July 14, 2014 at 22:07Online Store Failure History
Usually, when you study someone else’s activity, you meet only success stories. However, often you can get great benefit by studying why a particular idea has failed. Similar stories are periodically found on Habré, and this speaks in favor of Habr as a mega-useful resource, and also in favor of the courage of the authors of these stories.
They will be shown a finger, spit and stomp their feet. So, probably, everyone who doubts about whether to describe their failures or not thinks. Yes, of course, it is easy to judge with a backward mind. Making decisions inside the situation is much harder.
For a very long time I did not dare to do this, but something persistently moved me. I think it was a natural desire to help other people - in this case, at least with advice on how to do it.
2005, Moscow. For several years I worked in a young and small, but promising web company, which managed to hook a couple of very large customers for permanent service. A good team, a tolerant attitude of the authorities, a free schedule, etc.
Before that, together with a partner, I implemented a successful startup, which was successfully sold. But soon after that my interests changed, and since there were no ideas for my own project, I got a job as an employee. He was able to write tolerably well in perl, understood how the web works, more or less versed in javascript.
And suddenly one person came up with the idea to make a joint project - an online store. My project is always more interesting than hired work, so I agreed to try it. In principle, it was decided to do everything from scratch and without investors. The argument of the partner: “work for the investor is no different from work for hire”.
For days I continued to work in the office, and in the evenings and weekends I wrote a store in perl. At that time, probably, CMS on php already existed and even, probably, ready-made stores - but the decision was made to make one. Arguments:
- I like to program, no matter what
- I don't want to learn php to dig into someone else's code
- I’ll figure it out better in my own than in someone else’s - if you need to make functionality that is not presented in the finished product (and you probably have to do it) and fix possible product errors (there are probably such errors everywhere)
- you will have to test after each product update whether the changed and the functional corrected by me, the
Design was done on our own, believing that the main thing in the store was ease of use and attractive offers. How long, briefly, but for half a year of such a regime the store was made as a first approximation. Showcase, order processing system, content editing system and reporting system. In the summer he worked in test mode, in September he opened “officially”.
They decided to trade according to the “custom-made” system - so there was no need to invest in your warehouse.
I studied the Yandex.Direct and Begun advertising systems, and after the launch of the advertisement, a decent number of orders went so that it made me think. After all, it will only get better, right? So I made a risky decision and quit my job.
It was decided to hire our own couriers - at that time transport companies were fattening and offering their services at a price three times the price that we paid the courier for each delivery (companies usually had couriers, ours could deliver orders by metro) .
So, the two partners had the following list of responsibilities:
- server administration
- programming
- filling the site with content
- searching and working with suppliers
- hiring and training couriers
- working with couriers, planning delivery routes
- taking products from suppliers
- collecting orders
- phoning customers and receiving calls
Surprisingly, two people coped with this.
Errors :
- working from full zero is fraught with a very long and time-consuming climb. Of course, if you are lucky to make a product / service that suddenly becomes very popular - well, you are very lucky. 1 case out of 10,000. And if it is, for example, trade, then cash gaps, absorption of money into goods and other amenities begin here. If the growth of orders exceeds the percentage of profit from sales, then there is not enough money. The situation would seem paradoxical - sales are growing, but there are no incomes. In such cases, external supply is very necessary. Yes, of course, in the first place, it is still necessary to look for a sponsor / investor. Secondly, I’ll have to consult with him on all issues - as I understand it, in Russia there is tension with investors like “angels” (and 10 years ago they didn’t hear about them at all). And usually a person with money just wants to buy at least 51% of the business and give out teams, or just soon to sell it more expensive. Well, there is no ideal. In any choice there are pros and cons, they must be weighed in advance.
- the desire to do everything yourself and save money leads to the fact that you dig into the work and do not have time for a lot, and besides, the quality of the product suffers. Sometimes it is necessary to outsource specific things such as design development or creating an advertising campaign. Yes, you lose part of the profit, but you get something more valuable - personal time. Which can be spent on strategic planning, for example. For example, when we finally decided to turn to contextual advertising specialists, their campaign was about one and a half times more effective than mine (counting at the final cost of the buyer). Well, there’s nothing to say about the difference between a design made by yourself and a design made by a good designer.
- Do not try to do everything yourself from scratch. At least at the first stage, it’s easier to take a ready-made CMS system and adapt to it - this again frees up a lot of time for management activities.
- I had to learn php. Now, judging by the vacancies in the market of web-programmers, more than php programmers, perhaps only javascript specialists are required.
