18 E-COMMERCE STARTUP PITFALLS TO AVOID

Setting up an E-Commerce store can be a rollercoaster of a ride, from the exhilarating feeling when the first few orders trickle in, to the anxiety-inducing moments in between. For every moment that goes right, there could be twelve that go wrong. The learning curve from being an absolute beginner to even an intermediate can be filled with expensive mistakes and pitfalls.

To help newer online merchants or even the seasoned professionals, Ecomdash and Visiture worked together to put together this guide of 18 eCommerce startup pitfalls to help eCommerce retailers learn the ropes without costly mistakes.

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1. Not Choosing the Right Platform

It is not uncommon for an online merchant to go with one of the big three eCommerce platforms — Shopify, BigCommerce, and Magento — only to find out down the line that the platform is not a great fit for their needs. This is why it is important to not only be aware of other platforms out there but to also do your diligent research for your immediate needs.

For example, Magento is a great platform for bigger merchants because it is open sourced and allows for customer applications, but it can be very expensive when it comes time to hire developers for these solutions. BigCommerce and Shopify, on the other hand, are good for merchants just starting out and wanting something simple.

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Be wary of salespeople pushing platforms for commissions, and make the best decision for your goals.

2. Using a Marketing Agency Without Prior Marketing Knowledge

This is one of the first traps that most businesses fall into when they are just starting out in eCommerce. The assumption that a marketing agency can solve all of your problems, without even truly understanding the depth of your own problems yourself, is an expensive road that often leads nowhere.

A marketing agency is not a cure-all for your business ailment and can be quite expensive. You need to have a firm understanding of your company and how to acquire customers before you ever start looking for extra hands on deck. Thankfully, there are many resources online to help business owners learn marketing tactics on their own.

Before seeking out a marketing agency, you should have more than a conceptual understanding of how SEO, PPC, social media, content marketing, etc. tie into your brand and customer acquisition. This will help you get the most out of a marketing agency in the future.

3. Categorization and Merchandising Mistakes

Merchants just starting out can make a big mistake by either having too many or too few category pages. Too many category pages can complicate your site’s architecture and make it difficult for users to navigate. Too few category pages will prevent Google from ranking them for relevant keywords that customers are searching for.

Design your category pages from the perspective of the user. How would a new visitor navigate your page to find what they want?

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Tools such as SEMRush are helpful to see what your competitors rank for and can tip business owners in the direction to which they should try to categorize themselves for SEO purposes.

4. Not Buying Customers

Buying your customers might sound a bit counter-intuitive, but for anyone seasoned in the eCommerce world, it’s not.

People tend to get hyper-focused on their margins and think that they should have gigantic profit margins when they are just starting out. Successful eCommerce practices have a long, intertwined history with SEO, PPC, and other marketing channels to draw in long-term traffic. These strategies can be very front-loaded, with the majority of the benefits coming in at a later date. It is better to value your customers for the long-term, especially when contemplating SEO.

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Successful merchants use different marketing channels to “buy” customers at the top of the funnel and then use customer retention strategies like email marketing to push repeat purchases.

Focus on the lifetime value of your customers, and use top of the funnel marketing techniques to “buy” customers, along with retention strategies to grow your business. Incentivize your new traffic to buy more by using value adders such as free shipping to improve conversion rates.

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5. Choosing the Wrong Payment Model

Don’t simply focus on what your customers will buy. Focus on how they will buy it.

A one-time payment model offers the advantage of simplified billing, but you’ll end up spending more on acquisition marketing. Alternatively, subscription models are becoming more popular because they provide recurring revenue and often provide customers a welcome discount. This is not to say that one of these methods is guaranteed to be more successful than the other, but just be aware of what your long-term goals are before sticking to a single payment model.

Your payment model gives you the opportunity to take a swing at increasing your retention rate, so be sure to incorporate some method that saves you on future acquisition costs.

6. Thinking Outside of the Box

“Think outside the box” is little more than a cliché beaten to death by creatives and entrepreneurs for decades.

A better piece of advice for young eCommerce businesses would be “In order to break the rules, you must first master them.” Best practices don’t become best practices unless they have consistently worked.

