Problem: How to avoid the common pitfalls that sink e-commerce businesses
E-commerce is tough. And every mistake you make puts you one step behind your competitors. In fact, your business’ Achilles Heel may be hiding in plain sight.
There are sellers who make a lot of mistakes. Whether they’re a brand or a third-party seller, they’ve made some big mistakes when they try to sell a line that really limits their growth and their ability to succeed.
Nail The Small Stuff
You can’t anticipate every bump in the road. But you can definitely avoid the most common mistakes that thousands of sellers have made before you. This is your blueprint to rise above the chaos.
So I think it’s really great to find a good contract manufacturer to create your product and test, test, test, and make sure it’s in great shape. And then once you have a reasonable flow of sales going not the second time that you order, not when you reorder, but when you’re having to restock your product and order a new batch of product, every say two to three months, instead of every six months, it’s time to find a second contract manufacturer as a backup who knows how to manufacture your product and who can do some runs for you.
Tip #1: Diversify platforms
Amazon is highly trafficked and familiar, and easy to use. Lesley calls it the “granddaddy” of e-commerce. But a bulletproof business needs more than one marketplace. In fact, the more outlets you have for your products, the better.
I’ll give you an example. I knew a very large supplement seller on Amazon. They were doing tens of millions in sales per year, and they were busted for manipulating the platform twice. And that’s two strikes, and you’re out. And they didn’t have any other ways to sell their product. So after they were suspended, they were literally left with millions of dollars of inventory sitting there and no way to get rid of it, no way to sell it. And a brand that they had built that was just dead.
Tip #2: Be Unique
E-commerce is crowded. Really, really crowded. It’s critical to stand out– and maybe, for you, that comes by way of a private label. But even if you’re a reseller, you can find opportunities to gain an edge over your competition.
There are really big sellers out there who do some fascinating things like repackaging candy into a certain box with their own branding on it. And no one else can be on that listing. There are people who create bundles. Like for example, if you could do a Superman bundle that has all the party supplies for a Superman party, and then they have some of their own exclusive items that they put into the bundle along with things that you’re going to find from a wholesaler or distributor, and then no one else can get on that particular bundle.
Tip #3: Invest in Marketing
Sites like Amazon and Facebook Marketplace are cavernous. If you don’t make a serious commitment to marketing, your potential customers may never even find your product. Ad costs have gone up– but you’ll likely need to bite the bullet.
If you want to succeed on these marketplaces, at least when launching your products, you are going to need to invest in ads, pay-per-click ads, and DSP ads. You’ve got to do something so that people will see your brand and be driven to it. So advertising really costs probably 50% more than you think it is going to. That’s how much most people underestimate their marketing budget.
Tip #4: Diversify Vendors
So far, we’ve mostly focused on the demand side of your business. But if you neglect the supply side, everything could fall apart. It’s critical to make sure you have a backup plan if your principal manufacturer falls through.
There are sellers who really start to depend on a single manufacturer for their product or a single way of getting their product here if it is coming from another country. That is so dangerous, especially right now with all of the supply chain issues, and also– let’s face it. No one is perfect. Mistakes get made at all of these levels, and you could lose one of those partners.
Tip #5: Keep Long-Term Goals in Mind
There’s no right time to start paying yourself a salary. Every situation is unique. But it’s best to have a plan in place so you can lead decisively and invest intentionally both in your company and yourself.
This is the one no one wants to hear, so I’m apologizing in advance for bringing it up, but a lot of people who are investing in new brands, new product really trying to develop something that’s their very own– whether they’re an established business or a new startup– they do not plan for the time required to recoup their investment, or to actually start pulling in a personal income out of their online business.