in the golden age of the network economy, young e-commerce entrepreneurs holding a large amount of venture capital, to write a new venture of the new economic fantasy. Amazon’s "first growth, after profit" business philosophy used by many entrepreneurs as the only proper course to take into the new economy. Under the guidance of this idea, in order to win customers, prime time website people spend huge sums of money on television advertising, sponsorship of major concerts, at all costs to discounts, sometimes even the incredible price 40% ~ 50% sale of goods. They believe that once they win in the enclosure of the new economy, then it will be able to take a much more lucrative profits.
these costly marketing activities in a very short period of time to establish a dazzling image for the online store, people celebrate new economic magic, and young entrepreneurs business talent. However, behind the prosperity is a huge loss. The development of e-commerce this way almost is to burn the competition, the website competition is more intense, burn faster.
venture capitalists are not technology enthusiasts, but not idealists, the pursuit of return on investment is their fundamental purpose. They soon wake up from the new economy entrepreneurs to weave the wonderful story, e-commerce websites sustained a loss to lose their patience, many investors have to withdraw funds or no new money by making a large number of venture capital to set up the electronic commerce website immediately got into trouble. The profit has become top priority in front of the relationship between the site of vital importance for entrepreneurs.
reduce operating costs
many people think, because there is no need to pay high rents and hire a large number of personnel, operation of an online store is much cheaper than running a store, can save about 20% of the cost. But at the same time, an online retailer to bear much higher than the physical distribution costs and marketing costs. In order to improve the efficiency of delivery, ensure the quality of service, Amazon built 8 costly large distribution centers in the United States, in overseas has 151 distribution centers, a small number of spending is the construction and operation of the distribution center. In terms of marketing, online stores have to pay a higher price. Online shopping, after all, is a new way of shopping, in order to attract customers to their site to shop, online stores than traditional stores to do more promotional activities. In fact, the cost of acquiring customers has become the most important cost of e-commerce sites. The IDG survey found that many U.S. new e-commerce website to obtain an online shopping customer cost is $80, while the majority of e-commerce website gross profit is only about 5%, which means that a customer to buy $1600 worth of business.