The choices you make from the start can doom your online business. We’re talking about seemingly simple everyday common mistakes that will stop your store from ever being profitable.
Making these mistakes early on translates into a lot of hard work being done before an ultimate failure. By starting out making better choices, e-commerce can flow more easily later on. These choices won’t come back to haunt you later.
These are the ideas about choices our clients wanted to know from the start, and if your store isn’t profitable yet, there’s a good chance you’re probably doing some of the things on our list. If you haven’t started yet even better.
1. Choosing To Give Up And Try Something Else
Most startups fail because they just give up, not because they run out of money or time.
Your focus should be on building personal staying power, keeping learning, and making as many improvements as you can. Learning about common mistakes that will stop your store from ever being profitable is part of this process.
Client’s who’ve come to us with a store with no sales for months (sometimes years) not making any money, say that all of a sudden something they did change everything.
It created an online buying frenzy. We’ve noticed there is a common theme, and it’s what did they did during those months (or years) battling with a store with no sales: They kept going, kept learning and kept making improvements.
If you start and give up too soon, you’ll never know the true potential of what you started, simply because it can take time before momentum picks up for online stores.
You’ll often hear about successful online businesses “taking off” and the owners being unprepared for rapid growth because it happens unexpectedly.
Making a few sales here and there online is already part of the way there, it takes time before your improvements make a real difference and sales start really picking up.
2. Choosing To Do No Work
At the beginning of setting up an online store, either time or money or both is always needed. A lousy choice when starting your online store is to do no work at all. Owners who expect to do no work just aren’t working with a reasonable business model.
Starting any business has never been a money-for-nothing exercise, and being ‘online’ hasn’t changed that – but it has made the initial time and money investment much lower.
With a brick and mortar storefront, it may cost tens if not hundreds of thousands of dollars in setting up costs, fees and an incredible amount of time.
Picking a location to lease, creating the interior space and buying display racks and cases and specialist equipment, configuring lighting, buying all the inventory and making the space to store it, employing staff takes a lot of time. Dealing with regulations around health, about safety, even navigating the parking and the environmental impacts of your operation all take time and money.
And then there are future commitments, say you have a lease for three years you’re now tied up to that location for that time and the price specified in the lease.
If you have staff, you undoubtedly have contracts and employment regulations all commitments of time and money into the future. Even your getting hooked up with store services such as payment technology and internet all have minimum termination periods. Online business has far fewer set up costs and takes less time.
If you don’t have any time to set up online, you can always employ people from anywhere in the world, often on an as-needed or informal basis for reasonable prices.
And if you don’t have the funds to employ people right away, you can partner up and come up with a plan to share the profits. The key is to find people with complementary skills. Think about your weaknesses and the types of people you would need to employ if you had unlimited funds and then seek people who can fill those gaps – online development, sales, support, admin partners.
Remember that roles aren’t always perfect and clear-cut in the beginning, this is why we often see people making common mistakes that stop their stores from ever being profitable.
Most businesses grow organically at first. For a startup, the roles, and responsibilities of people often overlap and change over time as the business grows. So you may find yourself learning and doing things you never thought possible before to fill some gaps.
And as the owner, having a team frees you up to think the more big picture things or indulge in other aspects of life you enjoy.
But, you’ll still spend some time motivating and managing your group.
Any entrepreneur with a successful store will tell you it’s a real lifestyle and mindset change that requires determination and learning. It’s unrealistic to think there will be no work.
3. Dropshipping Without Choosing To Add Value
Automation and the ease of dropshipping are brilliant, they make online selling easier than ever before. But some new business owners go too far slapping together a storefront and expecting the autopilot to do everything else. It’s tempting, but this is a terrible choice when starting your online store.
They think they’ll use an app to find products to put in their store. Then they’ll auto-generate product descriptions to their store. Customers will want to buy items for more than what they can pay elsewhere.
They’ll use an app, so orders are forwarded automatically to the sellers on their drop shipping platform, those sellers will ship direct to their customers, and they’ll keep the difference in price.
Now again, the emphasis here is on the miracle of automation – we are HUGE fans of automation. It’s one of the best advantages of being online, not offline.
The time saving and scalability that automation allows is invaluable, but the problem with this model is that the store owner isn’t adding any value.
They don’t check the products going in the store are good, and they don’t check that the descriptions read naturally. In other words, they don’t do any quality control over their storefront, so it’s not curated well. It looks mismatched, doesn’t have the information customers want to know and is hard to navigate. As a consequence, they get a lot of customer questions which aren’t automated.
Then if anybody does buy from them, they’ve never actually seen the product, so they don’t know whether it’s any good. And when complaints come in, these are their problems to deal with. If complaints come in the form of online reviews, their business can easily be destroyed.
