10 Mistakes I Made When Running Two Online Stores (And How to Avoid Them)

The journey into e-commerce has been one of the most educational experiences of my life. What I learned from starting a business would be hard to find in an MBA or any business course.

The lessons I learned were the result of the mistakes I made. Every mistake makes you want to avoid it in the future. I would like to tell you about some of my mistakes so that you can avoid them and achieve success even faster.

Mistake #1: Rushing with mathematical calculations

If you ask any experienced entrepreneur what the most important thing in running a business is, they will tell you it is calculation. When I started my business, it was like a hobby for me, so I did not create a detailed business plan and did not pay as much attention to mathematics as I should have.

As a result, I found myself in a niche that had good demand, but wasn't making enough money to improve my position. The products I was trying to sell were very cheap, and I had to sell a lot more than I thought I would to be able to make decent money.

Business math is very simple. To see how profitable your business can be, use this formula: Profit = Demand * (Revenue - Expenses).

To understand this in more detail, let's assume that there are 20,000 people searching for your product (I have chosen such a large number because I am going to attract visitors not only by the main keyword, but also by its secondary "tail" keywords).

If we assume that you can attract at least half of these people to your online store, then we can say that 10,000 people will become your potential buyers. If you convert an average of 1-2% into real buyers, then this is 100 - 200 sales. And if the average order value is $ 100, and the profitability of net profit is 30%, then the profit will be in the range of $ 3,000 - 6,000.

Of course, these are just rough estimates. But no matter what you're getting into, if you've done the math, you can already guess what to expect. It took me going through the process of running two stores to learn a math lesson . Even though my second store had a very high average order value, the markup was so low that I barely made any money after the order was processed.

Mistake #2: Not Finding a Gap in Your Niche

Both stores I worked with were based on the Dropshipping business model. This meant that my competition was hundreds of other people who were offering the same products online as me.

If I couldn't differentiate myself from them in some way, I would be just "another Dropshipper" and would not provide any positive experience to visitors. Not to mention that I had to compete with places like Amazon and Walmart.

As for my first store, I just entered the market thinking it was a promising niche, but without researching any of my competitors to understand how the market was doing. What I didn’t notice was that the biggest player in my niche was simply amazing. They had all the products I offered, hundreds of reviews, thousands of social likes, a popular blog, and tons of press mentions. They had the entire market base covered, and I still had to compete with them. Needless to say, from a business standpoint, my store was a disaster.

My second store was doing better, not in terms of product selection, but in terms of preliminary information gathering and analysis. I started doing market research and managed to create a comprehensive resource in my niche.

I used SEO as a basis. It's not that the information about the products wasn't available on other Internet resources, and I was able to present it on my site in a way that was accessible and useful to visitors. The result? After some effort with SEO, I managed to achieve up to 15 thousand organic visits per month in a competitive niche.

This is what made my second store successful: I found a gap in the information content of the products. It didn't require a lot of financial investment, and in the end the value of my business consisted not only of the value of the products and the customer base, but also of the value of the content.

Mistake #3: Selecting the product range

My first store sold eco-friendly recyclable bags . However, since the bags did not sell very well, I slowly started adding other eco-friendly products from my supplier.

I ended up with a large range of eco-friendly products with no connection between them other than they were eco-friendly. This would be fine if my brand had a following in the eco-friendly space, but it didn't. While this didn't hurt the sales coming from the paid schedule, it made it very difficult to target specific customer marketing and hurt SEO efforts.

The mistake here was more likely a branding mistake than a financial miscalculation. Branding is just as important, because your brand is what your business is really worth.

Mistake #4: Not having a preliminary content management plan

This was another mistake I made with my first store. I didn't put enough effort into understanding content marketing , which made it very difficult to get organic and social traffic. I fixed this mistake with my second store, which focused on content marketing.

Seriously, how much can you write about reusable bags? The key here is to make content not about your products, but for your customers (which I later learned).

Who are the potential buyers of reusable bags? Someone who is environmentally conscious, right? They are also likely to eat healthy, study yoga, and practice natural healing. This is all guesswork, but doing some research might confirm it.

By building your content strategy around your ideal buyer rather than your product, you have many more content topics and many more ways to connect with your audience.

Even if your niche is very technical and you manage to write 50-100 articles about the nuances of your product, you will not have much else to write about. In order to really get value from your work, you need to have more in common with your customers than just the fact that they buy something you sell.

Mistake #5: Choosing the wrong marketing strategy

Some entrepreneurs are good at using a marketing ploy like sending out free product samples . Since I was in an eco-friendly niche, I had that opportunity.

Unfortunately, I underestimated this system and failed. I was able to sell only one product out of 300 test samples that I sent to potential buyers.

Freebies, contests, and giveaways are an effective way to market products, but they don't work for every niche. Freebies will work on perishable or consumable items: skin care, food, supplements, etc. For everything else, it's very hard to get a positive result.

From such expensive experience, I learned that these tricks do not actually drive sales, they help build a brand. But to build a brand, you need a comprehensive plan.

Mistake #6: Holding a competition without having a plan for its consequences

I was still looking for effective ways to market my bags. I decided to run a contest with a blogger . I thought we could get some SEO links and social engagement, which would help me expand my social media presence and increase my email list of customers.

This time I was more prepared financially, as the prize offered was only a $50 gift certificate. The result? I almost tripled my social media following and the contest gained notoriety.

Or didn't I? Since I had already made mistake #4, I didn't have a content plan to convert my audience into buyers.

