Running an e-commerce business effectively is not an easy task. In the first year of operation, you will probably make many mistakes. Perhaps, over time, you will gain experience and even become a leader in a certain niche. At the same time, the wrong actions can cause a lot of problems and burn too much money, jeopardizing the existence of the business.
So, let’s look at four common mistakes that can lead to serious problems if not addressed in time. Fortunately, they are easy to fix. If you overcome the main obstacles early on, you will be successful.
1. Overly general descriptions of product benefits
Many e-commerce brands are built on a dream that sounds like this: “I have an amazing product/idea/marketing strategy that everyone will love, so I’ll make a resource for everyone!” This approach takes hold and the main sales channel, whether it’s a website or Amazon product pages, tries to attract the attention of everyone they meet. Ultimately, this can lead to failure.
It’s impossible to please everyone. Trying to do this means you have to advertise benefits that are as broad as possible. This can make them seem unrealistic or boring, especially when they’re about trivial things. For example, everyone wants to feel relaxed and reduce stress. Simply promising this to your customers won’t connect with your audience. Messages that don’t explain how you do this or what types of stress you relieve will make your product feel as empty as your words.
To succeed in the first year, e-commerce companies need to target a specific market. Eventually, you can expand to the entire world, but this requires initial sales and a steady income. So, to begin with, when describing the benefits of the product, target the core target audience:
- help parents relax after a long day of caring for a two-year-old;
- relieve back pain for someone who spent an hour driving home;
- Let your high school student know that he can show off his new fashion item to his friends.
Each of the above examples will inevitably alienate some potential buyers. At the same time, they will help you connect with others. Target these messages to the group you consider your core audience.
2. Introducing new marketing channels without prior research
So, you’ve identified your audience and crafted your product’s benefits to suit them. Now you need to reach out to them and tell them about your value proposition. Hopefully, your startup work included consumer research that helped you figure out where your audience searches, shops, and spends time online. Young companies rarely have the money to advertise on major platforms, so you’ll need to be strategic from the start.
You may be wrong about your initial marketing channels, or the audience you attract may not be as big as you expected. If this happens, you may be tempted to start sending ads to Facebook, LinkedIn, Twitter, and wherever else you think your audience might be. Diversification is a smart move, but it’s not a waste of money. All spending should be backed up by research.
Where to start? Spend some money and follow your competitors and brands that your audience likes. Don’t just follow their social media activity. Dive deep into their processes.
- Buy goods from some of them.
- Add items to your cart and start the checkout process. Then cancel it and see how they retarget you.
- Search the Internet for competitors’ product range and related products to evaluate their ads.
- Review your site’s code to determine what e-commerce platforms and other tools it uses.
- Use keyword planners on competitors’ sites to see what keywords they rank for, then compare them to yours. Advanced analytics tools can do this for you automatically, but they tend to be a bit more expensive.
- Follow influencers and related fields related to your audience to stay on top of the latest trends.
These and many other factors should influence where you spend your money next. You’ll be able to identify what your competitors are doing and what they may be missing. Trends or tools you use will help you understand what works best for your current channels. You may also find that you can quickly enter a new space if you already have all the necessary technology. Finally, you’ll be able to understand whether it’s worth spending money on implementing new marketing channels at all.
3. Hope for passive income with minimal effort
Automation is a tired word that gets thrown around every time someone tries to sell a service or software. Almost everything can be automated, but what should and shouldn’t be automated is another story. Some people get too caught up in relying on machine learning and artificial intelligence all the time. You may be under the illusion that you can build a website and then magically generate sales and deliver orders with minimal effort.
Passive income is often discussed in e-commerce circles. Sometimes it’s about specific products that customers automatically buy via subscription. New entrepreneurs may try to sell you a guide to marketing, platforms, and other technologies. They promise that all you need to do is work a few hours a day to earn millions in your sleep. That’s not to say it’s not true, but it’s definitely not something you should expect in the first few years of starting a company.
Business takes time, work, and investment. You are unlikely to start making money right away. It may even take some time before you start making money. Plus, the first money you make should be reinvested into the business to keep it growing. Be patient with yourself and your business, and avoid automation that is touted as a shortcut to profitability.
4. Trying to do everything yourself
An e-commerce company is still a standard business, with a huge number of nuances and things to learn. It’s almost always too much for one person. You can’t do everything alone — without partners, employees, or outsourcing. One of the most common first-year mistakes is trying to do everything yourself or taking on specialized tasks without the proper training.
You are reading this article because many people have already made the same mistakes before you. Dozens of e-commerce businesses are opening right now. Use all this knowledge to make smarter decisions and avoid problems. The best option is to do it from the very beginning.
Map out your business processes and look for a suitable CMS or e-commerce platform. Research your audience and see what brands they like are doing. Hire a security expert to make sure your site and checkout process are secure. Find out if the company can offer you better shipping rates or eliminate the need for a warehouse.
Consider your own experience and seek advice from others if you are not an expert. Read the history of your favorite brand. Even if it is a mythological tech unicorn that was born in an ordinary garage, it still could not have been created without a team.
The goal of the first year is to learn how to ask for help. Join relevant communities on Reddit or Facebook. Ask your LinkedIn and VKontakte connections what they think about it. Go to business and management events. Call your friends. Conduct an informal survey while standing in line for coffee or sitting on a restaurant’s summer terrace.
Develop a habit of asking other people’s opinions. That way, when you need help, you’ll not only get it quickly, but you’ll probably already have a few reliable sources.
Scaling is the goal for the future
The initial sales, revenue, and profits can become addictive in the first year. You will learn some things that work well and resonate with your audience. A road will appear in front of you, beckoning you to take it and never look back. When this happens, be prepared to slam on the brakes.
Scaling requires a plan—you can’t just jump at the first opportunity that comes your way. All the work you put in to survive the first year will have to be doubled to grow in the second. That means consulting with an accountant, analyzing changes in laws and regulations, and researching customers, pricing, marketing, and more.
Growth is usually thought of as the potential to increase sales of a single product. In reality, it is an opportunity that requires improvements across the entire business. Make a plan and take your time to avoid overextending yourself and your team. You don’t want to spend all your revenue on products you can’t sell or technology you can’t use to grow your business.
