Six rookie mistakes to avoid in e-commerce


Usually, the first couple of years in business are an exercise in trial and error. Running an e-commerce business, though easier and cheaper to set up, is no different.

Note: This article is the seventh in a multi-part series by Chris Dahl, providing guidance on setting up an ecommerce business. Read the rest:

  1. Ecommerce success begins with laying solid foundations
  2. Ecommerce partners: who’s right for you?
  3. Accepting online payments: the essentials
  4. Understanding the risks of selling online
  5. Everything online businesses need to know about accepting foreign currency
  6. The Secret to Success in Ecommerce Sales

It’s fair to say that business owners tend to experience similar errors, no matter what their industry. Whether it’s staying competitive or serving customers, managing money or adopting the right mindset, there’s always someone who’s encountered your problem before you.

This means you’ll find heaps of tried and trusted ways around the obstacles you’re likely to face. Let’s run through a few of the most common e-commerce mistakes, and how to deal with them.

1. Underestimating the competition

Sure, you can use the latest tools and practices to get an advantage over ‘old school’ businesses, but it’s a different story when you deal with competitors who take a modern approach as well. Never assume your business is more organised, more hard working or more thought-out than everyone else out there.

Use tools like Google AlertsGoogle TrendsHootsuite and Similar Web to monitor trends, consumer preferences, brand perception and website performance across your market and target demographics. Remember, today’s SOHO solopreneur could be tomorrow’s industry disruptor, putting stagnant ventures out of business. So keep an eye on the other players in your sector, whether they’re old veterans or new challengers.

2. Overestimating your suppliers

This is a tough one. A supplier will almost always tell you they’re the right people for the job. And when you’re already dealing with the stress of starting a new business, it can be hard to look past the marketing-speak, and know whether you’re getting a good deal.

Don’t buy the hype in a hurry. Before you make a long-term commitment, ask around; take informal and formal references, especially from businesses similar to yours. Your competitors may be unwilling to share their secrets, but business owners in other industries could offer valuable advice about which suppliers you can and can’t trust.

3. Trying too hard (and burning out)

No entrepreneur goes into business expecting to fail. But many start off determined to win big from day one. They either wind up discouraged when business doesn’t ramp up quickly, or burned out from chasing an over-ambitious target. It’s a hard truth of business: you probably won’t land the big fish in your first year.

The hard work that comes before a success story rarely makes news. But ask any business owner, and you’ll probably hear more about their hurdles than their triumphs. Start small, focus on the quality of your product or service, and gradually build your reputation as a superstar. Don’t be discouraged by humble beginnings. After all, Rome wasn’t built in a day.

4. Selling out to buy your customers

When faced with a slow start in finding customers and clients, it can be tempting to compromise on price to bring in business. Within reason, this can be a viable strategy that won’t harm your offering. But over-compromising has the opposite effect — your clients lose respect for your products, services, business and brand.

 Early on, you may need to experiment with price points, getting a feel for where in the market you fit best, but once you get this right, it’s vital you stand your ground. Customers who are willing to pay what you’re worth are more likely to stick around, and the revenue you generate from them will keep you in business for the long haul.

5. Leaving key decisions to the last minute

Some factors aren’t crucial to your business or products, but are still fundamental to the success of your e-commerce business — like product warehousing or your order fulfilment process. You can still sell products and serve customers with an adhoc solution, but as your customer base grows, you’ll find business becoming increasingly harder to manage — sometimes to a point where your profits can take a hit.

Deciding in a rush or on a whim can spell disaster down the road, when unforeseen circumstances might arise. For example, businesses are treated differently when it comes to online payments. Some payment providers require extra qualification from, or simply don’t facilitate, certain business models or categories — this can cause major complications if left until too close to launch day. Make the time to effectively plan each area of your business, ensuring you select suppliers that offer the best fit for the way you operate.

6. Ignoring the risk of chargebacks and fraud

Chargebacks are an insurance feature that protects cardholders from losing money in the event of an admin error, a missing delivery or a faulty product. On their own, they’re a fantastic mechanism for ensuring your customers stay happy and your business keeps its great reputation. But combined with credit card fraud, they create expensive challenges for both online and brick-and-mortar retailers.

Too many e-commerce businesses learn about chargebacks the hard way — by neglecting the security measures that prevent losing both revenue and, in some cases, good product too. Before accepting online payments, do your research on how to pre-empt fraudulent transactions and fraud-based chargebacks. Your payment provider is the best place to start. They can offer solid advice on how to keep your business protected.

So, what can you do to protect your first year in business?

Learning from your own experiences is important, the lessons from these will be invaluable. It’s also key, however, to pay attention to those who’ve walked the road before. You don’t have to suffer from all of these mistakes yourself to gain the wisdom:

•    Keep an eye on the competition, and listen to your market.

•    Research your suppliers before you buy — it’s responsible, not rude.

•    Grow slowly and play to your strengths.

•    Believe in what you offer, and reward your loyal customers.

•    Make enough time to plan each area of your business.

•    Mitigate your financial risks — your business depends on it. 

Adding these to your toolkit, next to your proactive approach and open mind, you can build effective and flexible strategies any e-commerce business can thrive on.


About the author

chrisdahl_headshot_11Chris Dahl is Director, Sales & Growth at Pin Payments, an all-in-one payment provider, enabling businesses to accept payments around the world without a traditional gateway or merchant account.