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E-Commerce Business Failure in D. Crenna’s Article

What was the problem the business was solving?

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The article describes the failure of setting up the e-commerce business. Daniel Crenna (2011) speaks about his own experience of trying to create Lunarbits, which had to be a platform for digital goods selling. He faced several problems during the initial part of building this business since he did not develop an effective step-by-step strategy for this service. As a result, the entrepreneur spent too much financing and time on the project that had all signs of a future failure.

How was the solution this business provided and how was it different from the competition, both direct and indirect?

Crenna supposed that his business idea would find support among many people because there was nothing like this service in the market. His competitors, on the contrary, used the existing models to offer services that were not inspired by big ideas. The author mistakenly assumed that if there was a demand for a new business in society, it had to succeed.

What is the market/customers that the business was trying to capture?

The business was targeted at a very wide audience. He perceived his primary customers to be the software developers who seek better technical solutions for their working process. Crenna later supposed that if he had certain needs regarding the e-commerce services, then these needs were shared by many people.

What was the cause/causes of the business failure?

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Several issues caused the business failure. The entrepreneur spent too much money on the designer’s work before creating the website draft in detail. He also did not hire a team of professionals that would help him with the strategic planning. It resulted in too many details that he had to solve on his own, which appeared to be very time-consuming. Besides, he used a lot of time for developing the draft while relying on the idea that his project will be interesting to open source investors. Finally, he did not recognize that there was any market for his idea, and his interpretation of the service is useful for answering the demands of a greater audience substituted the initial plan of developing a website for the specific group of software developers.

What are the lessons learned?

The most important lesson that came from this situation lies in identifying the failure as an opportunity to acquire knowledge on how the business could be improved for achieving success. Even if the project is considered to be potentially successful by other entrepreneurs who have the running business, it may still fail, for the idea developed on paper does not equal its actual implementation. Thus, it would be wrong to rely solely on opinions and positive feedback from others.

What could have been done to avoid the business failure?

The possible solutions can be identified through studying the causes of failure. The most important step would be to narrow down the big idea and to compare it to the existing services currently presented in the market. Moreover, the detailed strategy and design of a project must be developed before spending money on its implementation. Finally, every entrepreneur, especially the one who lacks experience, must build a team of professionals to guide and consult him on the arising issues.


Crenna, D. (2011). Learning from failure: A case study in entrepreneurship. Open Source Business Resource. Web.

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