Like in nature, ecommerce products have a lifecycle, with each stage determining their status. From inception to getting antiquated, ecommerce products follow a lifecycle that illustrates their journey from introduction to market withdrawal.
The life cycle can vary for each product, influenced by various business actions and related factors.
This blog focuses on the lifecycle stages of ecommerce products, including activities involved in each stage, factors that influence these stages, and the steps you can take to extend the overall ecommerce lifespan of your products.
5 Stages of Ecommerce Product Life Cycle
1. Research and Development
The process begins with thorough product research to set the stage for a smooth consumer launch. In most cases, the product doesn’t even exist at this stage.
If this is the case, then spend your time understanding the market demand, sourcing options, distribution, sales channels, pricing, and ROI margins.
Revenue generation is minimal at this stage since the product is still under development. Your focus should be on creating and thoroughly testing a prototype across various aspects to ensure its quality.
If the product already exists, focus on areas of improvement like design, features, and quality to stand out from competitors. This can extend the product life cycle and increase user demand down the line.
Check our detailed blog on Ecommerce Market Research for a detailed overview of this.
Key Actions:
- Comprehensive R&D to shape products, understand the market, and analyze risk factors.
- Heavy investment to create a supply chain system.
2. Introduction
The next phase in the ecommerce product life cycle is introducing your product to the consumers. In general, this phase heavily focuses on implementing marketing plans as the product has little to no familiarity among users. Entrepreneurs focus mostly on branding and creating a positive impression among users in this stage.
Revenue is still a far cry, as the sale volume isn’t up to the mark to cover production, marketing, and initial investments and make a profit.
Moreover, the introduction stage is considered an ideal time to test the overall supply chain, sales channels, and other associated backend criteria so you can get a full picture of your capacity and efficiency.
Each observation from the introduction phase is carefully analyzed, with a focus on targeting the right audience and improving product quality for the betterment of the business.
Key Actions:
- The product makes its market debut.
- Minimal notable sales, let alone revenue.
- Heavy focus on marketing and customer base building.
- Work on the product as per customer feedback.
3. Growth
In ideal conditions, the introduced product should begin to show signs of growth. While rapid growth is unlikely, steady progress is expected as part of the typical product life cycle.
As your product starts gaining visibility, it will slowly spark curiosity among your target audience. Your goal is to turn this initial interest into sales leads, while simultaneously building trust and credibility for your product.
Expanding distribution channels and scaling marketing efforts to reach new customer segments should also be your top priorities.
Additionally, fostering customer engagement, providing strong support, and actively gathering feedback can significantly improve and refine the product. You’ll start facing Increased competition as competitors notice the product’s success.
Key Actions:
- The product starts getting attention.
- Ensure quality and customer trust are intact.
- Explore newer sales channels and distribution networks.
- Test your capability, and efficiency potentials.
- Competitors notice your product, brand, and success.
4. Maturity
Maturity marks the peak of success for any eCommerce product, when it achieves its sales targets and revenues reach their highest levels.
However, it’s also the phase where your product faces the fiercest competition. Key factors i.e. brand value, customer trust, marketing strategy, pricing, and other features will help your brand to stand out.
So, while you’re enjoying increased revenue, it’s essential to closely evaluate and refine these elements to maintain your competitive edge.
Key Actions:
- Product popularity sees its peak.
- Growth remains static.
- Requires monitoring to maintain consistency.
5. Decline
The final phase of an ecommerce product’s life cycle is the decline, where sales begin to drop or struggle to maintain the same momentum as during the growth phase. The most likely reason for this decline is the oversaturation of the market, due to competitors having simply better products and strategies.
Many separate the saturation phase from the decline in the product life cycle, but in reality, they often occur simultaneously. The first signs of decline typically appear as slowing sales growth, which eventually leads to a negative sales trend compared to previous quarters.
At this stage, you must be cautious, as the outcome can lead to either increased market share or a complete exit from the market. To start, focus on reducing costs, followed by a thorough re-evaluation of your marketing strategy and product offerings.
Key Actions:
- Sales declining gradually.
- Damaged sales due to market saturation.
- Product and market strategy need re-evaluation.
What to Do at the End of Ecommerce Product Life Cycle?
As your ecommerce product reaches the end of its life cycle, you need to carefully plan your next steps. Here’s what you should consider at the end of an ecommerce product life cycle.
Look into the Demand
The decline in your ecommerce product life cycle is likely due to reduced demand for that product or its category. Numerous examples illustrate this shift, such as Tape Recorders, Cable Television, and Casio Vintage watches, all of which experienced immense popularity in their time.
However, advancements in technology and changing lifestyle trends have led to their replacement by newer alternatives over the years.
