Shaumik Saha: “Your eCommerce Business Will Fail”
97% eCommerce businesses will fail within a year of inception. It is not all romantic.
Here’s a reality check for those considering digitizing their businesses.
Misleading claims made by opportunistic service providers:
Amidst the Covid 19 quarantine I’ve seen a worrying number of misleading claims being made by opportunistic eCommerce service providers about how success with eCommerce is as easy as attending their webinar, purchasing their service, and setting up your eCommerce front online.
Wrong.
Please be wary of this. Such eCommerce companies are not in the business of making you money, they are in the business of selling web hosting and design services and are only making overly optimistic promises to close a client. You.
Don’t let the stress of being at home or unemployed get to you. Don’t fall for buttered, sweetened and overoptimistic claims.
Having an eCommerce store/ app alone will do nothing. Nada!
Is it possible to open an online store for just a few hundred dollars? Sure (shopify, woo comemerce, etc.) Your teenage kid could do this themselves.
But is that it? Not at all.
The reality of eCommerce is as follows;
- 6–12 months of organic SEO to see any organic traffic at all
- Brutally expensive and competitive digital ads : you’ll almost never succeed with only organic, you have to advertise heavily in this space). The right expertise is needed here.
- Absolutely brutal price and delivery time competition: you’re competing with Amazon Prime’s free overnight deliveries. How likely are you to beat that level of logistical efficiency?
- Low to no customer loyalty: a small discount from a competitor will take them away from you. Harsh reality.
- Extremely long hours spent working on digital content, PR, marketing, etc. to rival the big name retailers who have much bigger teams. eCommerce is not a hands-off/ automated business from the get go. Long work hours and 24 hour monitoring and customer support is often required.
- 98% of consumers only use reputed retailers (amazon, ebay, etc.): Your effective target market as a small name online retailer is dismal. Harsh reality.
- 85- 90% cat abandonment: It’s up to fate weather or not even interested users will buy from you.
Is is even possible to succeed with eCommerce? Is there money to be made?
Sure, there is.
My point was not to scare you away from this line of business, but only to debunk some b.s. and give you a reality check on what’s what.
Here are some general guidelines:
- Do not underestimate the long term investment required. Setting up an eCommerce storefront alone is not the only expense. Consider advertising dollars, content curation, marketing, operations, etc.
- Do not rely on a website development or hosting company for advice on business development and marketing. These are separate disciplines and you must enlist the right expertise. Furthermore, always be wary of conflicts of interest that service providers have when consulting.
- Factor in the huge drop off rates in website users and checkouts when predicting financial performance.
- Dropshipping and other sneaky approaches don’t work in 2020: No one will pay more for a product with slower shipping times if they can get it for cheaper and faster delivery elsewhere. No one.
- Get the right advice and do not fall for unrealistic claims: If something sounds too good to be true it is. There are no exceptions in this. Anyone who promises you fortunes at a small expense up front is lying.
What qualifies me to make these claims and analyses? I’ve had the good fortune of working on some very interesting eCommerce projects in the consumer goods, health, f&b, business services and online coaching space. These are claims based on some actual numbers and metrics I have observed in my time working with such clients.
Need some advice regarding your eCommerce business?
Sure. I’m willing to have a free conversation with anyone looking to get started in this area, and help them make realistic projections on what is achievable and what isn’t. I’ve seen too many close acquaintances and clients being misguided by wrong advice and I’m only doing this to save you the trouble. I don’t have anything to sell in the way of eCommerce/ design/ hosting services, so be prepared for a brutally honest and unbiased perspective on what the possibilities of eCommerce are.
Until next time, adios.
- Find Shaumik on LinkedIn: https://www.linkedin.com/in/shaumiksaha/
- Find Shaumik on Twitter: https://twitter.com/shaumiksaha
- Stride Plus Events and Marketing: https://www.strideplus.com/
- Gulfvakil: https://www.gulfvakil.com/
