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How to Avoid 7 Fatal Ecommerce Mistakes

success%20and%20failure How to Avoid 7 Fatal Ecommerce Mistakes
Harvard Business Review
journalists Carroll and Mui conducted a comprehensive study looking at all the major US companies that failed in 2008. They published their findings in the September 2008 Issue in a powerful article entitled “7 Ways to Fail Big.” It outlined seven basic categories of mistakes: the synergy mirage, faulty financial engineering, stubbornly staying the course, pseudo-adjacencies, bets on wrong technology, rushing to consolidate, and roll-ups of almost any kind. What they did not discuss was that these seven mistakes can be fatal to ecommerce stores as well. As 2009 continues to fly by make sure your ecommerce business is not falling victim to these common mistakes!

1. The synergy mirage

Don’t assume that trying to integrate different applications, plug-ins, and services will yield the best results just because each is great on its own. Customer experience can suffer and in the long-run it can be very costly to your business if anything breaks and changes. Find one or two great companies with numerous offerings to do everything you need.

2. Faulty financial engineering

Whether free or paid, find reporting tools that will help you to keep a good handle on where your money is going. Tools like ROI trackers can help manage which of your efforts are generating sales, and inventory controls can help you keep track of how quickly you are moving merchandise. Planning and tracking go hand in hand- the more data you can track, the more information you will have when making decisions.

Volusion’s reporting tools

3. Stubbornly staying the course

The world of ecommerce is changing so rapidly that if your original idea or strategy is not working you have to be ready to abandon that concept and develop a new one to succeed. Fortunately, the fast pace of ecommerce also enables you to put a new plan into effect very quickly. In this way, running an online store makes it easy to try new things as frequently as you would like and pause, modify, or end them just as easily.

4. Psuedo-adjacencies

Many times businesses will try to grow by merely selling more products or expanding their target market. Often this is a bad idea because it is not well planned or reasoned from a customer’s point of view. Say, for instance, you are selling GPS systems. While GPS systems and home DVD players are both electronics few people are going to be in the market to buy them both at the same time. Consumers who already have a home DVD player are not going to see any value in being presented with that same DVD player while they are looking to buy a GPS system. And in a year or so when they are looking to get the newest home DVD player they are probably not going to remember that your store offers them because there is no reason for the DVD player to be associated in their mind with the GPS purchase made earlier in the year. In this scenario, it would be better to have two websites- one dedicated solely to GPS systems and one dedicated to DVD players (unless of course you plan on carrying a full line of today’s most popular consumer electronics).

5. Bets on the wrong technology

Unlike a retail store, where there is a significant amount of capital investment, it is actually okay to start a website selling a specific new piece of technology- say Blu-Ray Players. But what you have to keep in mind as you do so is that the resources that you put into the site should reflect the transient nature of the site. In other words, do not put all of your money into that one venture if it looks like it is only going to be profitable for a short time (until the next big tech invention is rolled out). Get in, get some return on your investment, and move onto the next venture. Trying to sustain these types of sites can be a big mistake unless you have deep pockets to keep charting the course from fad to fad.

6. Rushing to consolidate

This point was originally outlined to mean that it can sometimes be the best strategy to let companies around you struggle through mergers and acquisitions instead of being the one struggling. The message here is that it can be a sound decision (both financially and in terms of efficiency) to not always lead the charge into something new. If you cannot really afford to be the first one in your industry doing something new let someone else try first. You will learn from their successes and failures- helping you formulate a game plan all the while.

7. Roll-ups of almost any kind

Generally roll-ups refer to unifying many existing groups, teams, divisions, or companies under one unifier. In ecommerce sometimes online business owners try to join together pre-existing “bits” of things to help them operate their store. Say you or your business partner have had a store previously. Why not recycle resources, right? Wrong. More often than not pre-existing Pay Per Click (PPC) campaigns, domain names, hosting plans, coding, and many more resources are just reopened or given a make-over when a new venture is started to save time. Piecing together old resources can cause a lot of trouble down the road with lost logins, incorrect account information, old contact information, ownership disputes, etc. When you start an online store always start completely from scratch so that there is no confusion as the store grows and expands.

Avoid these seven fatal mistakes and you will enjoy success throughout 2009 and beyond!

Need some help? Partner with Volusion to achieve success!

-Kate Pierce, Volusion

15 Responses to “How to Avoid 7 Fatal Ecommerce Mistakes”

  1. Phillip Griffen

    Excellent post. Though these are fatal mistakes, I think these are most made mistakes! Thanks for the post, I believe many people would be more careful so that they do not make the same mistakes.
    Thanks,
    Phillip

    Reply
  2. Joseph

    Our new business is service orientated. We target only one industry. Is Volusion for us?

    Reply

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