12 Things to avoid when starting an e-commerce business

15 December, 2023 by
12 Things to avoid when starting an e-commerce business
Lameco JSC

Starting an online business can be an exciting journey. With low barriers to entry, e-commerce offers entrepreneurs the flexibility to start a business from anywhere at any time. However, the online space is highly competitive. Without proper planning and strategic thinking, your e-commerce venture could face serious roadblocks right from the start.

In this post, I will share 10 common mistakes made by e-commerce entrepreneurs and how to avoid them. As an e-commerce agency helping sellers start and grow their online stores, we have seen these issues derail well-meaning entrepreneurs. By learning from the experiences of others, you can set your business up for success.

1. Not researching the market thoroughly

Launching an online store requires significant upfront investment. Ordering inventory, setting up a website, and running marketing campaigns cost money. Before making these investments, research your target market and ensure there is demand for your chosen products.

Analyze your competitors to understand pricing, product selection, branding etc. Evaluating the competitive landscape will help you identify gaps and opportunities. It will also prevent you from selling products that already have too many established players. Market research will validate your business idea and set realistic expectations.

2. Attempting to sell too many product categories

A common mistake is wanting to be the "Walmart" of your niche and sell every related product. Starting with a wide catalog might seem lucrative but makes inventory management and branding very difficult for a new store.

Initially focus on 1 or 2 closely related product categories. Dominate a niche before expanding your scope. Mastering inventory and operations for a focused selection is better than mediocrity across a vast catalog.

As you grow, you can gradually diversify your products. However, lack of focus early on divides your time and resources. For example, selling shoes, clothing and jewelry simultaneously rarely ends well. Specialize first.

3. Choosing the wrong sales channels

Your product and target demographic should determine where you sell online.

For example, dropshipping high-ticket branded merchandise through Instagram and Facebook ads targets deal-seeking impulse buyers. On the other hand, handmade crafts appeal more to Pinterest and Etsy customers.

Even within e-commerce marketplaces like Shopify or Amazon, some platforms align better with certain products and margins. Choosing the wrong channel wastes ad spend and limits revenue.

Conduct in-depth platform evaluations before investing heavily in a sales channel. Find marketplaces your competitors use. Identify channels where your products can achieve optimal visibility and profitability.

4. Not building trust and credibility

Converting visitors into paying customers is difficult without trust.

First-time visitors need reassurance before providing their payment details and waiting days or weeks for products to arrive. Your store's design, content quality and aesthetic convey credibility and professionalism. High-quality visuals and copy establish expertise in your niche.

Secondly, social proof like reviews, testimonials and certifications boost trust. Feature authentic customer reviews prominently. Update your Google and Facebook business profiles to show visitor activity. Accreditations like BBB and trust badges signal reliability.

Without addressing trust factors, expect high bounce rates and abandoned carts.

5. Not branding effectively

Branding entails conveying what your business stands for beyond the products you sell. It forms your identity through positioning, messaging, visual elements and more.

For example, Dollar Shave Club built a brand around affordability and convenience. Their quirky videos communicated personality and values.

Consistent branding across channels shapes customer perceptions. It also prevents bland generic e-commerce stores that competitors can easily replicate.

Allocate resources to brand building from the outset. Convey your purpose, personality and positioning creatively. A memorable brand captures market share and loyal repeat customers.

6. Offering inadequate payment options

Only accepting limited payment options loses sales from certain customer segments.

For example, only using card payments excludes those wanting to pay via mobile wallets or cash on delivery. Domestic customers may prefer local payment methods over cards.

Offering international payment gateways opens your store to global markets. Depending on customer geography and order value, optimize payment methods accordingly.

Give customers the flexibility to pay how they want. Partner with payment gateways suited for your niche and fulfillment model. Eliminate financial friction in your checkout process.

7. Not registering taxes and licenses

E-commerce businesses must adhere to regulations just like any other industry.

Tax registration ensures you can legally ship products and claim input tax credits. Business licenses and regulatory approvals prevent penalties.

Consult professionals to register your business correctly. Understand your tax and compliance obligations in detail. While boring, registration enables above-board operations.

Ignoring regulations gets you in trouble when you scale. Stay compliant from the outset. It also lends credibility when communicating with partners and customers.

8. Attempting complex fulfillment early on

Fulfillment is daunting for e-commerce beginners. Interactions between inventory, orders, and shipping are intrinsically complex.

When starting out, lean on existing infrastructure before building your own. Third-party logistics (3PL) services handle warehousing and shipping for you. Marketplaces like Amazon also offer Fulfilled By Merchant (FBM) options.

Once you achieve scale, you can attempt owning fulfillment operations. Outsource logistics initially and focus on product-market fit. Premature infrastructure automation drains resources quickly. Learn the ropes before investing heavily.

9. Not prioritizing the mobile experience

Google reports over 50% of online searches now originate on mobile devices. Despite this, analytics show that up to 80% of e-commerce stores have poor mobile optimization.

The smaller screen real estate demands a streamlined browsing experience. Site speed, navigation, product filters and checkout must feel seamless on smartphones. Optimize your store for mobile or risk losing half your potential revenue.

Test your website on multiple devices. Improve site speed by minimizing HTTP requests. Use responsive frameworks that adapt to smaller screens. Good mobile UX cements conversions and brand perception.

10. Neglecting SEO

Ranking high on Google is non-negotiable for e-commerce discoverability. SEO leads interested searchers to your online storefront organically.

However, learning technical SEO can be daunting initially. Start by creating keyword-optimized content that answers searcher queries. Write blog posts and guides that educate and add value.

Lay the groundwork for SEO before expecting immediate results. Produce helpful content consistently. Get backlinks from relevant sites through outreach. With foundational aspects covered, advanced tactics like schema markup will incrementally boost domain authority.

11. Not investing in analytics

Data is crucial for understanding user behavior and campaign performance. Analytics provides insights to optimize conversions across the buyer journey.

Yet, limited budgets often lead to skimping on analytics. Robust analytics is an investment, not an expense. The data exposes growth areas and waste to focus your limited resources.

Integrate analytics early on. Segment users by behavior and monitor funnel conversion rates. A/B test changes before deploying them fully. Data-driven decisions prevent costly assumptions and experiments. Analytics pays for itself manifold.

12. Ignoring customer retention

Acquiring new customers costs up to 7 times more than retaining existing ones. Unfortunately, retention is often overlooked by e-commerce stores chasing growth.

Loyal repeat customers already like your brand, making them easier to market to. They are also more likely to spread word-of-mouth referrals.

Build retention into your customer relationship cycle. Send thank you emails and onboarding sequences after purchase. Offer membership perks and loyalty programs. Seek product reviews and feedback requests. Surprise occasional delightful offers.

Nurturing existing buyers earns you higher lifetime value at lower acquisition costs. Make retention a priority, not an afterthought.

In Conclusion

Avoiding these 12 pitfalls will help you start your e-commerce venture on the right foot. Perform due diligence before committing precious time and money. Lay strong foundations in brand, analytics and operations. Be patient and start small before attempting complex initiatives.

At Lameco, our e-commerce specialists leverage data and experience to help online sellers succeed on popular marketplaces. Get in touch to discuss how we can help you build, grow and optimize your e-commerce brand.

The online retail space has infinite potential if you avoid these mistakes and keep customers at the core. Implement the right strategies from the outset to set your business up for lasting e-commerce success.

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