We already started with the strange words and acronyms. If we have no choice. Today we are going to talk about eCommerce MVP, a concept that you have surely seen or heard out there and it is possible that you have been ojiplático. It is the typical expression that you hear when you go to an entrepreneurs’ party and that you put on a poker face when you hear it while you surreptitiously take out your cell phone and look for what the hell it means so as not to be a nerd. The MVP in eCommerce is the acronym for Minimum Viable Product, or minimum viable producta firm candidate to enter the new update of our 2022 edition.
Now that you know what it means, you may have stayed, as they say in my land, with Uncle Faba, the mateix estic that was (Like Uncle Faba, I’m just as I was).
MVP in eCommerce: Index
Putting the MVP in context
Okay, let’s get down to business. The MVP in eCommerce is not used in any business. Join in an entrepreneurship or start up environment. And let me tell you, Lima, that, although all businesses that start could be described as “entrepreneurs” (although it is not usually done, I will tell you why later), not all eCommerce businesses that start receive the tinsel of being called start-ups
That is If you are going to set up an eCommerce to sell wool for knitting, surely you will not be qualified as . But if you are going to produce the wool based on an algorithm that tells you how many sheep you have to shear in order to produce the balls of wool based on a sales projection for the coming year based on the demands of your customers, market research of fashion and the intervention of an AI, then yes, you are a startup.
One that sells wool for knitting.
Both startups and entrepreneurial initiatives are distinguished by a fundamental factor: their main source of financing is not credit, but capital injections from investors in successive rounds in exchange for a shareholding. The fundamental difference between entrepreneurial initiative and startup is that A startup usually has a very strong technological or scientific base that constitutes its core business.
Another day I’ll talk to you about the interesting and mystical concept of “serial entrepreneur” and about some very curious things (because they are counterintuitive) related to the value of startups in relation to their turnover, but today I’m already making many new friends to Add more. I’ll just give you one pill in advance: in the last 10-15 years, there have been companies that, the more money they lost, the greater their value on the stock market, something that can make the neurons of the uninitiated in the technological subject end up like slices of bacon that have been on the grill too long. Obviously, everything has an explanation, but we leave it for an ad hoc post.
I tell you all this because it is important when talking about the MVP in eCommerce. The MVP is a concept that comes, fundamentally, from the startup universe and of some business development methodologies such as (which in turn is based on the Lean Startup, which in turn is a cousin of Lean Manufacturing…) and which has been adopted in a fairly majority way among entrepreneurial initiatives, including of eCommerce.
Ok, but… what the heck is an MVP in eCommerce?
simply, An eCommerce MVP is the first viable product you launch into the market in a startup or entrepreneurial business of eCommerce in which the company is going to manufacture, create or define a new product or service. It is basically a market test aimed at the early adopter segment to see if the product is really viable. As its name suggests, it is not the culmination of product development, but rather It is the least possible that can be considered viable for this segment of early adopters to act, so to speak, as beta testers.
Is the MVP the first successful product of a startup? In most cases, the answer is no. What did you think, that the thing to undertake was to arrive and get wet? Do not forget a fundamental fact: It is not a mass launch product, but a test that has two equally important purposes for an entrepreneurial project:
- Demonstrate to investors that great ideas turn into something tangible. And convince them that to take that MVP to mass production, more money is needed. This is called “scaling”. I put it first even though it should be last, but we weren’t born yesterday, right?
- Check the market reaction to the productthe advantages and disadvantages that the user finds, how it behaves and what problems arise that had not been considered in the design process.
- Fail. I’m not going to say it’s necessary for him to fail, but it’s extremely rare for an MVP in eCommerce or any other industry to have massive success and catapult the company to the Olympus of (and don’t look at me like that, that the concept of not me I invented it). Therefore, the failure is already included in the expectations of the launch. What it is about is, precisely, to identify the causes of that failure and, from there, make decisions.
What role does an MVP play in the entrepreneurship strategy?
