online-businesses-e-commerce-mistakes
9 min read

Online businesses: 10 e-commerce mistakes new entrepreneurs make

Tom Baragwanath

Starting an online business is a lucrative dream for many people. The e-commerce industry offers freedom and challenge, not to mention the opportunity to find your niche, put your passions to work, and reap the rewards.

Given all this, it isn’t hard to see why so many people are looking to get started in e-commerce. In fact, the market has experienced steady growth in recent years, with no visible signs of slowing.

As great as these opportunities are, there are a whole lot of potential mistakes out there waiting to trip you up in the early years of your e-commerce startup.

We want you to succeed, and a big part of this is learning from the examples of others, both the good and the bad. In this post, we’ll take a look at ten early mistakes you’ll want to avoid to keep your e-commerce thriving.

#1: Chasing the wrong market segments

market-segment-ecommerce

Retirees, side-hustlers, office workers, at-home parents: these days, it seems everyone is looking to get in on the e-commerce action. And hey, why not, right?

This popularity means the e-commerce industry is becoming more and more crowded. You need to do whatever you can to differentiate yourself and pursue a legitimate gap in the market.

Before you get up and running, be sure to research the market gap you’re looking to fill. Understand your customers and your competitors, and develop a clear strategy for how to differentiate yourself.

Fail to do this, and you risk being shut out by your competitors.

A comprehensive e-commerce business plan will include a description of the market gap you are looking to occupy, a list of your major competitors, and how exactly you plan to differentiate yourself. And if you're selling direct to consumer (D2C), you'd better figure out how you'll get your product to their doorstep.

More importantly, don’t just develop a business plan and leave it to gather dust in a drawer. Stick to it, and update is as your business grows.

#2: Not paying attention to the numbers

We’ve all been there: you’re so caught up in the dream of being your own boss, setting your own hours, and leaving behind the horrors of the daily commute, that you cease paying attention to the basic ins-and-outs of your monthly survival.

Remember: you’re in the game to make money, not pour it down a hole. Keep a close eye on your fundamental metrics, especially sales and profitability.

These include: 

  • Impressions and click-through rate
  • Email subscribers and open rates
  • Average order value and revenue per visitor
  • Customer lifetime value and rate of repeat purchases

Here's a great list of these and plenty more. If things get too tight for too long, consider a new strategy, or even a change to your fundamental business model.

Paying attention to these basics from day one will help you avoid costly delays in making the tough decisions.

Too many people have hung on to pet projects for too long after they start losing money. Avoid this, and be clinical about your core profitability.

#3: Inadequate product specialisation

Your customers want a bunch of things: affordable shopping, a commitment to quality products, and responsive customer service. What’s more, customers want to be able to distinguish your shopfront from all the others out there.

Here’s where a classic problem can arise. Because of the dizzying range of products available for inclusion in your shopfront, it can be tempting to spread your market offering thin in an effort to attract a broader customer base.

For example, let’s say you’ve built a dedicated customer base for your custom mountain bike store.

mountain-bike-ecommerce

At some point, you might be tempted to branch into road bikes, and hey, maybe even scooters. Some of your customers will be interested, right?

Well, maybe. But in this scenario you risk losing the credibility as a niche purveyor of custom mountain bikes. Now the die-hards no longer see you as the place to go, and your dedicated core customer base starts to drop off.

The moral of the story? Know what you’re about, and stick to the niche offering that has built your customer base. Before you branch out into offering a wider range of products, be sure the possibility of increased sales outweighs the potential loss of your regulars.

#4: Superhuman multitasking

superhuman-multitasking-ecommerce

A scrappy, can-do attitude is a wonderful thing in the world of e-commerce. Heck, it’s a wonderful thing in the world in general.

However, as someone with a growing business, be wary of trying to do everything, all the time. After all, you’re not Vishnu; you’ve only got the one set of arms.

The rise of remote work websites has made it easier than ever for businesses to find flexible support from qualified people. And the ability to work abroad is now simple as well. 

Don’t wait until you’re already feeling overwhelmed to start splitting tasks up and looking for ways to divide them - get onto this proactively.

Remember: no matter where you are and what you do, there are plenty of folks out there looking for part-time work. If you need an extra pair of hands for a couple of days here and there, put the word out - you’ll be happier in the long run.

#5: Ad hoc marketing content

Online marketing is a key step in attracting a customer base. With the right approach to content creation and search engine optimisation, you can attract customers to your shop front, as well as start them interacting with your online community.