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For a starting business, limitations are your friend. The moment you start overreaching too early on, you risk falling into a spiral that can end in a resounding thud. Limitation is a good thing for a business to face. It forces efficiency, grit, and strategic thinking.

Don’t run your business decisions on blank assumptions, wishful thinking, and what ifs. Back everything you do with logical reasoning and data. Acknowledge, manage, and harness your limitations. When the time is right and you can confidently experiment, start A/B testing your theories.

7. Ignoring Customer Complaints

Just being truthful, negative online reviews are inevitable. And, really, negative reviews aren’t the worst thing in the world. They might show you problems that you wouldn’t have seen or thought of otherwise. These reviews are from real customers with real concerns reflective of their experience with you. For every vocal negative experience, there could be dozens in the shadows that will quietly take their business elsewhere. This is not something that you want to ignore.

The majority of online shoppers use reviews when deciding whether or not to purchase a product. If every negative review drains potential sales, wouldn’t it be wise to address the problem at the source?

You want to reach out to customers who leave negative reviews, publicly apologize, and invite them off public view to resolve the situation further. This also provides an opportunity to completely flip the script and transform unsatisfied customers into loyal users who will share their positive experience with the world.

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A proactive strategy that encourages happy customers to leave reviews will also help balance out any negative reviews.

8. Getting Discouraged with AdWords and Google Shopping

A business’s first experience with AdWords and Google Shopping is much like dipping your toe in a cold pool, only to quickly yank it out. Both AdWords and Google Shopping can be incredibly effective methods when they are used correctly, but, without prior knowledge, it can take some trial and error to correctly use them.

It doesn’t work for me” is not a valid excuse.

One of the main reasons AdWords doesn’t work for people is because they try to target short-term keywords and enter into an incredibly competitive pool of billion-dollar brands. Be realistic; you’re not going to make a dent ranking for the keyword “shoes” unless you have a few thousand dollars and, even then, it’s a long shot. With a more long-term keyword such as “used red Nike men’s running shoes,” however, you might see some positive results.

9. Obsessed with Raising Money

Getting the first glimpse at the opportunity to scale a business often sends business owners into a frenzy to raise capital. The obsession with scaling and raising money can throw merchants into unforgiving debt payments and other situations that make margins dwindle away.

A low burn rate is one of the many advantages of starting up as a small business. Whether you want investment capital or debt, or even want to crowdfund, you can kiss your low burn rate good-bye.

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Raising money isn’t necessarily a bad thing, but the obsession with it distracts away from the metrics that matter. Not everyone needs to raise money. Pay close attention to your margins, grow slow, and make good calculated decisions for sustainable growth.

10. Market Is Too Niche

One of the perennial gems of a market strategy advice is to niche down. As valuable as this advice is for a young business to help them find direction, however, it is possible to niche too much.

On one hand, going after the entire shoe industry wouldn’t be unrealistic, but becoming the authority retailer of a 10-person market of some sort of basketball shoe/sandal hybrid wouldn’t be ideal, either. The goal is to find a perfect balance between zeroing in on your initial pool of paying customers and having enough room for sustainable growth.

Finding a niche with zero competition likely means you found a niche with zero potential traffic as well. Determine the size of your market as well as distribution channels, and then niche down to a level that allows for future growth and expansion.

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11. Not Using Social Media

Social media is often dismissed as a main strategy since it requires regular upkeep and additional strategy, yet it can be one of the best channels for eCommerce businesses to not only get new customers but to also keep their customers coming back.

There are endless social media ideas for eCommerce businesses. One great tactic for social media is to use dynamic retargeting. Dynamic retargeting with social media ads allows businesses to send ads to people who are already primed to buy. This helps businesses cut costs from awareness ads and reach people who have already visited their site or searched for a specific keyword.

Don’t limit your social media presence to just Facebook. Twitter, Pinterest, Instagram, and even Snapchat are less traveled and can be incredibly effective platforms to reach your audience. Each requires a different strategy but can be cross-pollinated for maximum return.

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Don’t get discouraged if your social media efforts don’t work at first. It takes time to figure out what works. Start by finding out where your primary audience spends the most time, and then start figuring out what messaging they respond to the best.

