Ecommerce has come a long way from the early days of eBayers mailing Beanie Babies across the country in old cereal boxes. Online sales now account for more than 75% of all retail growth worldwide; in fact, global ecommerce sales are predicted to grow by an incredible 19% this year alone. That’s a projected total of some $4 trillion in 2020, spent by approximately 2 billion shoppers — 185 or so million of them on eBay alone.
So how hard can it be to cut yourself a profitable slice of this sizeable pie? That depends on you. Ecommerce is one retail playing field where small and medium-size enterprises (SMEs) can hold their own against the mega-brands and still prosper; brick-and-mortar shops largely depend upon local patronage, but an online store’s niche market encompasses a whole world’s worth of potential customers. Yes, competition can be fierce, but in the immortal words of Homer Simpson, “This is your chance…just don’t screw it up!”
Here are the top 5
pitfalls you’ll need to avoid in order to succeed as an online retailer.
Choosing the wrong platform(s).
you choose to start your ecommerce business may well determine its success or failure
right from the get-go. If you’re building it from the ground up, find your
footing as a seller on one of the major ecommerce marketplaces; that way you
can take advantage of their broad international customer base. Some are specialized
— e.g., Etsy for handmade and vintage, Poshmark for fashion and home décor, or
Ruby Lane for antiques and collectibles — while others showcase a broad range
hits the sweet spot for fledgling ecommerce entrepreneurs:
branding opportunities and selling tools for eBay storeowners
of all merchandise is sold at fixed price; the rest is sold at auction
mix of new and pre-owned merchandise
encompasses not just commodity items but also the unique and unusual (“Whatever
it is, you can find it on eBay”)
eBay, you can easily expand to other selling channels. When you’re ready for
your own website, BigCommerce and Shopify are good solutions for starters. Magento
is a great platform for larger businesses; it’s open source, so you can add
custom apps. The downside is that developing those apps can be very costly.
So be aware of what platforms are available, but do your due diligence to determine the right launching pad for your ecommerce enterprise.
Choosing the wrong product(s).
When it comes to deciding what
you’ll sell, you can make some major mistakes. A product must be:
demand, but not a flash in the pan. Beanie Babies put a lot of eBayers in
business, but not all of them stayed in business once that fad fizzled out —
and many got left holding a sizeable bagful of no-longer-hot Beanies.
niche, i.e., having a too-limited market. Furthermore, a niche with no competitors
may turn out to be a niche with no potential traffic.
available. Thrifting items one at a time limits your ability to scale, whereas
partnering with wholesalers means you can sell items in multiple quantities.
If you can’t make a profit on it, then it’s not the product for you.
every product you source will turn to gold. Liquidate the losers, and put the proceeds
into something that will hopefully sell better.
It’s harder to commit this
cardinal ecommerce sin when you’re using a marketplace format as opposed to
building your own store from scratch. Still, plenty of eBay stores manage to do
all their products together into the default “Other” category rather than creating
intuitive categories and subcategories (e.g., “Men’s Apparel” > “Men’s Suits”,
“Men’s Casual Wear” or “Holiday Gifts” > “Holiday Gifts for Him”, “Holiday
Gifts for Her”, “Holiday Gifts for Kids” — you get the drift).
branding their eBay store with their business’ logo, an eye-catching billboard,
and a keyword-rich description, then carrying the look through to their
listings and sales collateral.
to optimize listings for mobile (62% of all eBay transactions involve a mobile
to use eBay’s powerful selling tools (including Markdown Manager, Promoted
Listings, and store newsletters, and affiliate marketing through eBay Partner
listings with ineffective titles, lousy and/or not enough photos, missing item
specifics, incomplete or way too wordy descriptions, and/or overly onerous
terms of sale.
eBay best practices will serve you well, because most of them align with
ecommerce standards and thus will apply to any selling channel.
Not being customer-centric
If your customer’s complete
satisfaction is not your bottom line, then your ecommerce success is going to be
limited at best. It’s absolutely crucial that you give a great buying
Here are just a few of the
ways you can fail to put your customer’s happiness front and center:
unappealing or even off-putting terms of service, especially around shipping
customer relations management. For example —
communicate, i.e.. respond promptly to inquiries; set buyer expectations as to shipping
and delivery windows; and/or cheerfully and professionally resolve post-sale
sloppily and/or ship items in a less than timely manner, especially if you ship
without providing tracking information.
every buyer is out to scam you. This will cast a negative pall over every customer
customer feedback. Remember, only about 1 in 3 customers takes time to leave
feedback; if one person expresses disgruntlement with some aspect of a
transaction, chances are you’ve also got other unhappy customers who just won’t
buy from you again. So take both positive and negative comments to heart, learn
from them, and move on.
(Bonus points if you reach out
to dissatisfied buyers with a public apology and an offer to make right
whatever went wrong. Do this well enough, and you could even turn them into
loyal returning customers!)
build a customer database, from enlisting subscribers to your eBay Store
newsletter to harvesting customer names and addresses into your private resource
for generating repeat business.
social media. Social media marketing doesn’t just mean sharing your listings on
Facebook, Pinterest, etc. It also means building a community, whether via Instagram
followers, on a Facebook Business Page, or through your own blog.
Ignoring your numbers
This is the biggest pitfall of
all — and the cause of most retail business’ downfall, be it online or off. Numbers
measure the health of your business. If you do not know your numbers, you cannot
measure your business. If you cannot measure your business, then you cannot
manage your business. And that means sooner or later, your business will go
Here are a few of the numbers
you need to know:
year’s sales, both gross and net
of goods sold for that period
(warehouse space, etc.)
losses (lost or damaged shipments, returns, etc.)
i.e., advertising and promotion
other costs of doing business
(a.k.a. sell-through) rate —
each channel and format
category and product
of returns per total transactions (expressed as a percentage)
amount of total returns (important for determining loss rate)
velocity, i.e., the speed at which an item sells. Remember, unsold inventory is
your cash, sitting on a shelf, laughing at you!
there are more complex metrics you should track as well. This is where PayHelm
can help. Among other useful reports, it enables you to:
global sales performance
and chart an overview of your buyers by location
your sales across multiple channels and platforms
an eye on your numbers, and watch for trends. Formulate hypotheses to account
for these trends. Then test, test, test to see if your hypothesis is correct.
go forth and make the most of your chance to succeed as an ecommerce
entrepreneur. Just don’t screw it up!