Lessons from the Trenches: Real-Life E-Commerce Mistakes and How to Avoid Them

E-commerce is a lucrative business. There is a real possibility to operate an online store 24/7, reach out to a global market, and generate high profits. All this at a lower cost compared to a brick-and-mortar business. 

You must have heard a lot of success stories. How a brand with a modest 30$ investment earned seven figures quickly. But nobody talks much about failure. 

Failure holds essential lessons, and we will explore that in this blog. It is the story of Joel and how he tried to build an Amazon FBA business but failed. If you aspire to build an e-commerce business, you will learn crucial lessons from his failure, thus ensuring that you don't commit the same mistakes as Joel did.      

E-Commerce Is Not a Shortcut for Generating Passive Income

Joel's business plan was to buy acrylic paints from China, slap his brand on them, and sell them through Amazon.  

He was under the delusion that running an e-commerce business would be a quick way to generate passive income. Joel dreamt of selling a thousand units per month with a healthy gross margin within three months of launching his product.

Three months went by, but he barely made a few weekly sales. 

Why was his product not gaining any momentum? 

As nobody heard about his brand, people didn't trust his product. Customers prefer to buy products from trusted sellers. 

Trust is essential in any purchasing decision, especially when buying products online. It establishes a strong reputation, and customers are more likely to purchase when they feel that the business is reputable. 

Without it, people may hesitate to put their personal and financial information, which is mandatory for online purchases. They will likely shop around, compare prices and leave, leading to a loss of sales for the e-commerce companies.

So, earning your customer's trust is essential if you want them to buy your e-commerce product. That's a significant blunder that Joel made for his acrylic paints. He didn't put any effort into earning his customer's trust.   

Now, the question arises regarding how to earn that trust. Well, there are many ways to do that. 

Another issue was that Joel never took the time to identify his target audience and whether he was selling the right product. 

What problems were his acrylic paints solving, and for whom?   

The right target audience is the one that shares the problem that your product intends to solve. 

So, figuring out the right product and determining whether it is marketable takes time and effort. 

Joel's plan to buy paints from china, put a label, and ship them to amazon with the hope that they would take off from there was a mistake. 

The question is: How to determine your target audience?

You must decide who will most likely be interested in your product or service. Age, gender, location, income level, and interests are some factors you need to consider.  

To further narrow your target audience, you can conduct market research and gather information about your potential customers and their needs. It includes surveys, focus groups, and in-depth analysis of your competitors and their customer base.     

Gaining a better understanding of your target audience will help you create marketing strategies that are more effective and better suited to their needs.

Further Reading: How to Make the Most Out of Affiliate Marketing

Go For a Niche that You Have a Genuine Interest In

When Joel thought of selling paints on Amazon, he decided purely based on the expected demand and profit he could generate from the product.

Joel had no interest in painting. 

He thought that it didn’t matter as the projected numbers looked terrific.

By choosing a niche that he had no interest in, Joel put himself at a disadvantage.

1. He had no genuine curiosity to ask the questions through which he could build a valuable product.
2. Joel had no motivation to build an audience with which he could validate his product.

He didn't know anything about his customer besides that they had just purchased some paints from him. 

Joel didn't care to learn about the specific problems customers were experiencing, the different types of paints available in the market, or why people buy paints.

His lack of interest and experience in this niche made him overlook acrylic paint as a simple product with no room for improvement or iteration.

Ultimately, by choosing a niche that Joel had no interest in, he lacked the motivation and curiosity to build a brand and story around the product.

So, avoid niches where you have no interest or familiarity in because you will be up against those who are more motivated than you to spot opportunities for the product.

Relying Too Much on Paid Traffic

Joel's organic sales were slow, so he started running PPC ads to boost sales. 

He thought investing in an ad space on Amazon would do the trick.

Sure enough, his sales volume started to pick up. Joel thought he had finally solved his problem of slow sales. From now, he would just buy ads to direct traffic to his listing. So long as the acquisition cost (CPA) didn't eat into his gross margin too much, he would be good, right?

Wrong! 

It turns out that because he didn't have a brand presence or understanding of his customer’s needs, the only keyword that generated some sales for him was "acrylic paint."

Everybody selling acrylic paint was also bidding on that keyword, so he had to pay a high price to compete.

It is not necessarily harmful to rely on paid traffic, but it is essential to have a balanced marketing approach. 

While paid traffic can effectively generate leads and sales quickly, it is not a sustainable long-term strategy. 

To create a successful e-commerce application, you need to have a diverse marketing strategy that includes a mix of paid and organic traffic sources. It will help you create steady traffic and leads, thus improving your brand's visibility and credibility. 

Additionally, relying too heavily on paid traffic can become expensive over time, so it is essential to carefully consider your budget and the potential return on investment when deciding how much to allocate toward paid marketing efforts.

So, to summarize: 

No Brand Presence + Bidding On Competitive Generic Keywords = No Profit Margin

Joel started making a loss in his sales.

His product cost, amazon service fees, and advertising expenses were higher than his sales profits. 

Where he had started with the expectation of turning over a good cash flow within three months, he was now six months in and running at a loss. 

Depending Only on One Platform for Sales

Amazon was Joel's only outlet for sales.

He didn't have a website or any other presence online because Joel thought he wouldn't need one due to selling his product on the most major e-commerce platform.

This mistake only hit home when he had to rely on paid traffic to turn over his inventory. 

Since Joel had no brand presence, it meant he had no options. With no authentic brand presence and a generic product, Joel was left at the mercy of Amazon to dictate his cash flow.

For a long-term strategy, he should have prioritized building his website and viewing Amazon as a distribution channel only. Building e-commerce can be much easier than you think. Take, for example, platforms like WooCommerce. Emerging businesses can rely on WooCommerce developers to build a full-fledged e-commerce store in no time. 

Although there are successful brands that started on Amazon, it's best to have more options.

Further Reading: A Short Guide to Data-Driven Marketing: Benefits, Challenges, And Important Elements

To Sum It Up

So, here is a summary of key lessons that we can take from Joel's failure: 

1. Set the right expectations! Hoping for a quick turnaround can lead to bad decisions.
2. Choose a niche you are genuinely interested in getting into for your e-commerce business. Please don't overlook the importance of identifying a genuine product with a decent market.
3. Try to build your audience organically to validate your product and refine the sales pitch. 
4. Don't depend only on one platform for sales. Focus on building a brand presence and choose multiple channels to sell your product.  

After all, the only real mistake is the one from which we learn nothing.