In my 18+ years of doing ecommerce business, I’ve seen many entrepreneurs who have succeeded and thriving in their ecommerce business as well as many who have struggled and ultimately failed. It makes me wonder why some people are successful and others are not. What are the common theme and elements that successful ones have and as well as the ones that didn’t make it? What can they have done differently that might have increased their likelihood of success?
The following are from my own experience as well as interviews from current and past ecommerce business owners.
- They thought it was a slam dunk. Build it and they will come. It sounds absurd, isn’t it? But you might be surprised at how many entrepreneurs set up shop online and have this mindset. They took it for granted that their website would easily be found. Even if they set out to be willing to pay for PPC advertising, it’s not just listing an ad on Google Adworks, it takes work to make each ad campaign profitable.
- They are not product experts. Me too mentality. Entrepreneurs might have heard so and so was doing well online, or they have a connection to a cousin who is working at such and such place that can hook them up with products. Now it’s great to have the hook up, but more importantly you’re looking for the right hook up. If the entrepreneur did their due diligence to research keywords, traffic volume, consumer demand, competitors in the space, etc., they will likely have a better fighting chance at succeeding.
- They built their ecommerce platform from scratch. One can over spend and over invest in a storefront before the business is ready for it. It’s like buying a 6-bedroom house when you just got married thinking that you’ll grow into it and paying current market rate or worse over paying for your home. Building out a website with all the bells and whistle before you understand how your customers engage with your website is a mistake that small and big companies make. Now don’t get me wrong, your storefront is extremely important but it’s more important to get live fast and try to understand your target market than over building in anticipation.
- They are under-capitalized. Shortage of money is a major obstacle in growing a business, whether it is online or brick-and-mortar. If you are still scrambling to pull your scarce resources together so you could take your business to the next level, then I suggest you stop and secure your capital first. You are only setting yourself up for more disappointments, more frustrations, and more debts.
- Awaiting on perfection. Well, in reality, you can’t really wait for your product to be ready for launching. All products are never “finished” because all of them are a work in progress. You have to continue improving its features and developing its functions as your customers’ needs change. As long as your product is not “mediocre” and has a unique value, you can start selling it in the market. One of Guy Kawasaki’s mantra is “don’t worry, be crappy” – there is something to be said for that … that’s why there is this thing called “versions.”
- They partner up with the wrong people. Many entrepreneurs believe it’s a wise idea to create a business partnership with close family members and friends. However, I know a few people who failed bitterly in ecommerce because of doing business with cousins, brothers or sisters. I’m not saying this is impossible. But when you do it, make sure you write everything in paper. Each partner should be able to maintain the relationship strictly “business.” This applies to hiring the wrong people as well. As founder, it’s not enough to just say you have to hire the “right people”, it’s also equally important (if not more) to ensure that the “right people are in the right seats.”
- They ask investors to invest in a business idea. You probably always hear or read about this – entrepreneurs asking investors to fund an idea. However, it doesn’t work that way in the real ecommerce world. The specific purpose of money must be defined. Are you going to use it to manufacture the product, pay your manpower, or purchase machineries? You don’t approach an investor to fund your idea. Do it and be prepared for rejection. You can only ask them to buy something or to pay for something to help materialize your idea.
So what are some of the solutions?
- Create a plan. You need to come up with a plan on how you are going to drive traffic to your website, either you have for it or you work social media in some capacity. But once people are on your site, you need to ensure that your messages are resonating with them, meaning they want what they see, they want what you sell, etc. If you’re not sure on how to go about it, you either have to learn quickly by studying everything you can get your hands on, talk to everyone who is doing well and modeling their success, or you have to hire the talent and build up your team so that you can get there faster.
- Be the product expert. There are three things to keep in mind. First, you have to become the product or category expert. Second, you have let people know you are the product expert. Third, it really helps when you’re passionate about your product and business. This is hard to fake as most people can tell when you put yourself out there.
- Take advantage of technology. There are so many platforms available that are affordable like Yahoo for small business, Shopify, WooCommerce and/or BigCommerce. Pick one. It doesn’t have to be perfect. Just start and don’t spend a lot of money upfront, prove your concept, you can upgrade and move platforms later once your business takes off.
- Secure your capital. Don’t attempt to level up your business without sufficient funds. Talk to investors, angel investors, and get a bank loan, etc.
- Launch your product early. The advantage is you get to know early what needs to be fixed and improved. You get to know early on if your product is sellable or not.
- Choose your partners wisely. As much as possible, it’s best to partner up with people who share your vision, similar values, adds talent to the business and goals in business. There will always be disagreements and fights, just know this and more importantly, don’t let you EGO get in the way of a good thing.
- Ask investors to invest in you. Before you approach them, plan ahead where their money will be specifically spent. Be clear whether it will be used for marketing, equipment, inventory etc. At the end of the day, investors are investing in you, not so much on the idea. They want to believe in you, and when you are responsible for other people’s hard earned money, you need to be prepared to do whatever it takes to be successful, otherwise, don’t ask or accept other people’s money.
So, it sounds simple, yet it’s not. Big and small companies get it wrong all the time, that is why you hear about even the big ones failing. At the end of the day, it’s not just the company but the people behind the company and the products. Either you look back smiling about what you prepared yourself and your business for in avoiding the 7 mistakes above, or you contemplate what you would have done differently. I hope in sharing these with you, you either will avoid these or learn from them.
Written by: Shirley Tan