Today, I have a guest post.
Many e-commerce gurus tout passive income. They go on about how easy it is to make millions while you’re on vacation if you buy their course for the low price of a few hundred dollars. This is one possible outcome of setting up a successful e-commerce empire, but that’s not the whole story.
To achieve real e-commerce success, you must work hard, especially in the first years of your endeavor. That doesn’t mean you won’t eventually become a wealthy magnate on a perpetual vacation. It just means you’ll do the effort-intensive part first.
Learning from other people’s mistakes is one way to make the hard part as easy as possible. Avoid these nine mistakes so you can reach that next stage as quickly as possible.
9 E-Commerce Mistakes You Should Avoid
Focusing on Product Passion
One of the biggest lies in business is “Do what you love, and the money will follow.” It’s great to find a profitable niche close to your heart, but if you have to choose between the two, always choose the more profitable one.
This doesn’t mean losing out on a fulfilling career in favor of a lucrative one in an industry you hate. You’ll likely spend 40 or more hours every week immersed in that industry’s products, details, culture, and priorities. You’d better at least like it, or you’ve signed up for a miserable life.
However, the point of e-commerce is to quickly get to the level where you engage with it as little as possible. So sell what sells, regardless of whether or not it sets you on fire. Serve your passions with the financial and time independence e-commerce gives you.
Hiring Help Too Soon
You need to gain all the skills necessary for massive e-commerce success. At some point, you will need to hire experts in publicity, logistics, web optimization, and a dozen things, either tied directly to your online store’s success or as part of the logistics behind accounting, legal compliance, and similar endeavors.
That said, you must wait to hire those people. The early stages of e-commerce are lean on revenue. Saddling that challenge with the burden of paying for additional staff can sink your effort before it begins. You’ll do a lot of stuff on your own, and that’s all right. Wait until your revenue can pay for long-term help before you commit to the expense.
This doesn’t apply just to the bottom line. You must also understand each role in your e-commerce venture well enough to make smart hiring decisions and ensure your team members are doing a good job. Doing that job a bit yourself is one of the fastest, best ways to reach that level of understanding.
Hiring Help Too Late
It’s also a mistake to wait too long to hire help. During the initial stages, your customer list and workload will be small enough for you to handle things on your own. You’ll also be chasing smaller contracts and deals where you’re not competing with more extensive operations. All that changes when you move from small-time to something that can produce a regular and reliable income.
If you hire expert help too late, the best-case scenario is you spend months making just enough to keep pouring effort into your e-commerce business, but you never reach a point where you can quit your day job.
The worst-case scenario is you fumble, get bogged down at that crux point and make costly mistakes. If that happens, the time and money you spend trying to build it all come to nothing.
It’s a tough balancing act to avoid both this mistake and the one just before it. But it’s worth it.
Not Minding the Numbers
E-commerce ventures live and breathe by their metrics. They’re like vital signs for your business, and the closer attention you pay to them, the healthier your income will be.
Each venture is different, so your specific metrics will vary. But they should include several from this list of standard most important numbers:
- Number of impressions from your advertising efforts
- Total reach of your marketing
- Total engagement and individualized engagement from different marketing channels
- Email click-through rates
- Cost per acquisition for each lead
- Social media engagement numbers (a topic of its own)
- Customer journey abandonment numbers and locations
- Conversion rates for each landing page
- Average order value
- Customer retention rate
- Customer lifetime value
- Repeat customer rate
- Refund/return rate
- Net promoter score
- Monthly gross income
- Monthly expenses
- Monthly net profits
These numbers are most crucial and vary from business to business and within individual companies. Remember to watch your numbers, mine them for insights about where and how to improve, and be especially alert for changes in any given metric. Those changes are often your first sign of trouble — and opportunity.
Shipping Cost Catastrophes
This may be the most straightforward item on this list to notice and understand. Free shipping and low-cost shipping are great extras to offer customers, but many e-commerce novices need to pay more attention to how much shipping will cost. If you sell 1,000 units but lose $2 on each unit because you guessed wrong on postage, you do not turn a profit.
The good news is you can use mailing services like Stamps.com, dropshipping services, and direct shipping services, so you know exactly how much it costs to ship your product anywhere. Bake the highest domestic shipping cost into your offer, then give “free” shipping so you always avoid this potential pitfall.
Be especially careful if you offer international shipping. Those prices can be surprisingly high and shift unexpectedly with logistics costs, fuel prices, and international politics. It’s best to charge individualized shipping rates for customers overseas, and customers mostly expect this.