Reform the Product
Another possible outcome in the ecommerce product life cycle is starting over through rebranding. Reviving a product’s relevance by introducing advanced features and updates can sometimes breathe new life into it. Rebranding efforts often include adding size and color variations or incorporating unique, innovative features.
However, not every declining product is suited for such a transformation. For instance, offering cable television in different colors and sizes is unlikely to attract users or boost sales, as the underlying technology is no longer in demand.
Change in Marketing Strategy
If you believe your ecommerce product still has strong demand and has been fully optimized, yet it remains in the decline phase of its life cycle, the issue likely lies with your marketing strategies.
Some approaches to consider are exploring new markets, creating compelling advertising strategies, reducing prices, offering special discounts, and targeting different demographics, and age groups.
However, there’s no guarantee that any single marketing strategy will work for every type of product, as success often depends on the specific market and product grade.
Discontinue the Product
If you’ve exhausted all options without seeing significant improvement, discontinuing the product or in other words, making a formal exit, becomes the wise decision. This could involve selling off remaining inventory through clearance sales or transferring the assets to someone else who may want to take a different approach.
Amazon provides one of the most relevant product life cycle examples. The company initially entered the market as an online bookstore, representing the introduction phase of its product life cycle. However, Amazon quickly expanded its product offerings to include a wide range of ecommerce goods.
How to Extend Ecommerce Product Life Cycle (EPLC)?
If you want to stay competitive in your specific market, while maximizing your profits, you need to be well-versed in extending the Ecommerce Product Life Cycle (EPLC).
This section explores practical strategies to help you extend the lifespan of your ecommerce products and get the most value from them.
Innovation is the Key
The world is quickly evolving technologically, and so is the ecommerce ecosystem. To sustain in this space, you have to be quickly adaptive to innovation through technology.
The more you can develop products that are technologically superior to your competitors, the greater the likelihood of attracting and retaining customers.
Marketing Strategy Adjustments
Marketing has always been and will continue to be, a critical component of any business. The same applies to extending the ecommerce product life cycle, regardless of whether the product is exceptionally strong or just average.
Your marketing strategies must be distinctive and more engaging than your competitors. Pairing products with lower sales numbers alongside high-performing items in bundles can also be an effective way to boost visibility and sales.
Customer Feedback and Support
Customer satisfaction is crucial for building trust in your product, which directly impacts sales potential. To achieve this, it’s essential to put yourself in the customer’s shoes and pay close attention to user feedback. This will help you better understand their needs and refine your products accordingly.
To gain first-hand customer comment, you can offer your product to a selected group of users at a discounted price or even for free during the introduction or development phase. This allows you to gather valuable feedback on what customers like or dislike about your product.
Their comments will be beneficial to rework on product’s quality, design, and features, ultimately leading to a higher acceptance rate when it is fully launched.
Importance of Analyzing Ecommerce Product Life Cycle
Every product follows a life cycle, and analyzing it serves one key purpose: determining whether it’s worth the investment. Ecommerce products are no exception to this rule.
The Ecommerce Product Life Cycle provides a forecast of a product’s demand, its performance after launch, potential customization needs, and strategies to ensure its success.
Some other reasons include:
- Better risk management skill development.
- Strategic planning on possible future products you should work on.
- Get a clearer vision of advanced budgeting and resources required.
- Knowledge of newer market trends and understanding users’ perspectives.
In a Nutshell
Every product, especially physical ones, follows a recognizable life cycle. Managing this cycle effectively allows for a detailed analysis of each stage in the product’s journey. From placing it on the product page to delivering it to the customer’s doorstep, each phase plays a crucial role in ensuring the success of the product.
Understanding the product life cycle is essential for planning future products. It helps identify the necessary optimizations to capture users’ attention, as well as the steps needed to overcome various challenges at different stages of the life cycle.
When combined, it lets you convert your ecommerce start-up into a successful business case study.
Frequently Asked Questions (FAQs)
What are the 5 stages of ecommerce product life cycle?
The core 5 stages of ecommerce product life cycle are 1) Development, 2) Introduction, 3) Growth, 4) Maturity, and 5) Decline.
What is PLM in ecommerce?
PLM or Product Lifecycle Management is the process of managing all the required stages of ecommerce products. These stages start from conceptualizing the product idea to developing, launching, and dispatching the product off the shelve.
What is the customer lifecycle of ecommerce?
Just like the eCommerce product life cycle, there is also a customer lifecycle in eCommerce, which includes the stages of Awareness, Consideration, Action, Retention, and Advocacy.
Each stage represents a critical part of the user’s journey in buying or selling online for business purposes.