Every day online stores open and closed. The exit reasons from business can be different: problems with the competition, logistics, marketing. In article we will consider 10 mistakes which were made by Jason Bartasusian at start of two online stores.
Work in e-commerce gave me the best practical experience in life. Those things which I learned, starting online and business do not tell at the lectures MBA or other training courses.
All mistakes which I made allowed me to understand business challenges better, and I will share the experience that you did not step on same “rake” and could come to success quicker.
Mistake No. 1: did not count efficiency
If you ask any skilled businessman that the main thing in business, then he will answer: “Mathematics”.
When I began the business, for me it was rather a hobby. I did not pay sufficient attention to mathematics.
As a result, I appeared in a niche in which demand was high, but income was not so big that business made profit. I sold goods absolutely cheap and to earn decent money, it was necessary to sell more potential demand.
The business mathematics works very simply. To understand how profitable can be your business, use such formula:
Profit = Demand * (Revenue – Expenses)
Let’s assume, every month your goods look for about 20 000 people. This figure can be received, for example, proceeding from statistics of inquiries in search engines. If you are able to attract a half of these people, then these are already 10 000 potential buyers. At average conversion in 1-2% is 100-200 sales in a month. At the average check in $100 and a margin in 30% your profit will make $3000-6000 a month.
Certainly, it is rough estimates, but anyway, having made such calculations, you will be able to understand profit borders for yourself and to draw a conclusion on prospects of your invention.
I learned this lesson having started two shops. Even in spite of the fact that the second shop had rather high average bill, the margin was so small that I had not enough money after all expenses.
Mistake No. 2: did not find a niche in the market
Both shops which I started were constructed on the dropshipping model (purchase of goods from the supplier after receipt of the order in online store). I sold the same goods, as other shops which worked according to this scheme. It was necessary to be distinguished somehow from other shops not to be for the buyer one of many. It was necessary to offer value to buyers and to be distinguished from other sellers, without saying about competing with Amazon and Walmart! (Jason is the modest person).
With the first shop I just at random chose a niche as I thought that it is quite perspective for sales. I did not conduct a research of competitors to understand a situation in the market. And I did not notice that the largest players in this niche were very strong. They had same goods which I sold hundreds of responses, thousands of likes and the excellent blog. I still think that I could not compete with them. Of course, the shop was catastrophically non-profitable.
With the second shop I found an excellent opportunity in respect of content. I managed to create information resource. This information was also on other websites, but I managed to process it and to teach in simpler look. As a result the resource generated 15 000 visitors from search engines in competitive subject.
Estimate quantity of useful content on branch resources, on subject of your shop. It is quite possible that you will manage to find niches where there are not enough resources or giving of content suffers.
Mistake No. 3: did not pay attention to a brand and products
My first shop was called ReusableBagStore.com. As you understood, I sold what bags. They were on sale not really well therefore I gradually began to expand the range, adding what products to the range.
As a result in my shop absolutely different products were on sale. The only moment which somehow united them is environmental friendliness. But it was insufficiently for positioning of shop and I had difficulties in seo-advance of the website and an explanation of that for whom shop and that it sells.
It is important to think over creation of a brand and positioning from the very beginning. If in the long term you plan to expand the range, then do not use any specific product in the name and positioning.
Mistake No. 4: there was no content plan
It was one more mistake which I made in the first shop. I did not use content marketing which allows to attract visitors from search engines and social networks. And without content marketing it was rather complex to attract visitors in shop of what bags.
I corrected this error in the second shop which was completely constructed on the strategy of content marketing.
For some niches it is quite complex to create content. Seriously, you think many articles it is possible to write about what bags?
The key moment (which I learned later) in writing not about a product, and about your buyers. Continuing an example with what bags who uses this product? Most likely are those who care for the nature, most likely, they lead a healthy lifestyle and practice yoga. These are only guesses, but they can be confirmed having conducted a small research.
Building the content strategy of your relative audience, but not a product, you will find more subjects for communication. Even if your niche small and specialized.
Use of content marketing is a long-term strategy of attraction of traffic, but nevertheless thematic content will give constant free traffic and the relation to your shop will be more loyal.
Mistake No. 5: incorrectly used free samples
Some online stores do very big sales through distribution of free product samples. For me such experience was unsuccessful, I “closed” only one sale from 300 samples.
Free samples, competitions, gifts are tools which well work for advance of your goods, but they are suitable not for all niches. They will work for perishable goods and for expendables: cosmetics, food, additives, etc. For other products which can be bought only once (for example, clothes) reception will not work.
This reception also works for increase in recognition of shop and creation of a brand, but if you have no general marketing plan, then such activities will not lead to anything.
