big-money

E-Commerce Myths and Truths

If you’ve ever tried to launch an e-commerce site, you already know it didn’t go exactly as you originally thought it would.  Web designers, shopping cart vendors, and web hosting companies have made a fortune telling you how “easy” it is to launch an e-commerce site.  You can’t fault them for making their pitch though, e-commerce is easy… for them.  I have a friend who’s a military-trained bomb technician who tells me how easy it is to diffuse a bomb too, but that doesn’t mean I could do it.

Myth #1 – E-commerce is “easy”
Sure, the process of actually setting up the site – importing the products, designing the pages, etc. – is easy for a lot of people, I’ll give you that.  Most hosted shopping carts even have pretty decent looking templates these days.  But that doesn’t mean you’re done… you have to maintain your inventory, market your site, optimize it for search engines, respond to customer inquiries, the list goes on and on.  If someone told you that you can just throw up a website and star getting sales, you’ve been mislead.  You need a plan. (Coincidentally, I’ve laid out a plan for ecommerce success you can reference).

Myth #2 – E-Commerce is inexpensive
This depends largely on what you compare it to, but I’m talking more about those guys who run around selling $500 e-commerce sites, suckering companies out of their money.  You get what you pay for.  Maybe you can get up and running with $500, but all you’re getting is the same (usually ugly) template that 100 other people also bought.  Your website is often your first and last chance to make an impression – don’t cheap out here.  You can get a great looking sites for around $3,500 – $4,000 if you don’t have it now, save your money until you do.  You’re better off not being seen than being seen and making a bad first impression.  Presentation is everything, don’t skimp on this.

Myth #3 – Access to Global Markets
One of the most common pitches I hear from people selling e-commerce sites is that people all over the world will be able to find your site and buy from you.  Technically it’s a true statement… but that doesn’t mean it’s going to happen, or that you really want international business.  You might think you do, but unless you understand what’s involved, what the risks are, and are prepared to handle them you probably don’t.  Do a Google search some time for the products you sell… there are thousands, possibly millions of websites selling the same things.  The odds of someone in your own neighborhood finding the site are slim as it is, much less half way around the wold.  If you’re in the United States, chances are you would prefer to buy from someone else in the United States vs. a foreign site, right?  Well, so would they.  So unless you’re holding something super unique that can’t be found anywhere else, don’t count on “going global” via the Internet.  And if you are… do you really want to deal with customs, fraudulent orders, charge-backs, and shipping costs?

Myth #4 – Online Transactions are Safe and Secure
More than 80% of all Internet fraud is committed by buyers, not sellers.  These are the people who buy something, then call their credit card company and say they never ordered it, never received it, it arrived broken, etc.  In these situations, the buyer’s card-issuing bank immediately takes the money back from the seller – you – plus a $25 charge-back fee, and then begins the dispute process.  If you win the dispute, then you get the money back.  But the chances of winning the dispute are slim – I had a situation once where the buyer said they didn’t receive the merchandise and I provided the signed delivery confirmation from FedEx.  The bank’s response was that proof of delivery doesn’t prove what was in the box.  So not only was I out the $400 sale, I was also out my $350 cost of the item, plus the $25 charge-back fee.  Instead of making $50 on the item, I lost $375.  Now there are things you can do to reduce buyer fraud, like only shipping to the billing address for the credit card instead of allowing the buyer to specify an alternate shipping address.  But it does still happen, and is something that can’t be ignored.  I’ve found a simple phone call to validate the order is the most effective.

Myth #5 – You will get the sale if you have the best price
This might have been true in the early days of online shopping, but today price is just one of many factors.  Your website has to instill trust.  This is part of the “Presentation is everything” mentality… you can have the best prices on the Internet, but if your site doesn’t look trustworthy you won’t get the sale.  This is why Amazon is so successful, in spite of not always having the lowest price: because you know they’re a real company, with a real support staff, and if the item isn’t exactly what you expected you can pick up the phone and call someone.  Make sure your site has an appearance that doesn’t make people wonder if you’re legit.  Create a friendly return policy that benefits the customer, not just you, and offer a phone number where people can call you for customer service.  It also wouldn’t hurt to have a few Trust Badges like Honesty in Commerce or UpFront.

Myth #6 – Manufacturer Photos are Good Enough
It’s one thing if you’re selling large items like furniture, but for small popular items using the manufacturer-provided stock photography makes you look like every other drop-ship site out there.  Especially for price-competitive items, when people visit your site and see the exact same photos they saw on the last 3 sites they looked at, they’re less likely to buy from any of you.  Get yourself a lightbox like the Sunpak 620-EBOX kit and take some original pictures.  If getting up and running quickly is a concern, you can use the manufacturer-provided photography to get started, but try to phase them out over time.

Myth #7 – Drop Shippers Are Awesome
I can’t recall how many times clients have spent money on a great looking layout, then just imported a bunch of products from drop shippers and waited for the magic to happen.  They’re still waiting.  When all of your products are the same as the products on Amazon, eBay, and 10,000 other sites, you aren’t going to win with this strategy.  If it were really that easy, everyone would be doing it.  Oh, wait, everyone is doing it – and they aren’t making any money with it.  The reason those sites look like they haven’t been updated in five years is because they haven’t.  The site owner gave up a long time ago.  Your buyers need  a reason to buy from you.  What are you offering that no one else is?  You need some differentiation.  Dropship products should complement a site, not be the centerpiece.

Myth #8 – No Experience Required
The great thing about e-commerce is that you can “learn as you go”, but don’t think you can just set it up and forget about it.  It’s just like any other business and needs to be treated like one.  You don’t have to be an ecommerce expert, but you do have to have a little common sense.  Think about your website the way a customer would.  Are they getting the most out of their experience?  What could be better?  This is an ongoing project, and as the web evolves make sure you’re either staying up to date on what consumers want.  If you’re up for another read, check out my article 11 E-Commerce Tips for 2011 for some more pointers on what (and what not) to do.

Fortunately there are plenty of companies out there that can help lend some expertise with search engine optimization, pay-per-click marketing, and web design.  And of course, you can always contact me and I’ll point you in the right direction.

 

3 replies
  1. Ravi Pathak
    Ravi Pathak says:

    Hi Ron,

    This is great article ,especially, when every day new mom & pop store opens selling the same thing ! E-commerce is not easy !

    Also, you are so right, lowest price doesn’t guarantee the highest volume ! I learned it & the other way around hard way and have some nice tricks after few failures !

    You might also want to add in these times just putting up a website, wouldn’t really do anything. Its continuous marketing, seo, smo efforts for prolong period , that produces the great outcome !

    Reply
  2. Andy
    Andy says:

    Bang on the money. So many people expect it to be a walk in the park. Truth is, the most successful stores put in a lot of hard work and it takes time…

    Reply

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>