The trick with social media is to involve your followers in some process.

• You need to find content and share it with your followers every day.
• Post your content regularly.
• Start a conversation.
• Be useful.

Who would have thought that Facebook and Twitter could be so much work? But since I did nothing, I was forgotten by all my followers. Another lesson learned!

Next time you plan to hold a contest, make sure you have a plan for the aftermath of the contest . Using this plan can be more useful than the contest itself.

Mistake #7: Spending too much time on something you're not an expert in

In economics, there is a concept called opportunity cost . Basically, when you decide to take an opportunity, its "cost" to you is that time is no longer free for your other opportunities. So the cost of one opportunity is actually equal to the other opportunity you have.

If you are creating your own business, like me, then most likely you were engaged in the implementation of all the possibilities yourself. You created your online store, you came to terms with it, you loaded the products into it, wrote all the descriptions, did all the marketing. A spectacular show performed by one person.

The problem is that while doing everything yourself is great, it's also incredibly time -consuming. That time could be spent with your family, brainstorming new ideas, or building business relationships.

You should try to automate as many of the tasks that are essential to your business as possible. It will cost you a little more money, but the headaches and heartache you will save will usually outweigh the money spent. Plus, you can often find people who will happily do these tasks (unloading inventory, entering data, etc.) for you for a reasonable fee.

Mistake #8: Not Knowing Your Ideal Client

This is a mistake I realized after working on my first online store, but one I also made when working on the second one.

Conducting good niche research consists of two parts: finding a product and knowing your customers. The simple thing here is that you can first know your customers and then find a product for them. But it is very difficult to first find a product and then find customers for it.

Most conventional wisdom says that you need to look at numbers and analytics when researching a niche, and that's absolutely necessary. But the critical step I wasn't taking was finding my ideal client and creating a profile.

Even if your niche has enough demand and a good selection of products, without knowing your ideal customer, you will have a much harder time. That's what happened to my second store. I had very good months in terms of traffic, but I was not targeting my customers well enough and probably lost a lot of sales.

If you dig deep enough, you will find a niche within your niche. The more niches you find, the better, as each one will be easier to present to your client.

I was selling quite complex electronic equipment in my second online store. Even among the countless number of products, they were all divided into levels:

• Less complex.
• Medium difficulty.
• Very advanced.

My store featured all three types, but in retrospect, if I had focused on just one type, I might have kept customers on my site longer. My marketing position was something like "too complicated for beginners and too easy for pros."

 

Mistake #9: Not Having a Solid Marketing Plan

"Fail to plan, plan to fail," or as they say.

When you're building an eCommerce website, and you know who your customers are and where you can find them, setting up your marketing plan should be a no-brainer. Unfortunately, since I didn't know any of these things, my marketing plan was a bit of a spaghetti-on-the-wall mess.

While every eCommerce store should have a well-prepared marketing plan that covers all the bases, some of the available channels will obviously be more effective than others. Some products will sell better using pay-per-click advertising, while others will sell better using SEO or social media. Email is also a solid sales channel.

Whatever your plan, make sure it is comprehensively prepared before you begin any action. Naturally, new opportunities will arise as you run your business, but if your foundation is solid, it will allow for sustainable and scalable growth.

Mistake #10: Believing in easy money scams

When your business is in its early stages, it is easy to find a service or software that is a silver bullet that solves all your problems. I can't even count how much time I had to spend looking through site after site looking for a solution to all my problems.

Then I came across a company. It could have been any company, really, but it was the one for me. It was a bit of a cost for me to go with them and would have hurt my situation if they failed, but the appeal of their marketing videos and the incredible results they were showing other clients pulled me in.

Then I called them and they convinced me that they could turn my business upside down and it would just run on autopilot.

I had no more room for error. What was the result? I was stuck in a 6 month contract that cost me a good chunk of cash, and any sales I made during that period were from my own SEO efforts – none from PPC advertising. Please don’t think I’m blaming that company! I’m sure they’re good at what they do, but my mistake was that the niche I chose wasn’t a good fit for their solution.

The PPC companies I've come across have two payment schemes:
a) They charge a fixed subscription fee for their services and spend the rest of the money on advertising your products.
b) You can spend as much as you want on advertising (but not less than the minimum) and pay them a percentage of your advertising costs.

With scheme (a) , you, as a small business, will spend a lot of money just to pay for their services, without getting much return, and with scheme (b), you need to have a large budget to start.

If you are a Dropshipper like me, both options will be tough for you. A friend of mine used the same services and he made some money, but it was nothing significant. If you make your own products or have the ability to charge a high markup, then you might want to consider going that route. Many companies have great success with pay-per-click advertising, but it's just a matter of timing.

What I recommend to aspiring entrepreneurs

After reading about all 10 mistakes, you may be wondering: What should I do? No one can answer this question for you specifically. But to help in some way, here is a short list of hard but rewarding work you can do to increase your chances of success in starting and running an online store:

1. Research your niche: is there a demand in it?
2. Know your customers: Who exactly are you solving a problem for?
3. Find a gap in the market: Is there anything valuable you can add to your niche market, or do you just "want" to have a store?
4. Create a marketing plan.
5. Avoid wasting time on distracting work that is not related to your skills.
6. Think twice and thoroughly check any company you deal with and avoid anyone who makes grandiose promises.
7. Use a good clean design for your website that doesn't require any fuss.
8. And lastly, be persistent!