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Don’t open an online store (until you read this). The reality of e-commerce.


Most people wouldn’t write this story, because it’s the truth.
Don’t open an online store (until you read this). The reality of e-commerce.

by Shawn Khemsurov

July 14, 2017

There are countless articles about starting your own Shopify or Squarespace store as the path to becoming your own boss and subsequently making millions. For every amazing success story you hear about, however, there are 100 failed e-commerce projects that drain wallets and crush the entreprenuerial dreams of their founders. Alas, this isn’t meant to be a total downer of an article, rather some advice about taking some precautionary measures when opening your own e-commerce business.

Knowledge & Innovation

You may be familiar with the blue ocean strategy, which I’ll admit that for a while I thought was the term for sailing into a business you weren’t familiar with. It’s actually more like starting a business in an uncontested market where there isn’t much competition and capturing new demand (think Southwest Airlines or Starbucks). It’s not that the companies don’t have knowledge in their field, they actually have plenty of it and innovated their way into a market that didn’t exist.

Some entreprenuers luck out in a business they have no training or experience in, but I suggest starting a business in a field you are familiar with. My educational background was environmental science, but shortly after finishing school I fell into a career that was more related to my hobbies outside of school. Art, music and graphic design were all interests of mine that eventually helped me succeed at an entry level corporate fashion job. I felt at home with the designers because I grew up in the punk/hardcore scene.

Now with my foot in the door, I was already trying to figure out what was next. Armed with the all the knowledge I learned in my first two jobs (I was a sponge), I set out to join a startup t-shirt company with a buddy of mine. This was 2007, and neither Tom, Dick, nor Harry had an online store selling t-shirts. It was unlike today, when I can open an online store in one evening with no coding knowledge.  We combined our knowledge of creating vintage style t-shirts with early social media marketing efforts, built a cool website, and got pretty lucky. It was the right time and place, but it took a ton of hard work to eventually see it grow.


old crappy photo of me photographing tees on an iphone

Don’t jump into a completely new field, start with something you know about so you can be an expert and focus on selling.

Passion

You’ve heard it a million times, but I’ll say it again, you can’t have a successful online store if you aren’t passionate about what you sell.  I grew up thrifting vintage rock tees and work-shirts in the 90s, so it only made sense to be recreating them for more people to enjoy. I genuinely loved the work, so it wasn’t an issue to put in the extra hours or learn new skills that it took to grow the business. We had an absolute blast and I actually looked forward to going into work because I had no idea what would happen that day.

If you don’t have that passion for your product and the work it takes to blow it up, please stop now while you are ahead. If you are in it to make money, it never works. When I was starting out with the new company, I took a pay cut to do it and had absolutely no idea if I’d have to go back to corporate design.  If you like that feeling of taking a risk and being positive that everything will work out, entrepreneurship might be for you.

Marketing

I’ll also admit really didn’t know what ‘marketing’ was after spending so much time in design. It was only after much later on that I understood its importance and how to plan for success. If you are just making a product that you think is cool, but nobody else does, you’re doomed. Ask your friends, family, and others in your network about your idea. There’s a good chance if they are honest with you and the majority of them like the idea and think there’s a market, or would even buy it themselves, then the idea is solid. You’re going to have to get that point across with your marketing to many more people beyond your group of friends.

It’s important to have an original idea, but it isn’t enough to make you money. Think about your marketing plan before you launch. Do you have a budget to start Facebook advertising to test your concept? Do you want to do youtube videos, sponsorships, direct-mail, Google shopping ads? Explore what could work best for your product and have a plan in place so you don’t waste time and money. Facebook ads are usually the best bang for your buck for e-commerce, but keep in mind it’s alot easier to do with a built-in audience and a big budget (alot harder for startups).

Be original with your marketing and give people a reason to buy. Maybe you have something that the customer doesn’t know they need, and it’s your job to show them why they need to buy it. Or, your plan might be to just put your clothing brand on the coolest people on instagram and see if it grows organically. Fashion tends to be a popularity contest, so if you have a low budget, unoriginal idea, or no following, you could be in for a rude awakening.


Anti Social Social Club is a brand that blew up solely off social media hype. An extremely rare occurrence that you can’t plan for.

Try and stay away from saturated markets and focus on being different. Position your store to provide a product that can’t be purchased elsewhere. Pick an underserved demographic, then aggressively target those people.

Inventory & Operations

Over-zealous entreprenuers looking to break into online selling often forget the basics of the business. You have a storefront, which may not always be physical, but your products usually are. They still need to be ordered, produced, shipped, stored, and sent out to the customer. Oh, and when the customer doesn’t like it or get the wrong size, it needs to be returned or exchanged.

Make sure you plan your inventory orders, not overexposing yourself with surplus product that hasn’t been a proven seller.  It’s ok to sell out at first, as scarcity generally increases demand. Once you have an item that catches, slowly increase your buys and production to satisfy the customer. On the other hand, if you never have a product in-stock, the customer might give up on you and never come back to your site.


Don’t get stuck with a warehouse full of inventory! Consider using a fulfillment house.

Some online sellers just have a product concept, and while that’s where the business starts, it doesn’t end there. Make sure you’ve at least thought about inventory, trademarks, accounting, (potential) employees, distribution, and packaging before you pull the trigger on an online store.

Don’t overlook the importance of the operations side and make sure you have the resources to get your orders out in a timely fashion. Customers are now used to the Amazon-level of service that can’t possibly be matched by a small business. You better damn well try though, and that brings us to our next topic.

Customer Service

I saved the best for last. Tony Hsieh claims to have not known much about shoes before he started the footwear giant Zappos, but insists that it was just a ‘customer service company that happened to sell shoes’. In the early days, they would go down the street and buy the shoe at full price and lose money if it meant making the customer happy. You might not have to go to those lengths to please the customer, but treat them how you want to be treated.


Read this book before starting any business!

We are living in a time when companies are being hit from every channel with customer service inquiries, from instagram direct messages to the email box. If you don’t have the support team to answer questions swiftly you can’t win the customer service game. Consider how you will deal with an influx or questions or returns, and if you need assistance from apps like zendesk.

Retaining customers is so important for the success of your online store, and it’s never been easier to track the lifetime value of a customer. Be considerate and kind, and follow the ‘customer is right’ mantra no matter how much of a pain in the behind they can be. Sometimes you will run into customers that can’t be pleased, and you might have to let them go. You can’t be everything to everyone and that’s ok.

Conclusion

I would never want to dissuade someone from pursuing their dreams. If you are 110% sure you have a great idea for an e-commerce company and have thought about all the facets of the business you will have to either learn or hire someone to cover, by all means open your e-doors. It’s a growing sector that will only become more important and innovative as physical retail shrinks. Most importantly, it’s a heck of a lot of fun.

I’ve seen successes, failures and various shades of the in-between. Hopefully you are passionate, innovative, and dedicated enough to open a thriving e-commerce business. I wish you the best of luck and would love to hear your feedback in the comments or by email.

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