- the more you outsource, the better. Working with their couriers was a source of ongoing headache. Hiring, training people, sorting out with delivery problems, developing routes ... Problems with seasonality, when the number of orders increased sharply. It was necessary to balance on their own between when there are too many couriers and they are not interested in working, and between when there are too few of them and they do not have time to deliver. Many deliveries had to be done on their own because of a lack of couriers or because of the large weight of orders. Well, the loss in the event of the disappearance of the couriers with the goods. By the way, the native militia in these cases showed me such concrete indifference that I lost faith in this organization forever. In general, couriers are what you must first give to a third-party company.
- The first version of the store was made in a procedural style. And over the years, naturally, new features were added there, which you would not immediately foresee. This turned into a nightmare spaghetti code with a total volume of more than 500 kb, into which every time it was all the more frightening to climb into. When creating a large project, pay particular attention to good structuring (OOP, MVC).
- work for yourself - it's cool, it's exciting. But it is also very difficult, without any guarantees of success and very difficult. And if it didn’t work out, it’s very psychologically difficult to return to hired work
2006-2008. Sales grow by 50% every year, new suppliers appear, everything is in a bunch, it blooms and smells. We continue to work with our couriers. A brilliant thought comes into a clever head. Why should we pay for an office warehouse if we can buy an apartment on a mortgage? This is an investment in real estate. When we pay rent, this money goes nowhere. And when we pay the mortgage, in the final we get an apartment. It will always be possible to sell more expensive if something happens. Let's take odnushka, place an assembly point and a mini-warehouse there, we will take couriers there.
I remind you that in the first half of 2008, real estate prices continued to rise, and the dollar continued to fall steadily. Of course, in early 2008, American banks began to crumble, but who knew that it would bring down everything else so badly? Usually, everyone reasoned in the style of “the way the US should be.”
No sooner said than done. The loan was taken in dollars.
Errors :
- the office is really rarely needed. But only because most IM operations can and should be outsourced. Operators - call center. Couriers are a transport company. Ideally, take a corner in the warehouse of the transport company and collect orders there.
- you can’t take a mortgage
- in general you can’t take a mortgage!
- in general, loans are evil. The loan is taken because “I want something now, but I’ll pay it later, because then everything will only get better.” This is a dangerous fallacy. You cannot know what will happen tomorrow. The principle should be simple: accumulated - bought. There is an option to take a business loan from a bank, but this is also not a sugar deal, and in many ways resembles having a private investor. Only with a bank is it even harder to negotiate.
- Do not mix business and investment. It is better to invest business income directly in it
- it was only the USSR that was not dependent on the financial collapse in the USA in
2009 . It got worse. For the first time since the start of work, the number and amount of orders went down. I had to tighten my belts. The dollar was growing, but it was necessary to give credit. Well, nothing, the crisis will end sooner or later - we reasoned ...
Errors :
- The global financial crisis does not quickly end in
2010 . Amid the crisis, transport companies restrained their appetites, and began to reduce prices. One of the shopping mall beginners came to us through cold calls and offered us the same shipping costs that we had with our couriers at that time. Of course, we agreed.
Sales continued to fall. Money was getting smaller, and the loan had to be given. After trying to negotiate with the bank and borrow money, it became clear that there was nothing to do. I had to sell "investment in real estate." And by that time, prices had fallen so much that they managed to sell the apartment for an amount even less than the debt owed to the bank. And we found ourselves in a situation where we owe a bank of money for an apartment that is no longer there.
Although our situation has deteriorated dramatically - I really did not want to quit the job, which was given so much strength.
Errors :
- It seems to me that it is better to determine in advance the time after which you promise to throw yourself a suitcase without a handle and do something else. The more time you endure, the more offensive it is to quit then. But time is running out.
2011-2013 . In mid-2011, the first timid sales growth began. Compared to the full year 2008, sales are 2 times less, but there is still growth. And when there is growth, leaving the business is even more offensive.
However, the growth was about 5% per year, which is incomparable with the pre-crisis growth, and in itself is too small. The growth in the number of orders was greater, but the average order amount decreased significantly. But such a strong habit and attachment to the matter has already developed that it became very difficult to drop it.
2014. Sales began to fall again. Many entrepreneurs are now seeing a fall - both in trade and in services. I don’t know what this is connected with - analysts, as always, have a huge number of options to choose from. But most likely the market is close to chaos - minor changes lead to serious fluctuations, and it is impossible to calculate what exactly caused the decline or growth. Moreover, it is not so important. It is important that I had to gather courage into a fist and admit to myself the failure of the enterprise. Or at least in that the expectations were not met. Errors in the whole project :
- Determine in advance your expectations from the project and the timing of these expectations. For different projects, they will be different, but they must be reasonable. Promise yourself that you will leave the project if it has not reached the specified level within the specified time. Better do something else faster
- stay tuned for new industry trends and try to learn new things all the time. Plan your work so that you have time to master the spare tool.
