8 Common Mistakes by Ecommerce Merchants
In my articles I try to provide positive, practical advice on how ecommerce businesses can improve. With this article, however, I’ll explore common mistakes that ecommerce merchants make that harm their businesses. I learned some of these the hard way in my own company. Others are ones that merchants tell me when their revenues or profits are declining and they need help.
1. Growing Dependent on a Few Sources of Traffic
As many merchants learned in 2012 and again this year, Google changes its algorithms frequently. If you depend on organic referrals from Google, your revenue can tank in a single day. Beyond Google, being too dependent on any traffic source is a mistake. It’s best to balance traffic from organic search, pay-per-click, social media, affiliates, partner sites, blogs, other advertising, email promotions, and direct traffic.
Continually seek new referral sources. Many merchants feel PPC ads are prohibitively expensive. But aggressive campaigns that offset declining revenues are a huge advantage even if those campaigns produce lower margins.
2. Getting Comfortable with Current Products
Consumer tastes change consistently. Competitors introduce alternative products. Price competition gets fierce. Suppliers discontinue products or run out of stock. Shoppers simply like to see new things.
Change it up. You can keep best sellers, but keep trying out new products. Experiment with new product categories. Expand your selections. Promote them differently. Whatever you do, keep a fresh pipeline of products ready to add to your store. Adding new products and selling them to existing customers is one of the easiest ways to increase your revenue stream.
3. Letting your Online Store Get Stale
It’s a challenge for many smaller ecommerce merchants to continually refresh content, feature new products, create promotions, re-arrange end caps, and so forth. It’s important to keep your online store fresh — at least every season. Ideally, you are presenting new products on your home and category pages weekly. That’s a stretch for many merchants. But strive to change your home page and a few categories and promotions regularly.
Make sure that old promotions are removed. If a product is out of stock indefinitely, pull it from the store. Check your links regularly and remove broken ones. Make sure your site-search results are returning live products.
4. Failure to Monitor Performance
This is a huge point of failure. It is crucial that you monitor your key performance indicators daily. I addressed KPIs earlier in the year, at “21 Key Performance Indicators for Ecommerce Businesses.”
At a minimum, monitor daily your store traffic, new visitors, referral sources, cart abandonment, checkout abandonment, revenue, new customers, average order size, and other key metrics. Check your pay-per-click ad performance at least weekly. Review your ads in-depth to make sure you are not wasting money.
If you outsource activities like PPC advertising, make sure you monitor your supplier’s performance. Agencies do not have the same incentive to deliver results that you do. They sometimes spend money on underperforming ads, campaigns, and keywords.
5. Assuming you Know What your Customers Want
It’s easy to fall into the trap of assuming you know your customers so well that you really don’t need their input. This is especially true with product selection and the design of your online store. It is especially dangerous to make design changes merely because you or your designer prefers it.
Ask your customers what they think. For the design of your website, conduct A/B tests if you have enough traffic. Get customer feedback with surveys, by offering online chat, informally polling customers, or talking with customers who call in about what they would like to see you do better. You can ask questions about all aspects of your business: products, customer service, your store, or your pricing. Ask and you may be surprised at what you learn.
6. Relying on Promotions to Drive Revenue
As competition heats up or revenues start to decline, merchants often resort to promotions to maintain revenues. It’s a good short-term tactic. But, it’s not a long-term strategy.
You need a user experience that is not reliant on discounts or free shipping. You do this by selling compelling products, and offering rich content, superior customer services, and a solid perceived value. Building a solid brand with a store that is easy to navigate and fun to shop is also important.
7. Ignoring Mobile Devices
There are likely smaller merchants that believe mobile shopping is not going to affect them. They are dead wrong. Consumers love to shop on tablets and read email and research on smartphones. They love mobile apps for their simplicity and ease of use. The transition to mobile has begun. If you don’t offer a mobile-friendly experience, your revenues will decline.
For some merchants, this may mean finding a vendor to help build or host a mobile store. For others, it may be a redesign of your existing store to a responsive design. (For a primer, read “Getting Started with Responsive Web Design.”) Changing platforms may be the best option for stores with older, smaller shopping carts. If you haven’t investigated your alternatives, do it now.
8. Ignoring your Competition
Ecommerce businesses are increasingly using automated software to monitor prices against competitors. That’s overkill for many merchants. But it’s important to understand your competitors, their product and pricing strategies, and to monitor them regularly.
Competitors are a good source for new product ideas, products that are not selling — see the clearance pages — and to gauge appropriate pricing levels. Failing to watch competitors may leave you selling a product at a hefty premium while they are aggressively marketing it at a lower price.