Not-So-Quick-To-Market: Is Your Million-Dollar Idea Built On A Scalable Commerce Platform?

The American Dream is alive and well. Call it “million-dollar idea”, “instant business stardom” or “unicorn startup”, but the fundamentals haven’t much changed since the 1850’s gold rush: hitting it big, and hitting it quick. Nowhere is this more obvious that in modern-day entrepreneurs’ obsession with hitting the ecommerce jackpot — it drove pioneers into the Californian wilderness, and it’s still driving ambitious entrepreneurs to Silicon Valley and the Silicon Slopes.

The jackpot these days is finding the next “it” business model, the next industry to be disrupted, the next coveted product that Generation Y can’t live without, or, as suggests, figuring out how to get an already popular product to market faster: “If people are lining up for a product, figure out how to make the line shorter and they’ll buy from you.

For a hot new offering hitting the market, indigestion is a far more likely cause of death than starvation.” – John Bates, Leadership & Communications Expert

The dream is equally vivid for entrepreneurs and investors alike, and the internet has made it easier than ever to crowdfund and get financial support for everything from the most ridiculous business endeavors to serious companies and projects. Even century-old companies are jumping on the innovation bandwagon, in an attempt to keep their relevance, and possibly mould the future, acquiring companies and patents, investing in “crazy” ideas and R&D.

One question, I notice, isn’t often asked out loud: “What happens to business operations when the company actually hits the jackpot?” But you can bet it’s asked behind the scenes, and often only after it’s too late. As executive speaking coach John Bates is fond of saying, “For a hot new offering hitting the market, indigestion is a far more likely cause of death than starvation.

A Personal Hell Made of Glitter

While it’s becoming more and more obvious that dreaming up a million-dollar idea at night is far easier than actually getting an entire business up and running in record time, being able to scale up after it’s all been set up is an even bigger concern for any company whose analysts are predicting impending superstardom. Ideas are great, but execution is what separates the dreamers from the winners. There’s nothing worse than becoming ultra-popular overnight, having the right partners and capacity to produce the quantities needed to fulfill increasing orders, only to suffer a very public and shameful defeat from the enemy within: business processes, enterprise resource planning (ERP), and order management systems that just can’t keep up, or scale up fast enough.

Even though it turned out to be a marketing stunt that got blown out of proportion, the ecommerce company that promised to do just that for $9.99 back in 2015 is a funny, but very real reminder that when the market demands, you better have the technology to back it up. After having the website crash in just 24 hours after the news of glitter bombs went viral, Matt Carpenter, the website’s creator posted a public plea saying: “Hi guys, I’m the founder of this website. Please stop buying this horrible glitter product — I’m sick of dealing with it. Sincerely, Matt.” His original intention may not have been to start an actual company, but if yours is, imagine having to ask enthusiastic customers to stop trying to buy, because you can’t keep your ecommerce store up, let alone process their orders.

Another good example comes from Forbes (spoiler alert!) “Lessons From A Kickstarter Fail: Coolest Cooler Raised $13M, But Needs More Cash To Fulfill Orders”, where Coolest LLC made fundraising history, only to realize that supply-chain management is just as important as product design and production. Even well-established companies declared in a 2016 study that their internal legacy systems were holding the company’s growth back in almost 40% of the cases, and that 36% couldn’t even scale up to match customers demand during peak times like Christmas and Black Friday. Imagine that happening when you’re at the very beginning. Needless to say, you wouldn’t even get the chance to complain about peak times.

Unfortunately, this was the creator's exact reaction when his idea's popularity got out of hand (Source: Huffington Post)

Unfortunately, this was the creator’s exact reaction when his idea’s popularity got out of hand (Source: Huffington Post)

Shaving Money, Shaving Time

Not all startups and billion-dollar ideas (in this case) suffer from the symptoms of what TechCrunch affectionately callsthe golden age of irrational exuberance on Kickstarter.” The Dollar Shave Club is probably the best example where business model, supply chain and technological infrastructure were able to stir up some serious digital disruption into a market that hasn’t needed to change in decades.

Stratechery blog’s analysis of The Dollar Shave Club’s success stipulates that a number of factors turned AWS’s easier, cheaper cloud services, YouTube’s cheap and easy video sharing, and Facebook’s millions in audience come together in a “perfect storm” that’s more and more likely to repeat in the form of gigantic startup successes. All of this is built, of course, on AWS and Amazon’s legacy of having both normalized ecommerce amongst consumers and incentivized the creation of fulfillment networks, which has in turn made the creation of standalone ecommerce companies more viable than ever before.

Technology was the main advantage that allowed The Dollar Shave Club, hosted on AWS servers and using the unlimited shelf space of ecommerce, to take on a Goliath the size of P&G, and to successfully neutralize its distribution advantage: having your blades shipped to you automatically is cheaper and better than going to the store.

The blogger professes that “this sort of disruption will not be a one-off: the Internet (and ecommerce) has so profoundly changed the economics of business that it is only a matter of time before other product categories are impacted, with all the second order effects that entails.”

The Scalability of Success

Cautionary tales aside, the economy has shifted to empower more small and medium businesses, and it’s only those business owners who don’t take full advantage of the technological advances that get caught by surprise by the success of their own creations. Even Huffington Post noted that: “In the past, P&G would have used technology to get ahead and create barriers to entry. Only they and their peers could afford expensive deployments of SAP enterprise resource planning (ERP) suites and state of the art Oracle databases. (A minimum SAP contract is thought to be $250,000, similar for Oracle, before considering hardware and staff costs).

Retailers are achieving the same business feats that were previously reserved for internet companies, and it is all due to a suite of cloud providers to power their business model – “it is the only way to grow a $1 billion company that quickly.Open-source enterprise technology, cloud-based commerce and customer-friendly licences, like that of Apache OFBiz Accelerator, make it possible for any company that believes in their product to launch an operation that allows them to comfortably take on the biggest players in the market, AND keep a good grip on the reigns when sales skyrocket.

We know what it’s like, we’ve talked with hundreds of companies who share the same problem: when you’re first planning on launching that product, bringing in those investors, taking out that loan that’s going to revolutionize your company, you can’t justify the cost of an SAP platform that would allow you to grow as fast as you’d need to, but can’t risk investing in a Magento Enterprise solution that won’t.

When your business success hits, Unified Commerce is what will keep your business running smoothly every step of the way, and will allow you to focus on the vision, rather than operations. Just ask Scootz. We’ll be here whenever you decide that you’ve found your own million-dollar idea, and if you’re ever in need of a bit of inspiration, remember that Forbes is even offering them for free.

DATE: Apr 18, 2017
AUTHOR: Anca Matcovschi
Outgrowing Magento, Customer Intelligence