7 Reasons Why My First Ecommerce Business Failed10:03 PM
E-commerce businesses are a great business to start if you don’t have a lot of experience and a lot...
E-commerce businesses are a great business to start if you don’t have a lot of experience and a lot of capital. It is entirely possible to start with a shoestring budget and build a successful online store and make a good living at it.
I bought the wrong stockThis is easily when you start out. Unless you are really on the pulse of your market, you will almost certainly buy some stock that fails to sell. You will consider lots of different stock and your success will be partly determined by your ability to pick well.
Buying the wrong stock is a common mistake but it can be exacerbated by making the next mistake that I made. Want to know what I did?
Also read: 10 Common Mistakes to Avoid When Starting an Online Business
I bought too much stockStock is important when you run a retail business, but you should still try to limit your risk. I invested too much too soon and because I made the wrong stock buying decisions I tied up a lot of capital that I could have spent more wisely once I had more experience.
I built my own websiteThe silver lining is that learning to build and market websites turned out to be the start of a career that I love, but at the time it would have made more sense for me to hire someone else to do the work.
If had spent less on stock and more on getting a professional website built I would have launched sooner and probably made more sales.
I didn’t know how to marketThe bigger mistake really though was that I assumed once I had a website I would start making sales. I never really considered how I would get traffic and why customers would buy from me.
There are a lot of websites out there and I now know how to get traffic to them, but at the time I never even thought about it. I didn’t have a plan to generate the traffic I needed.
I failed at PPC advertisingPPC can work very well, but programs like Adwords are also very competitive and I simply wasn’t able to hone my advertising well enough to make it profitable.
These days, creating a profitable Adwords campaign takes a lot of fine tuning and it is usually wise to expect to make a loss for the first few weeks. If you don’t have the know-how and the money to fund this, there are probably better ways to generate sales.
Recommended: Choosing the Right Display Advertising Network
I didn’t use split testingAnother key to any sort of paid advertising is that your website needs to sell as well as possible. Testing different versions of your pages/copy is important if you want to improve. If you can double your conversion rate, it makes it much easier to eak a profit out of your advertising budget.
Failing to use conversion optimization is leaving profit on the table, simple as that.
I assumed I would sell stuffIn my forecasts I assumed I would make a very modest number of sales. By taking a conversion rate of around 1% I was expecting a healthy profit, but the reality was a conversion rate more like 0.1%.
I now realize this was a result of the wrong stock and a lack of branding and marketing ability of course. Plucking a ‘reasonable’ conversion rate out of the air is rarely a good idea.
As you can see, there is a lot to think about and prepare for when starting an e-commerce business. Have questions? Feel free to leave them in the comments below.