Poor Item Optimization
An item sales page is the electronic version of your in-person sales staff. A helpful item sales page makes you money 365 days a year without ever asking for permission or a day off. A bad sales page takes up space on your server. To create a useful sales page, you need to optimize it in two different ways.
First, optimize it for the internet. Use SEO and SEM techniques. Be sure to use similar search engines your customers would use to find your page. The bad days of keyword stuffing are behind us, but strategic use of a single word or related phrase means strangers will find you, whereas not using one practically guarantees they won’t.
Second, optimize it for the user. Craft emotionally laden, high-quality copy that walks the reader through what pains your product solves and how it does it. Include obvious sign-posting for the reader to learn more, experience videos or other content, and buy the product.
With both of these in place, your item page will easily outperform most of your competitors.
Slow Customer Service
This is one of the areas where in-person business still has an advantage over the low-overhead, no-operating hours, no-rent world of e-commerce. One of the most common e-commerce concerns and complaints is the need for better customer service from doing business with a web page instead of in person. If you compound this problem with a slow response to customer questions and concerns, you can quickly lose your reputation (and its accompanying income).
You don’t need to be responsive for 24 hours to beat this. You need to be responsive quickly across multiple platforms:
- Social media
- Text messaging
- Online chat on your website (as appropriate)
- Comments on your blog
- Comments and reviews within your e-commerce platform
- Reviews on the general web
It’s alright to not provide a phone number, especially at the beginning when you’re probably just using your cell phone. But use alerts and notifications to get the word about a potential issue quickly enough to respond in real-time.
E-commerce begins at a deficit in this department. It’s up to you to overcome it for your brand.
No Customer Profiling or Customer Journey
These two concepts are essential in the early stages of full-time, professional marketing teams and vital to long-term profits. Too many e-commerce endeavors never work on either. Sometimes, it’s because the person in charge doesn’t have a business or marketing background and has never been exposed to these concepts. In others, it’s because they know about both but erroneously think an e-commerce gig isn’t essential or official enough to warrant taking these steps.
In both cases, it’s a mistake.
Customer profiling is developing an understanding of who your core customers are. Two t-shirt companies, one selling sports-themed shirts and the other selling shirts with lines from famous Romantic poets, should pursue a different demographic.
Instead, each should construct a persona of their most likely customers, including age, education level, hobbies, where they live, shows and music they like, and businesses they’re likely to frequent. Some go so far as to give this persona a name. The better they complete and understand this profile, the more effective their advertising will be.
The customer journey is a path by which a stranger follows your marketing, advertising, online resources, and customer service and ultimately becomes a buyer. Amateurs throw out various pieces of copy and hope people will follow the trail of breadcrumbs. Successful companies create a systematic, step-by-step process that leads somebody through interest, information, engagement, and ultimately to the sale.
Bonus points for crafting your customer journey to scratch your core customer’s various itches.
Not Doing A/B Testing
This is another Business School 101 concept that far too few e-commerce operations do. The idea is simple:
- Run two versions of an advertisement, product sales page, website landing page, or other asset.
- Let them operate for a month.
- See which one performs better, and keep the elements that made it different.
If you do this repeatedly, making iterative changes based on each version, you fine-tune your marketing strategy step by step.
As we said, the concept is simple. Many e-commerce companies choose not to do it because setting it up on your website, newsletter service, or sales platform can be challenging. But that doesn’t mean it’s not worth investing time and energy to learn how.
When A/B testing, it can be tempting to make each version very different. Avoid this temptation. Although it makes intuitive sense, you’ll never know what aspect of each version drove the difference in response. Instead, change just one substantive thing, such as the wording of your CTA, the image at the center, or the background color. That way, when one version performs better than another, you know exactly what element was responsible.
Final Thought: The Fire-and-Forget Mindset
This last mistake is so common and important it deserves its own section. Because of how e-commerce is sold, people walk into it thinking they can build a shop and let the money roll in. This fire-and-forget mindset will not create an online store that brings you consistent income.
Creating a reliable, profitable, sufficient online income stream takes work, attention, follow-through, and management.
David Swarthone is a consultant who provides marketing advice to a variety of businesses.
Jason Butler is the owner of My Money Chronicles, a website where he discusses personal finance, side hustles, travel, and more. Jason is from Atlanta, Georgia. He graduated from Savannah State University with his BA in Marketing. Jason has been featured in Forbes, Discover, and Investopedia.