Describe the virtual merchant business model and its unique challenges in becoming financially viable

What will be an ideal response?

Virtual merchants are single-channel e-commerce firms that generate almost all their revenue from online sales. They face a number of challenges. They must build a business and brand name from scratch quickly, and face many virtual merchant competitors. They also face large costs in building and maintaining an e-commerce presence, building an order fulfillment infrastructure, and developing a brand name. Customer acquisition costs are high, and the learning curve is steep. Facing low margins, virtual merchants must achieve highly efficient operations to preserve a profit, while building a brand name quickly to attract sufficient customers to cover their costs of operations. Most merchants in this category adopt low-cost and convenience strategies, coupled with extremely effective and efficient fulfillment processes to ensure customers receive what they ordered as quickly as possible.