From the marketplace seller to the exit of your company

This article was translated from our Spanish edition using AI technologies. Errors can occur because of this process. Opinions expressed by Entrepreneur Contributors are their own.

Customer preference for e-commerce has grown exponentially over the past year due to the pandemic caused by COVID-19, but even if everything returns from normal and open physical stores, the reality is that preference for this business model is maintained or will continue to grow over the next few years.

According to a report by the Mexican Association for Online Sales (AMVO), e-commerce in Mexico reached pesos 316,000 million in 2020, an 81% year-over-year growth.

And according to a study by Euromonitor, the closure of non-essential retail stores in 2020 led consumers to buy everything from accessories to home accessories online for the first time. Brands and retailers invested in innovative ways to market their products online. Management. Through live streaming, as well as locker rooms and virtual stores, companies from Amazon to Ralph Lauren learned to recreate what consumers love about in-store shopping – including shopping with friends and presenting advice. the seller – completely online.

Learn More: The Simple Sales Secret That Got Ralph Lauren From Zero To 6 Billion In Annual Sales

As a result, the growth of e-commerce at the expense of brick-and-mortar retail will continue even when stores reopen in 2021. Consumers will continue to use more and more digital tools that can now make e-commerce not only more convenient, but also more fun like shopping in stores. This can present several challenges for entrepreneurs who want and will continue to benefit from the exponential growth of e-business.

One of the challenges that companies have to face in order to support this growth is working capital. As they grow, they need more inventory and in most cases there is insufficient working capital to meet the increase in inventory. This is especially true for entrepreneurs who, despite having their own brand, import products from countries like China. In many cases there are cycles of up to 4-6 months to receive the goods, but payment is usually 30% in advance with an order and 70% within 30 days of the order being placed. . This means that in order to finance growth, investments are multiplied by amounts that cannot be paid for with the company’s own funds or with loans from financial institutions.

^{Consumers will continue to adopt more and more digital tools / Image: Depositphotos.com}

Another difficulty they are currently facing is putting together a professional ecommerce team to manage inventory across different channels or platforms as their pace increases. In some cases, entrepreneurs who do not have this expertise turn to competent agencies to run their brands. While it’s a very good solution for specialist product entrepreneurs, it means they don’t develop technical e-commerce skills that are becoming increasingly relevant for in-house use.

On the flip side, businesses need to get professional to handle exponential growth. Entrepreneurs often manage to build a small business that depends on them but lacks the processes necessary to grow. These processes can include implementing systems to improve product ordering or logistics, as well as financial and accounting systems to understand profitability and liquidity or working capital requirements.

A strategy to grow the brand

The digital realm today, more than ever, shows an opportunity for entrepreneurs to get there, grow and catapult their brand and if they plan to do so, others can invest in them and this can be a more profitable and exponential business model.

One very interesting goal that entrepreneurs can achieve today is to generate exponential growth and then sell their company’s business exit strategy. Until 1-2 years ago, consumer goods companies or private equity funds didn’t see attractive companies based their sales strategy on marketplaces, but that changed radically. Right now this market is extremely exciting and entrepreneurs can put together a strategic plan to sell their property to a company, investors, or simply to consolidate the brand.

There are companies with extremely solid strategies that partner with successful investors in digitally selling branded products like Wonder Brands to grow their growth through an exponential process of scaling. These Latin American-born investors are local-market focused and understand the dynamism and growth of Latin American digital buyers. They are next-generation companies with the latest brands to serve the new group of buyers through different channels, thereby creating diversified asset portfolios.

The implementation of the strategy is achieved by making a significant investment in inventory and working capital in the portfolio companies in addition to added value in the professionalization of the company, for example in the areas of technology, digital marketing, supply chain and administration. In addition, it enables the owners of the companies in which it invests to obtain significant economic loans in the short, medium and long term.

This added value gives companies a status also on an international level, which is like another triumph for the entrepreneur who developed this idea, since according to AMVO for online businesses the reach to international markets such as North America, where almost 75% of the articles are Export or to Western Europe with more than 10%, the independence from the local market and the increase in sales by customers in different parts of the world as well as the income in hard currency are the main advantages in the market.

These type of alliances bring very significant capital gains to the brand because, as we’ve seen, selling a company is one of the greatest recognitions a founder can achieve. Consolidating a company and getting someone to invest in it or even buy it is considered a success because it shows that in an environment as complex as e-commerce, your idea stands out from the rest.