Even when you’re drop shipping, you must give additional value to your customers. Your business model should always include a real reason for people to buy from you. And that will nearly always include your ability to add value. If you don’t know what ‘adding value’ is, we tell you exactly how to add value to your store here.
4. Choosing Products That Aren’t Very Valuable
One of the most common mistakes that will stop your store from ever being profitable is not choosing the right products to sell.
Some products are cheap, and customers expect them to be so. The type of customers who buy these cheap goods are inherently cheap people scouting for bargains. So, if your store isn’t showing the lowest price, they’ll go elsewhere, and this doesn’t leave you with much margin.
The most common cheap goods we see are non-branded clothing, fashion jewelry, fashion watches, non-branded phone cases, gadget kitchenware and kid’s toys.
The problem with selling cheap goods is compounded. Cheap products are usually easy to find from local retailers, where customers don’t have wait for delivery or pay to ship the product.
And because shipping on cheap items is often the same as shipping on high-priced pieces, it’s easy for shoppers to get a better bargain locally.
Say your product retails for $60 and costs $15 to ship to most places, but for items that are priced at $4 and still cost $15 shipping the math is ridiculous.
Anyone selling very low-cost products will see customers put an item in the cart, head to the checkout, find out the shipping charge is too much given the price of the cheap good. Then they abandon the cart to head down to their local store to buy something similar.
If you’re selling cheap goods, you’re be left with a few options. Offering free shipping which affects your margins, cutting corners on the packaging or sending everything by standard letter mail.
It’s best to avoid selling cheap goods online altogether. Go with better products with better margins.
5. Choosing A Really Competitive Niche
Some markets are a poor choice for an online store than others, just because there’s a lot of competition for them out there. The stores that we often see struggling with no sales are ones for woman’s clothing, woman’s shoes, watches, and phones.
Why? Because in an already crowded space, so by not adding value you’ll end up getting lost in the crowd.
The good news for these niches is that the price per item is usually higher (so margins are wider). And customers are less focused on getting low prices if they fall in love with the style and quality in your store.
But with women’s clothing and shoes there’s another issue that’s significant: shoppers often want to see it in person, touch it, and try it on, before buying it. They can’t do that online, and they will go to an offline shop where they can.
Now, you might think the same problem would crop up with something like men’s clothing. But they don’t, or at least not to the same the degree. Why? Women enjoy the experience of shopping online and offline. In fact, for women in some countries, looking for clothing has become a hobby, a passion, an addiction and a ‘therapy’ and even if they are only ‘window shopping’ and not buying.
Your choice to sell online is vast; you could be selling anything. And your range of choice is expanding especially if you take warehousing out of the equation and are dropshipping.
So avoid asking for trouble by choosing products that are especially difficult to sell online, and target easier products to sell. If you must sell into these markets, the key is to add a tremendous lot of value.
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6. Choosing To Read Sales Data Too Early
If you’ve got around 40 or 50 visitors and you’re worried about your store having no sales yet, it’s just simply too early to tell.
Profitable online stores often convert at 1%, and this doesn’t mean that you’ll get 99 visitors, then magically one sale, then another 99 visitors before another sale. What it means is that sales happen randomly but that over an extended period of visits they occur at an average rate of 1 out of every 100.
Conversion rates are all about statistics, and to calculate them you need a significant amount of traffic to create meaningful data before you can tell whether you should be worried.
How much data is market specific. If your niche is a market where people usually take their time looking and considering before buying your sales rates will show that by taking the time to pick up.
Examples of this type of niche might be vacuum cleaners, scientific calculators, cars. But if you are selling impulse items often show higher conversion rate even at the start such as clothing and jewelry.
Bad Choices When Starting Your Online Store Are Easy To Avoid
Common mistakes that will stop your store from ever being profitable are so easy to make if you lack experience. And we see business owners making small mistakes which cause significant problems for their online conversion rates later on or cost them more money down the road.
Automation can be your best friend, mainly when it’s used in the right places and once your online store is established. It’s a massive advantage that online stores have over offline operations giving an excellent opportunity for scalability and rapid, explosive growth.
Pick a niche you love and avoid selling cheap products or super competitive markets unless you can add a lot of value in other ways.
Expecting to do some work, even when you’re drop shipping is a given. An online store isn’t a magic box where you put in nothing and pull money out. It’s all about making things efficient so you don’t have to put a lot of effort in.
Just don’t give up making improvements and learning new things to boost your sales. Remember that your determination will pay off.
Don’t expect sales too early, keep going and gather enough data, so you know what to improve.