12. Not Building Email Lists and Collecting Customer Information

Email marketing has been around for nearly 40 years and is still one of the best customer retention channels. By collecting a customer’s information and emailing them promos and content to keep them engage with your brand, you have a much higher opportunity to keep them coming back.

Collecting email is only the first step. Segmenting an email list is incredibly important for sending the right messages to the right people at the right time. Segmented emails receive a 14.31% higher open rate than non-segmented campaigns, with a 100.95% higher click rate.

An eCommerce business with a large customer list that actively re-purchases your products is inherently worth more than one that does not.

13. Being Scared to Try Things

To hearken back to our point of not “thinking outside the box” too soon, there is a certain danger of never trying new things. This danger is stagnation. There is a point where industry best practices might still work but will yield less effective results.

But this isn’t fair! You’ve been doing everything by the book and following the advice of experts. Once profit margins start decreasing, you might feel as if the world is closing in on you.

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Take a proactive approach to innovations, and you just might stumble on a new strategy no one else is using that can multiple your current efforts.

14. Not A/B Testing or Measuring

If you are not consistently measuring and re-evaluating your e-commerce strategy, how will you know which of your strategies are effective or not? Use Google Analytics to track important criteria such as your daily traffic and bounce rates. If you are doing A/B testing, be sure to only test one variable at a time and use A/B testing tools to streamline the process.

Conversion rate optimization (CRO) tools such as Kissmetrics to see who’s on your site, CrazyEgg to heatmap your traffic, or Hot Jar for an all-in-one analytics tool are great ways to put your eCommerce startup on the right track for growth.

15. No Retention Strategy

Ecommerce merchants put so much effort and money into acquisition campaigns, yet overlook one of the most important metrics: retention. Not only is an old customer more likely to buy than a new one, it is significantly less expensive to target them.

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We’ve discussed email as a retention strategy, but it doesn’t stop there. Other proven strategies include everything from building an internal community on your site, to offering incentives or even creating a Facebook group for your champion users to send them exclusive promotions.

16. Poor Value Proposition

Most eCommerce sites are lucky to get more than three seconds of a visitor’s attention. The average attention span of someone on the internet is incredibly short-lived, and this makes it important for an eCommerce startup to explain its value proposition as concisely as possible.

Failing to make a visitor aware of what you can do for them (save them money, time, or give them higher quality products) likely isn’t going to send them on a journey searching for answers on your site; they’re going to go somewhere else.

Form a mission statement that captures the attention of your visitors, offers your value proposition, and gives visitors a feel for your brand.

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17. Listening to Too Many People

Advice online is like being in an auditorium filled with people with megaphones. A simple question could lead you down a rabbit hole of cross-references and advice that isn’t guaranteed to work. This is why it is important to focus on the best content from the best publications or people who otherwise have been vetted as a knowledgeable and authoritative figure in the space.

Be extremely selective from whom you get your advice. There are mastermind groups available or pay-to-play groups that ensure the quality of advice must, at a minimum, meet a certain threshold. Hiring a business coach or consultant that has a proven track record in your industry is also a good way to keep your attention focused on your goal: making sales and growing your business.

18. Not Being Prepared for the Worst

The more insulated a startup is from risk, the more likely it will stay in business if something drastic happens. No industry is safe from events out of a business owner’s control, and eCommerce merchants are exposed to a multitude of risks such as online fraud.

What’s your plan if suppliers up their prices? Can your profit margins absorb a hit if you can’t find an alternative supplier? If 100% of your traffic comes from your Facebook account, you are essentially at the whim of Facebook’s algorithm. A small change could knock a few thousand visitors off your site per month.

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You will inevitably encounter a few costly mistakes, and that’s okay. The best thing you can do is to prepare yourself for avoidable catastrophes, diversify your options, and observe patterns as best you can.

Final Thoughts

These pitfalls can be very dangerous to a new business, but they can be easily avoided with some foresight. A good offense is a great defense. By constantly measuring your progress and benchmarking your results to industry standards, you will be able to consistently grow your eCommerce business. Act like a curious scientist looking to find the perfect ingredients to what makes your business tick successfully in your niche, and approach each challenge with a creative, open mind backed by analytics and data.