I wish you success and successful learning from the mistakes of others.
They will be shown a finger, spit and stomp their feet. So, probably, everyone who doubts about whether to describe their failures or not thinks. Yes, of course, it is easy to judge with a backward mind. Making decisions inside the situation is much harder.
For a very long time I did not dare to do this, but something persistently moved me. I think it was a natural desire to help other people - in this case, at least with advice on how to do it.
2005, Moscow. For several years I worked in a young and small, but promising web company, which managed to hook a couple of very large customers for permanent service. A good team, a tolerant attitude of the authorities, a free schedule, etc.
Before that, together with a partner, I implemented a successful startup, which was successfully sold. But soon after that my interests changed, and since there were no ideas for my own project, I got a job as an employee. He was able to write tolerably well in perl, understood how the web works, more or less versed in javascript.
And suddenly one person came up with the idea to make a joint project - an online store. My project is always more interesting than hired work, so I agreed to try it. In principle, it was decided to do everything from scratch and without investors. The argument of the partner: “work for the investor is no different from work for hire”.
For days I continued to work in the office, and in the evenings and weekends I wrote a store in perl. At that time, probably, CMS on php already existed and even, probably, ready-made stores - but the decision was made to make one. Arguments:
- I like to program, no matter what
- I don't want to learn php to dig into someone else's code
- I’ll figure it out better in my own than in someone else’s - if you need to make functionality that is not presented in the finished product (and you probably have to do it) and fix possible product errors (there are probably such errors everywhere)
- you will have to test after each product update whether the changed and the functional corrected by me, the
Design was done on our own, believing that the main thing in the store was ease of use and attractive offers. How long, briefly, but for half a year of such a regime the store was made as a first approximation. Showcase, order processing system, content editing system and reporting system. In the summer he worked in test mode, in September he opened “officially”.
They decided to trade according to the “custom-made” system - so there was no need to invest in your warehouse.
I studied the Yandex.Direct and Begun advertising systems, and after the launch of the advertisement, a decent number of orders went so that it made me think. After all, it will only get better, right? So I made a risky decision and quit my job.
It was decided to hire our own couriers - at that time transport companies were fattening and offering their services at a price three times the price that we paid the courier for each delivery (companies usually had couriers, ours could deliver orders by metro) .
So, the two partners had the following list of responsibilities:
- server administration
- programming
- filling the site with content
- searching and working with suppliers
- hiring and training couriers
- working with couriers, planning delivery routes
- taking products from suppliers
- collecting orders
- phoning customers and receiving calls
Surprisingly, two people coped with this.
Errors :
- working from full zero is fraught with a very long and time-consuming climb. Of course, if you are lucky to make a product / service that suddenly becomes very popular - well, you are very lucky. 1 case out of 10,000. And if it is, for example, trade, then cash gaps, absorption of money into goods and other amenities begin here. If the growth of orders exceeds the percentage of profit from sales, then there is not enough money. The situation would seem paradoxical - sales are growing, but there are no incomes. In such cases, external supply is very necessary. Yes, of course, in the first place, it is still necessary to look for a sponsor / investor. Secondly, I’ll have to consult with him on all issues - as I understand it, in Russia there is tension with investors like “angels” (and 10 years ago they didn’t hear about them at all). And usually a person with money just wants to buy at least 51% of the business and give out teams, or just soon to sell it more expensive. Well, there is no ideal. In any choice there are pros and cons, they must be weighed in advance.
- the desire to do everything yourself and save money leads to the fact that you dig into the work and do not have time for a lot, and besides, the quality of the product suffers. Sometimes it is necessary to outsource specific things such as design development or creating an advertising campaign. Yes, you lose part of the profit, but you get something more valuable - personal time. Which can be spent on strategic planning, for example. For example, when we finally decided to turn to contextual advertising specialists, their campaign was about one and a half times more effective than mine (counting at the final cost of the buyer). Well, there’s nothing to say about the difference between a design made by yourself and a design made by a good designer.
- Do not try to do everything yourself from scratch. At least at the first stage, it’s easier to take a ready-made CMS system and adapt to it - this again frees up a lot of time for management activities.
- I had to learn php. Now, judging by the vacancies in the market of web-programmers, more than php programmers, perhaps only javascript specialists are required.
- the more you outsource, the better. Working with their couriers was a source of ongoing headache. Hiring, training people, sorting out with delivery problems, developing routes ... Problems with seasonality, when the number of orders increased sharply. It was necessary to balance on their own between when there are too many couriers and they are not interested in working, and between when there are too few of them and they do not have time to deliver. Many deliveries had to be done on their own because of a lack of couriers or because of the large weight of orders. Well, the loss in the event of the disappearance of the couriers with the goods. By the way, the native militia in these cases showed me such concrete indifference that I lost faith in this organization forever. In general, couriers are what you must first give to a third-party company.