However, for many of those running an e-commerce site, e-commerce marketing is done one blog post at a time, with no overarching strategy. This can lead to inconsistent information, patchy messaging, and even double-ups in content.

To give yourself the best possible shot, be sure to plan your marketing content in advance, and to do so consistently with your business plan. Your content should touch on subjects of interest to your target customers, and should offer fresh takes that are helpful and informative.

A solid content strategy will give you the best shot at gathering and holding your audience. This doesn’t have to be complicated - at a minimum, try mapping out some topics for the upcoming year and looking for ways to match these to your products.

This is also a great way to plan your holiday marketing strategy - usually a huge focus for e-commerce businesses. 

#6: Not prioritising your tasks

Being a sole operator can be tough. You’ve got to run a website, manage suppliers and customer queries, and deal with your tax and accounting obligations. What’s more, you’ve got to do all this while building market presence and keeping an eye on profitability.

This can result in a rolling cyclone of daily tasks, some more important than others. Sometimes it can be hard to know where to begin, and even harder to know when to stop.

Give yourself the best shop at staying on top of things: prioritise your tasks and take care of the most time-sensitive things first. This may seem painful, but allocating your time efficiently will give you the best shot at staying on top of crucial tasks.

Fortunately, there is now a range of helpful software tools to help you manage your time and complete your most urgent tasks first.

#7: Not understanding your target customer

target-customer-ecommerce

As with your market niche, understanding your target customer group is a critical step for growing e-commerce startups. This helps you tailor your marketing efforts, build sales numbers and differentiate your business from the others out there.

The more you understand about your target customer, the better you can frame your marketing activities and online content. This way, you can shape your product offerings to match demand, as well as avoid wasting time and effort with inefficient marketing.

Understanding your target customer can be as simple as understanding your website traffic, or as elaborate as commissioning specific market research.

Whatever you decide, be sure to check out the range of tips and guidance out there.

#8: Ignoring burnout

Cast your eye across all the ecommerce blogs out there, and you’ll see endless glowing testimonies of hard work, success, and innovation. One thing hardly anyone talks about, however, is the risk of burnout.

The do-it-yourself nature of e-commerce, combined with the high demands of the industry, mean that many entrepreneurs struggle with taking on too much at once. Especially in the first few years, it can feel like your to-do list keeps multiplying overnight, with no end in sight.

Develop strategies to stay on top of things, and be deliberate about taking time out for yourself. Remember: business can be like a bucket with a hole in the bottom - you can pour as much of yourself into it as humanly possible, but there’s always more to be done.

Keep an eye on the hours you’re working, and be careful about your limits. Ensuring balance between business, friends and family will be better for you in the long run, and will ensure you’re still having fun at year five.

#9: Overlooking basic compliance

In the first few years, you’ll spend so much time building your business and getting things off the ground that you might not have time to think about your legal requirements, including tax responsibilities and consumer obligations.

However, core compliance is way too important to avoid thinking about. At the minimum, you need to be well-positioned to comply with tax responsibilities and cope with a potential audit. Accounting and expense management software can be a lifesaver here.

Build familiarity with relevant consumer guarantee laws at an early stage, and know where you stand in relation to the rights and expectations of your customers.

And if you’re employing people, make sure you understand your rights and responsibilities.

#10: Leaving the hardest problems for later

It can be hard to think about gnarly problems. You’re only human, and the equation between short-term pain and long-term gain can be tough.

But if there’s a key thread running through this list, it’s this: in e-commerce, don’t leave the hard stuff until it becomes a problem.

Give your core tasks (business planning, understanding performance metrics, proactive marketing, legal and taxation compliance) the best part of your time and effort. Don’t put something off just because it requires the full arsenal of brain cells.

This can be easier said than done, but trust us: the ability to take on the harder and more complex tasks is a major distinguishing factor between those who are still in the game at year five and those who flare out early.

Conclusion: Learn from the common mistakes

Starting an ecommerce outfit has never been more enticing. Unfortunately, the numbers paint a pretty bleak picture - 80% of ecommerce businesses don’t go the distance.

However, if you’re anything like us, a few pesky numbers won’t keep you from pursuing your passion. If anything, they’ll only serve to sharpen your resolve.

To make sure you don’t contribute to these gloomy statistics, be sure to keep these ten common early mistakes in mind, and do everything you can to avoid them.

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Tom Baragwanath

Tom Baragwanath is an author and freelance content marketer.