Why eComm Stores Fail

I had the pleasure to speak about my entrepreneurial journey at an event at Every Nation the other day. One of the questions from the audience was:

"How do I succeed with my online store?" How do I become successful in selling online?"

And my answer to that was: 'First of all, we have to look at why Ecommerce Stores fail.'

Like in every business, there is a variety of factors that determine our success. Just to list a few:

  • Not having a clear vision or goal
  • Poor product quality
  • Logistics - shipping and stock management
  • Supplier issues
  • Lack of funds

... and the list goes on

But if I had to pick the one not so obvious reason, it would be:

eComm Stores Fail Because we are Selling to Strangers

Here is why:
If we still sell on our own store, we have to bring traffic to our store. Unless we have an an established store that is ranking on Google and gets tons of organic traffic - which is rarely the case especially when we start out - we have to pay for traffic.

The average conversion rate on Shopify stores is around 1.4%. To make the math easier, let's assume your conversion rate is 2%. Which means: you have to bring 100 visitors to your page to make two sales.

That's not many sales. And the profit out of these two sales has to cover the cost of traffic for 100 people. That is very rarely profitable. Even if you are a 'rocket scientist' with your Facebook ads or Google ads - wherever your traffic comes from.

It is very tough to make a profit if you have to bring 100 people to your store to make 2 sales.

If you're selling on marketplaces like Amazon, Lazada, Rakuten or other, then the challenge is that you mostly compete over price if you don't have a brand. You're competing with hundreds of other sellers selling similar products, so most customers will look at the price first and will choose the cheapest one. Which, of course, minimizes our profit margin and makes it very tough to be profitable.

What is the answer to this? I would call it:

Build a community, build a Brand and get repeat customers

This is to me the magic sauce and this is the most important thing to look at when we start or grow an e-commerce business. We simply want people to buy from us again. We want a community. We want a brand that's known as trustworthy.

If you look at successful businesses, they all have repeat customers. Nobody buys from Burger King once — they come again and again. And that's how they're profitable - because they don't have to bring in new customers every time they make a sale.

To succeed online we need to build a community. We should do that even before we start selling anything.

As soon as we created a group of people who we care about and they care about us, we are good to go. It can be a FaceBook group with 200-300 members. Or any other social media platform. We now can

  • Listen to the pain points our members have 
  • Come up with a product or service that would solve that problem
  • Ask them if this is something they would like to have / buy.


This is so much more efficient and meaningful than scanning Alibaba for something that's 'cheap' and looks like a good deal.

The next step - after we have started selling - is to build our customer list and take care of them as good as possible. But that's a topic for another post covering Ecomm CRMs.


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