- The first version of the store was made in a procedural style. And over the years, naturally, new features were added there, which you would not immediately foresee. This turned into a nightmare spaghetti code with a total volume of more than 500 kb, into which every time it was all the more frightening to climb into. When creating a large project, pay particular attention to good structuring (OOP, MVC).
- work for yourself - it's cool, it's exciting. But it is also very difficult, without any guarantees of success and very difficult. And if it didn’t work out, it’s very psychologically difficult to return to hired work
2006-2008. Sales grow by 50% every year, new suppliers appear, everything is in a bunch, it blooms and smells. We continue to work with our couriers. A brilliant thought comes into a clever head. Why should we pay for an office warehouse if we can buy an apartment on a mortgage? This is an investment in real estate. When we pay rent, this money goes nowhere. And when we pay the mortgage, in the final we get an apartment. It will always be possible to sell more expensive if something happens. Let's take odnushka, place an assembly point and a mini-warehouse there, we will take couriers there.
I remind you that in the first half of 2008, real estate prices continued to rise, and the dollar continued to fall steadily. Of course, in early 2008, American banks began to crumble, but who knew that it would bring down everything else so badly? Usually, everyone reasoned in the style of “the way the US should be.”
No sooner said than done. The loan was taken in dollars.
Errors :
- the office is really rarely needed. But only because most IM operations can and should be outsourced. Operators - call center. Couriers are a transport company. Ideally, take a corner in the warehouse of the transport company and collect orders there.
- you can’t take a mortgage
- in general you can’t take a mortgage!
- in general, loans are evil. The loan is taken because “I want something now, but I’ll pay it later, because then everything will only get better.” This is a dangerous fallacy. You cannot know what will happen tomorrow. The principle should be simple: accumulated - bought. There is an option to take a business loan from a bank, but this is also not a sugar deal, and in many ways resembles having a private investor. Only with a bank is it even harder to negotiate.
- Do not mix business and investment. It is better to invest business income directly in it
- it was only the USSR that was not dependent on the financial collapse in the USA in
2009 . It got worse. For the first time since the start of work, the number and amount of orders went down. I had to tighten my belts. The dollar was growing, but it was necessary to give credit. Well, nothing, the crisis will end sooner or later - we reasoned ...
Errors :
- The global financial crisis does not quickly end in
2010 . Amid the crisis, transport companies restrained their appetites, and began to reduce prices. One of the shopping mall beginners came to us through cold calls and offered us the same shipping costs that we had with our couriers at that time. Of course, we agreed.
Sales continued to fall. Money was getting smaller, and the loan had to be given. After trying to negotiate with the bank and borrow money, it became clear that there was nothing to do. I had to sell "investment in real estate." And by that time, prices had fallen so much that they managed to sell the apartment for an amount even less than the debt owed to the bank. And we found ourselves in a situation where we owe a bank of money for an apartment that is no longer there.
Although our situation has deteriorated dramatically - I really did not want to quit the job, which was given so much strength.
Errors :
- It seems to me that it is better to determine in advance the time after which you promise to throw yourself a suitcase without a handle and do something else. The more time you endure, the more offensive it is to quit then. But time is running out.
2011-2013 . In mid-2011, the first timid sales growth began. Compared to the full year 2008, sales are 2 times less, but there is still growth. And when there is growth, leaving the business is even more offensive.
However, the growth was about 5% per year, which is incomparable with the pre-crisis growth, and in itself is too small. The growth in the number of orders was greater, but the average order amount decreased significantly. But such a strong habit and attachment to the matter has already developed that it became very difficult to drop it.
2014. Sales began to fall again. Many entrepreneurs are now seeing a fall - both in trade and in services. I don’t know what this is connected with - analysts, as always, have a huge number of options to choose from. But most likely the market is close to chaos - minor changes lead to serious fluctuations, and it is impossible to calculate what exactly caused the decline or growth. Moreover, it is not so important. It is important that I had to gather courage into a fist and admit to myself the failure of the enterprise. Or at least in that the expectations were not met. Errors in the whole project :
- Determine in advance your expectations from the project and the timing of these expectations. For different projects, they will be different, but they must be reasonable. Promise yourself that you will leave the project if it has not reached the specified level within the specified time. Better do something else faster
- stay tuned for new industry trends and try to learn new things all the time. Plan your work so that you have time to master the spare tool.
I wish you success and successful learning from the mistakes of others.