.
Channel: Service providers like Mail Boxes Etc. may try to partner with online retailers, but they lack the necessary physical presence and benefits provided by NoHassleReturn.com.
Why Us?
Our mission is to enhance customer service, boost customer retention, and increase sales for online merchants. We aim to improve the overall image of online shopping by streamlining the return process and resolving problems efficiently.
Expectations
NoHassleReturn.com has conservative financial projections but expects impressive sales once operational. We require an initial investment of $50,000, which will be provided by the owners.
Opportunity
Problem & Solution
As e-commerce grows, so does the issue of processing returns. The average return rate for Internet-based companies is 9%, amounting to $1.5 billion worth of merchandise. This process is time-consuming and burdensome. NoHassleReturn.com aims to become the market leader in offering online merchants and consumers a uniform and seamless way to return merchandise. Our service simplifies the return process, saves sales, and improves customer satisfaction.
The online retail market is expanding rapidly, with revenues reaching $11 billion during the holiday season. However, the number of complaints about online transactions has increased dramatically, impacting customer satisfaction. NoHassleReturn.com aims to address these issues and provide consumers with a convenient and trouble-free return process.
Competition
Currently, no independent company specializes in returned merchandise services for online consumers. However, online retailers themselves are internal competitors. By partnering with NoHassleReturn.com, retailers can offer a centralized location for returns and save on shipping costs. Other potential competitors include service providers like Mail Boxes Etc. and carriers like UPS and FedEx, but they lack the comprehensive benefits provided by NoHassleReturn.com.
Our Advantages
NoHassleReturn.com provides several advantages:
– Increased revenues and customer satisfaction through a streamlined return process
– Simplified shipping for consumers and improved inventory management for merchants
– Enhanced customer service and improved brand image
– Centralized online location for merchandise returns
– Reduced or eliminated shipping costs
– Database of purchase information for targeted marketing
Keys to Success
To offer our services, we need to:
– Develop a customer service software application to manage return processes
– Establish relationships with online merchants
– Form strategic alliances with shipping companies and credit card issuers
– Design and maintain a user-friendly website
Execution
Marketing & Sales
We will initially promote our services to online merchants through a direct sales force. Engagement with Internet service providers like America Online and portals like Yahoo! will be crucial for establishing partnerships and reaching a wider audience. Large online retailers such as Amazon.com and Buy.com are also key targets. Smaller retailers will be approached through industrial marketing techniques, including specialized publications and email campaigns. NoHassleReturn.com plans to offer its services for free during the initial period to encourage adoption. The initial expenses for sales and customer service are estimated to be $400,000, with additional funds allocated for program development, marketing, and training. Industrial advertising and promotion expenses in 2000 are estimated at $250,000.
The services can be sold to merchants through internet hosting service providers, portals, and software developers. These companies will act as distributors and agents, earning commissions. This approach eliminates the need for a large sales force. The final layout depends on agreements with companies like America Online and Amazon.com, as well as their ability to promote the services.
The customer approach is illustrated in the diagram below, with service consultants being the direct sales force that approaches potential customers. Once a customer is signed, the service consultant only presents new service offers and product upgrades. A client care professional is then assigned to each customer to handle customer service issues. The professional will proactively reach out to customers to ensure high-quality service and satisfaction. The consultants and professionals will have direct communication lines to ensure efficient problem-solving.
Before launching a nationwide TV advertising campaign, it is important to achieve critical mass with signed retailers. This campaign aims to make consumers aware of NoHassleReturn.com and prompt them to look for participating merchants. The estimated budget for the TV campaign is $5 million, but this can be reduced if the preceding industrial marketing campaign achieves its goals.
NoHassleReturn.com will eliminate shipping costs to consumers through strategic agreements with online merchants, shipping companies, and credit card companies. Merchants will reimburse shipping costs in cases where the fault lies with them. Shipping companies will offer discounts, and credit card companies will provide a rebate on returned merchandise. NoHassleReturn.com will absorb the remaining 10% of the shipping cost through a special "instant rebate."
Merchants will be charged a program fee of 0.5% of their total sales and a per-claim fee of 12% of each item’s listed price. However, up to 4% of the per-claim fee will be given back to merchants to cover the remaining portion of the shipping cost. This means the actual per-claim fee will be reduced to 8% across the board.
The service offered by NoHassleReturn.com aims to enhance customer retention and loyalty by providing an easy and trouble-free return process for online shoppers. It serves as a customer service and customer satisfaction program for online merchants. NoHassleReturn.com positions itself as a strategic partner to all parties involved in handling product returns. It aims to establish lasting relationships with online merchants and improve customer satisfaction.
The program streamlines the shipping process by allowing customers to generate shipping labels online, reducing the hassle at shipping counters. Retailers can also target customers with new sales offers during the return process. By asking consumers why they want to return a product, merchants gain valuable information to save sales and improve customer satisfaction.
It is estimated that the program will increase merchants’ sales by at least 15% and expand the online shopping industry. By offering convenience, peace of mind, and free shipping, NoHassleReturn.com aims to increase the number of online shoppers and become an industry standard.
Throughout the process, the company will not ask for or gain access to consumers’ credit card numbers, ensuring security and confidentiality.
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