There is no easy business. Even in their best time, every company has difficulties. This is not a cliché, but a truth with which we begin a series of lies that we will introduce to you. In the good moments in your business you will fight for growth, and in the bad ones – to stay alive. Look at Blockbuster, Kodak, Yahoo, VW, Google, Facebook and so on.
eCommerce is an extremely voluminous industry that both pros and cons. Some of the myths surrounding it are so widespread and blindly believed that they have become the rules for every online store. In this article we will try to introduce you to a few of them and explain why these outright lies are not true and should not be.
As a company that builds online stores, we have noticed how even some of our customers believe these untruths.
Here are the lies we all believe in and the truth behind them.
Lie number 1 – Online trading is a passive income
We do not know an online store that makes money without doing a lot of work. Now they are probably even more active than before.
eCommerce is not for lazy people. It requires a special analytical thinking that sees beyond business and understands what and why consumers want, how they react and how they think. If this seems like a passive activity, you are very wrong.
Probably selling socks, for example, is easier than making them. A process that is incredibly complex and lengthy, but that doesn’t mean that selling online happens on its own. Daily multifaceted efforts are at the heart of well-developed online stores.
There is nothing passive in the income our customers generate. Everything is very, very active.
Lie number 2 – If you have an online store, the money will accumulate.
Unfortunately not. Building an eCommerce store is extremely easy nowadays. The use of platforms such as Woocommerce, Shopify and more are available online, and most of them are even free.
When the barrier to entry is so low, it means that the market will be crowded very quickly. It may not be in your vertical, it may not be in this moment, but it will certainly happen. The Internet is endless and the more people create online stores, the less chance the customer have to find exactly your store. For reference only, as of 04.08.2020 there are over 20 million online stores. At the same time, about 5 billion people in the world use the Internet – so there are 250 people for each store, the struggle is huge.
Let’s explain it better. Imagine that you open a physical store, but there are no people around you, there is not even a way to your store, but there are 50 other stores selling exactly the same and right next to yours. To make money, you have to build a path to your store (advertising), get people to come (marketing), and then make the customers loyal ones (sales).
It doesn’t sound easy to us, we don’t know about you.
Lie number 3 – Offering free shipping is complicated
Not At all. Not if you have structured your business properly from the beginning.
There is always a lot of noise around the word free. We have customers who offer their clients to pay for the delivery. Such a fee helps them, if the store is new, to accumulate capital and then add free shipping. Sometimes this loses some purchases, but this is offset by incredible service and excellent product.
Two things are quite important to ensure low delivery costs and neither is complicated. The first is volume. How many shipments do you send each day? If this volume is large, you have the opportunity to negotiate lower prices with your courier company. The second is your product margins. If your margins can support it, then you can bear the shipping costs and your customers will receive free shipping.
Remember to choose a product with high margins.
Lie number 4 – I can sell everything online
You can probably sell something at least once on the Internet. We are sure that you will be able to sell a pair of socks with holes, but it is impossible to build permanent sales of socks with holes.
The variables needed to conduct an eCommerce trading are huge. There are any unforeseen costs that you will not have in mind: product production (or licensing), packaging costs, product selection, delivery costs, return costs, marketing, advertising, content production (because advertising does not lead to real traffic , content does), warehouse costs, rent, transaction fees, eCommerce store building, maintenance, development, troubleshooting and much, much, much more. It’s complicated.
Don’t rush into the deep and sell everything, but choose a product that has a real chance to sell constantly. Find out what its margins are – or what the potential sales of the product are. Do not do a general financial analysis, but calculate things specifically, in the smallest possible detail. Do you know exactly what percentage you will realize as a profit? If the answer is no, don’t go headlong into this business.
If you know this, and also calculate the cost of acquiring each new customer, this is the beginning of your business plan. If the cost of acquiring a product is too high, the cost of delivery is too high and your basic selling price is too low , it will turn out that you are at a loss. Nobody wants that.
Margin is everything.
Lie number 5 – My competition is local
The days of local online competition are over. Of course, it is very likely that most of your customers are local, but that does not mean limiting yourself. The Internet is limitless and allows you to grow wherever there is demand for your product.
If you sell in only one region, consumers will look for a replacement. It is easy to go to Google, to search for meters almost identical product, cheaper, with free and express delivery.
Don’t forget about the rest of the world.
Not only your competitors are there, but also new customers and potentially huge expansion opportunities. Start selling locally, but think globally
Lie number 6 – “Customers will like our brand because we are special”
You are not special.
Your company sells socks, do you know how many companies sell socks. Each of them is different in its own way. However, you use different tools, fabrics, colors, logos, amazing customer service, produce constant content and have a community around the brand.
No one should love your brand. You are not the only one on the planet, customer’s trust must be won over, it is not given to someone by right. You earn it. Make your product irresistible so that customers want to come back again and again. Find your unique offer and sell it like no one has ever sold before.
Lie number 7 – Online commerce will kill brick and mortar
Even though it looks exactly like that, the truth is that shopping in a brick and mortar store will not go away for one very simple reason – people prefer to be among people. The truth is that outdated processes are killing some businesses, and those that adapt to a changing world are growing. Companies who do not add an eCommerce store to their brick and mortar or do not have a unique offer / product for their customers, they have problems.
Most of our customers started with brick and mortar and years later decided to add an eCommerce one. They even tell us that even though their online stores are great, brick and mortar still convert and sell better. If this example is not enough, let’s mention that Amazon opened its first bookstore. That’s right, online retailer Amazon has opened a physical store, and we can bet it will open more in the next few years.
Let us introduce you to a few truths about trading in a physical store:
- Conversion rates are significantly higher than online. The average online conversion rate varies from business to business, but remains much lower than in the physical store. If 10 people walk into a store, at least 4 of them end up buying something. Online, if 10 people visit an online store, only 1 of those people buy something. And that’s even a good comparison.
- Luxury retail requires all the senses. In expensive luxury stores, fragrances attract customers, the goods are arranged so as to catch the eye. Thus, the customer engages and understands the brand. Online, you have to choose to click on our history, customers, news and accept that the products are luxurious without being sure. Only one sense is used – sight.
- Logistics is simpler offline than online. Offline:
- People pass by the goods
- They choose what they want
- The product is packaged
- A receipt added
- Customers find the site somehow * Google search, Advertising, Content, from a friend and a hundred other options
- Browse through navigation
- Choose the category they need
- Browse products
- Like what they want to buy
- Add it to the cart
- View cart and click “Buy”
- Fill in: full name, email address, phone number, billing address, delivery address, credit card details
- Choose delivery method
Then the supplier has to: receive the order, find it in the warehouse, pack it, a bill of lading is made and it is sent by courier.
Let’s not forget how some people do not want to provide their data online. Converting by email, before or after a purchase is extremely difficult. See how to make email newsletters work for you, here:
Don’t get us wrong, we love eCommerce. You just have to know what you’re doing. A brick and mortar store alone is no longer enough for a trade to be successful. Online stores are the perfect addition to any business. Created, advertised and managed properly, they will increase your business many times over. You can easily reach new markets and become global.
Do not rush to open an online store if you believe any of the lies above. Find the truth and only then take this step, and if you need help – we will help you!