Usually, the development and launch of an MVP is a fundamental milestone in the business plan that investors approve and for which they finally decide to bet their money (well, except in the case of business angels, the money belongs to others). A simple outline of a business plan (exclusively related to the product) would be something like this:
Having an MVP ready (which I insist, is NOT the final product that you have in mind to create, but a minimal but viable version) is a powerful signal to the market and to shareholders that things are going well. Keep in mind that many entrepreneurial ideas that receive seed capital (and even more powerful financing) are never able to reach the stage of having an MVP And that’s where his story ends, because investors assume the loss but they won’t want or hear about putting one more euro.
From there it is when, in view of the results, two possible options open up:
- The MVP has proven its viability and is accepted by early adopters. It is time to move forward with the plan, improving the negative aspects and preparing to evolve from MVP to product or product family. This is called, in startup parlance, “iteration.” Each iteration is a new improved version of the same product.
- The MVP fails. Depending on the causes and magnitude of the failure, two possibilities also arise: a) Review the MVP, improve it and launch a new one, that is, persevere or b) Accept failure and pivot, which means, in entrepreneur jargon, turning the original idea around to do something different with it. Pivoting is what the vast majority of startups and entrepreneurs have to do:
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- In addition to being a one-stop shop, Amazon earns much of its income from renting space on its servers ()
- Facebook started as an unassuming service for college kids
- YouTube started out as an online dating platform
- Nintendo began manufacturing decks of cards in Japan, from there it went to games for children and from there to video games
- It started out as a Foursquare-type geolocation and check-in app.
- Flickr started out as a 3D virtual reality game (what today we would call )
- Uber Eats is a clear pivot for Uber in the face of growing legal problems to operate its vehicles in many countries
- Aquarius was first marketed as a sports drink. Today its main distribution channel is the hotel industry.
And there are thousands of other examples.
Eye: You don’t always pivot from failure, and this is another of the great strengths of the MVP. Many times in the development of the product and the analysis of the market, business opportunities are identified in which it is feasible to enter, since by developing the MVP we have accumulated a know how which allows us.
An example: Tesla realized when developing the batteries for its electric cars that the batteries themselves could be marketed separately. to store cheap electricity (for example, self-generated renewable energy or that purchased during off-peak hours) and consume it during the hours when energy is most expensive. In fact, the launch of Tesla batteries for the home environment was almost parallel to that of its first car models.
The MVP in eCommerce: peculiarities
If you have had the patience to get here, you may be thinking that your eCommerce, like most, is not going to sell products manufactured by you but from external suppliers, so the concept of MVP would not be applicable to your case. Well no, the MVP in eCommerce is not a phrase for him, It is something necessary in any eCommerce.
Just because you don’t make the products doesn’t mean you shouldn’t have a business strategy. Remember: Amazon started out selling books.
What is the MVP in the event that nothing is manufactured and it is purchased from suppliers? Well, very simple: the minimum number of different products that you must offer so that you can verify if your eCommerce is viable without accumulating a considerable stock. We have already talked about this many times. The best way to enter the market from eCommerce is not to jump in and do what God wants. The MVP(s) are a way to put your foot in the pool water to see if it’s too cold without committing too many resources. From those first results is when you will really begin to configure your catalog and make decisions about which products you are interested in betting on for your eCommerce based on something more than intuition.
Checking, measuring, verifying, testing and going back to a (real or metaphorical) drawing board is something that, in reality, should be the day-to-day of an important part of the management team of any company, and in fact it is in the case of many companies that are a reference for their success (example: ). Intuition and nose for business are key to start and have creative and disruptive ideas (ask Amancio Ortega or ) but the companies that are really successful do so because they learn to manage based on a strategic cycle with a clear methodology that defines how far risk goes (decisions based on intuitions) and how far certainty (decisions based on numbers), this methodology is called Lean or Maricarmen.
Let’s not forget that Lean Startup is a methodology, a management model, but that it is not the only one out there nor is it probably the best for all startups. In many cases, the methodologies have been developed from academic or consulting environments where SMEs or micro-enterprises are not worked with, so it is necessary to adapt the methods to what is really operational for your specific business.
Evangelizing about the need for methodologies is great and I am the first to sign up, becoming a prophet of a specific method and convincing people that they have to adapt their business to the method and not the other way around is a mistake that can have catastrophic consequences . So don’t be automatic think and use those parts of the X methodology that may be most useful to you.
From this, and nothing else, is the use of…
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