Ecommerce Advice: Throwing Money At The Problem is the Problem.


Most entrepreneurs know that in order to make money, one must also spend money as it plays a vital role in not only starting up a business but also in growing it. As entrepreneurs, we also know (or will soon find out!) that every now and then we may stumble across a bump or two within our businesses that will require our time, problem solving skills, and possibly even our money in order to recover. If this is you – no shame! We’ve all experienced it. However, it’s imperative that when you do experience problems that you don’t fall into the trap that many ecommerce business owners do in believing that money and money alone will solve your problems … because I guarantee you, it won’t!

Now, you’re likely protesting and saying that you don’t throw money at any problem, in fact, money is hard to come by. Though this may be true for some, we cannot ignore the fact that many business owners mistakenly throw away their money due to the lack of a solid game plan. When a plan either does not exist or is not well thought out, there is a higher chance for one to spend haphazardly on outside resources for all of the wrong reasons. For example, when issues arise, many larger companies fail to innovate and end up buying another company in order to grow their company rather than focusing on their own innovations. Similarly, many smaller companies spend money towards tools, such as outsourcing, because it’s easier to outsource rather than figuring out their own marketing strategy themselves.

Let’s say you want to start a business. But rather than do the due diligence on what is the best business model for your new business, you just sign up for the next turn key solution that promises you to auto-magically produce sales in your sleep. So, you can go the beach program or perhaps your existing business has hit a growth plateau, and you think that if you have the latest/greatest tools sets you find at conferences that would help you with that problem.

A well thought out strategy plan is the key to success and survival of your business. You should ask yourself competitive analysis (SWOT) questions such as: “Who is the leader in your space?”, “Who do you have to beat to get to #1?”, “Why are they so good and how are you going to beat them?”, “Why are you so good and what would your competitors have to do to beat you?”, etc. Time and time again, I watch entrepreneurs sign up for numerous expensive tools at industry conferences with no real strategy on how to implement or execute. Some sign up because it’s the latest and greatest tool set for turn key solutions while others do it because their competition is doing the same thing. My thoughts? – One BIG distraction. Why? Because these tools handicap entrepreneurs from developing the ability to solve the real problems in their businesses.

New tools and new solutions come out so quickly that you could literally go broke in a day if you bought into every marketing ploy that vendors provide you. If you haven’t already figured it out, when you own a business, the list of things to do and buy are never ending. Though certain tools may instantly solve your problems in some cases, it’s best not to rely on too many of them to solve all of your problems, especially if you do not have an effective strategy plan to complement them. It’s far too common for entrepreneurs to make the mistake of settling a problem by throwing money at it without a proper plan. The secret that all entrepreneurs should practice is to know how to determine when to spend, where to spend, and how to spend. It is critical to determine what specific issues can be addressed by spending money and how much is necessary.

I know of an entrepreneur who complained that his marketing campaign didn’t work. Customers didn’t buy from his website and sales also decreased over the course of a few months. So, he decided to throw more money at the problem by increasing his budget for advertising. Unfortunately for him, this did not solve the issue. In fact, I discovered he even lost more money after reviewing his Google Analytics.

It turns out that his marketing message was not resonating with his targeted customers. Instead of allocating an additional budget for the same ineffective campaign ad, the money should have been spent for research and development. Lesson to learn: Get to know what your customers want, innovate your product, and modify your campaign to achieve better results.

Understanding your metrics is another key factor in a successful business. In my 17+ years of E-Commerce experience, I know that without metrics, spending for an equipment upgrade or a system update is a waste of money if you don’t really know how exactly this is going to affect your employees’ productivity and your company’s profitability. If you are not sure how it will affect your revenue, it would be best to allocate the funds that will add value to your customers. I can tell you from experience, I’ve made these very same mistakes. I’ve bought expensive equipment on a whim based on my gut feeling; I’ve taken actions based on staff opinions just for the sake of making them feel as if their opinions mattered, even if it wasn’t in line with my company’s budget or needs. So yes, I get you! Write that check for $60K equipment – been there and done that. But I can tell you, I’ve learned from those mistakes and wouldn’t make them again.

I once had a client who was irritated that I was asking all kinds of questions, perhaps not even related to the purpose of his call. He asked what was wrong with his site and wanted me to have it fixed right away. In the back of my mind, I was thinking “I just saw your site. I’ve only spent 15 minutes checking it. How can I diligently recommend a solution that you would roll out for the next year?” It’s like going to the doctor, telling him your insides hurt, and requesting him to prescribe you medicine to make you feel better without actually running any tests in order for him to diagnose you. He was initially upset because he felt that he was hiring me now and that I should just give him the answers and tell him what to do.  I had to actually take more time to explain to him how it works and that quick answers are part of the problem because quick answers are not necessarily the long term solutions.

That was insane. If someone could analyze the issues on your site in less than 15 minutes – this should scare you! While you may get lucky and find a person who can do this, you should really evaluate if they are truly right/correct. Do not expect money to instantly fix everything, as it’s important to remember that time is also essential in solving problems.

As an ecommerce consultant, it’s important for me to take the time to learn everything about the client. I tell my clients, I’m good at what I do because I’m naturally curious (okay I’m nosy) and I want to learn everything about the business so that I can make sound recommendations that make sense, fits their business model, and are executable. You have to do the same, you can pretend even for an hour to be an independent consultant to your business and see what are the glaring issues in your company. What were the past problems that you may have just thrown money at hoping that the problem would go away? Force yourself to look thru the lenses of an independent 3rd party, you may surprise yourself that you already know what to do and perhaps it doesn’t involve spending/investing more sums of cash to make it go away.

My main point is that throwing money at the problem is not enough. Quit thinking in the short term and stop looking for quick fixes. Factors such as appropriate action, metrics, and time are also crucial. Don’t just spend money. Rather, understand how it will solve the problem and how it adds value to your customers. If you don’t know how spending the money helps you, you are not helping alleviate the issues, instead, you are only creating a new set of problems.


Written by Shirley Tan

One Response to Ecommerce Advice: Throwing Money At The Problem is the Problem.

  • Dl says:

    Similar experience as what you have mentioned. Having clients expecting us to provide an instant remedy to their current business situation.

    Thinking that by simply spending more $$ on advertising or a/b testing the hell out of their website is going to help solve their short term goal without even realizing at times they might need to take a step back and look at their current business model – which at times might entails a customer/product mismatch or market change.

    Thanks for sharing this Shirley!


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