4 things to define in project report when it comes to value creation and how online marketplaces like Amazon fare


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When starting a new business, a project report (also called business plan) that analyses among other things prevailing market condition, investments required in short-term and long-term, and anticipated risks is crucial. Here are the four things to define while preparing project report for your business when it comes to value creation:

  1. What value your business intends to provide.
  2. To whom your business seeks to provide this value.
  3. What resources/partnerships your business can mobilize to provide the value.
  4. How your business will produce added value.

The purpose of any business is value creation (be it in a form of product or service), and a good project report should demonstrate how you are going to add value. This will help you in quicker approval of loans from banks/financial institutions. But whether you explore loans or start business with your own capital, project report assists you in a better understanding of where you stand. Employees and other stakeholders have a clearer idea of what the organization strives for with segments like mission and vision statement of the enterprise.

Let us analyze briefly how marketplaces like Amazon, Flipkart, or SnapDeal fare when it comes to value creation. Enrolling with Amazon as seller means you reap the benefit of showcasing your products to a large number of prospects who visit them to compare before purchasing, something your stand-alone offline shop or online store/website like chumbak.com cannot do. By creating large warehouses, adding a number of employees/ delivery boys to their payroll, these companies are duplicating what traditionally taken care by a pool of retailers, distributors. If there is a slump, Amazon may have to retrench employees/labors bringing unrest to the society. For SMEs, such shock is part of their lifestyle.

If I can touch and feel the mobile phone before buying from a retail store that is walking distance from my home, applying online from the comfort of home/office is no big deal. Till recently, it was discount that kept the interest of consumers making these marketplaces suffer big losses in the name of creating an initial customer base. These marketplaces boast of allowing consumers to compare products from different vendors, which is nothing new in a traditional offline marketplace with a number of vendors (90% of start-ups are nonsense, have no meaning: KishoreBiyani). Surprising thing about the online marketplaces is their recent trend of going offline raising the question how viable the whole model of eCommerce is at the first instance if they cannot cope with returns and refunds.

2018 Update: Regarding Amazon, the latest is that its strategy to diversify has paid off. While endeavors like entering into smartphone business failed, they have been more than compensated by others including Amazon Web Service so much that it is now feared that Amazon will soon be venturing into many new businesses and coining of a new phrase being Amazoned meaning your business disrupted by entry of Amazon into the same field.

Cyberspace to warehouse: why has Amazon become a terrifying company in the world? 

 


Recommended Readings:

1. How to write proposals that win clients

About Rajeev Bagra

Founder at Splendid Digital Solutions.

View all posts by Rajeev Bagra →

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