Mistake No. 6: start of a competition without plan
After failure with free samples I became farther to look for ways of advance of the online store. I decided to start a competition together with the blogger. I thought that it will give to me many references that is good for seo and also subscribers in groups on social networks and subscribers to mailing.
This time I was more grounded financially and the certificate for $50 was a prize. Result? I trebled the number of subscribers on social networks, and the competition became a hit.
But as I made a mistake No. 4 I had no content and the plan further to communicate with subscribers.
As a result subscribers forgot about me as I had no content to tell about the shop and to continue communication. Who could think that generation of content in Facebook and Twitter demands a lot of time?
At start of a competition be convinced that you have content to continue communication with subscribers on social networks or by means of email-mailings.
Very frequent mistake is the wrong choice of a prize for a competition. So, if you sell goods for motorists play either the goods, or the certificate on purchase in your shop. Thereby you will attract target audience which is interested in your goods. Often happens so that play not thematic prizes, for example iPhone, as a result your group on social networks is replenished with those who like Apple, but not your goods.
Mistake No. 7: did everything by myself
In economy there is a concept “alternative costs” (or costs of alternative opportunities). Your time is not free. For example, if you are engaged in a copywriting for online store, then lose an opportunity to be engaged in other, more effective business. For example, to find new suppliers or to organize new ways of delivery of orders.
I did everything: created the website, did descriptions for goods, uploaded them to the site, was engaged in marketing. Was a person orchestra.
Problem here in that, being engaged in all this independently you spend huge amount of time which could go to more important things, such as forming of business relations, search of the new ideas for business development.
Manual labor happens two types: obligatory and optional.
Obligatory work it: addition of goods, creation of descriptions, etc. Such work it is possible and it is necessary to optimize, your time anyway is more expensive. For search of performers for such work it is possible to use various exchanges of freelancers, there is a lot of offers on such work and it will not cost much.
Treat optional work: design of a logo, choice of color of the button “add to cart”, etc. Such work can bring significant effect only when testing and at big attendance of the website. If you only begin the business, then time for such work will leave much, and the considerable effect will not be.
Mistake No. 8: did not know who my ideal client
I made this mistake at start of the first shop, so up to the end did not correct during the work with the second.
The correct work in the niche consists of two points: to find a product and to find target audience. It is easy to find a product when you have clients, and here when there is a product, but there are no clients then difficulties begin.
At a research of the market it is important to look at figures, but for me creation of a profile of the ideal client became the most important.
Even if in your niche good demand and a wide choice of products, without knowing who your ideal client will be more complex to work. I made this mistake during the work with the second shop: I had good sales in some months, but because I did not know the target audience I lost a part of sales.
If to dig a little more deeply, then you will understand that there are niches in niches. The you will be able to make narrower targeting on the buyers, the better. In the second shop I sold the complex electronic equipment and I had segments of the advanced equipment, average and initial level.
I sold all three types of the equipment, but now I understand that if focused on sale only of one ruler, then it would be simpler to address target audience. And I had a situation when products were too advanced for beginners and too simple for the pro.
Mistake No. 9: there was no general marketing plan
“If your plans fail, plan possible failure”.
Creation of the marketing plan – a simple task if you know who your clients and where to find them. I had no plan and I did what came to my mind and it was not the best idea. The marketing plan has to cover all channels of attraction, but anyway for someone will the contextual advertising, for someone SEO or social networks is more effective.
The marketing plan has to be ready before start of online store. In the long term it can be scaled and changed or added, but the basis remains.
Mistake No. 10: failed in PPC campaigns
When you only begin online and business, in each service you see the solution of all the problems. I spent a lot of time, looking through the websites of various services, seeing in them the solution of all the problems.
And once one company got to me, it could be any other company, but for me it was that.
The price of their services was essential to me and in the absence of effect my budget would suffer very strongly, but results of other clients and marketing videos made the business.
I was called from service and told that will be able to increase considerably sales of shop and everything will work on an automatic pilot.
As a result I signed the contract for 6 months which cost to me quite much, however I did not receive any order from PPC (pay per click – advertising with payment for click) during this time. All orders which were made during this time – was results of my efforts in seo-advance of the website.
Therefore correctly choose services for attraction of traffic. I am sure that the company well works, but for my niche such channel of involvement of visitors did not work. Estimate cases and clients with whom the company works. It is desirable that it already had results in a similar niche.
What needs to be done before start of online store:
- Investigate the market – whether there is demand for your production?
- Investigate the clients – who they and what problem you solve are?
- Find a niche in the market. Do you start the next shop which offers most too, as others or bear additional value for the client?
- You have to have a marketing plan;
- Do not spend time not unnecessary work. Concentrate only on the most important;
- Think twice before beginning work with the company which guarantees increase in sales;
- Use simple, accurate design;
- Work hard.