5 Things I Wish I Knew Before Launching an Ecommerce Business

You may be prepared to start an internet retail business. You have the financing, cash flow intended, stock managed, and just a marketing campaign ready to start. But there are some additional things you will want to know before you begin doing business.

U.S. ecommerce sales grew 13 percent last year to a $289 billion, including traveling, based on trend tracking firm comScore. In the first quarter of the year, online spending in the U.S. had surpassed $78 billion, again based on comScore, making ecommerce the fastest growing retail segment.

Although it’s certainly true that a substantial amount of the growth came from big retailers such as Amazon and Walmart, many smaller retailers selling things on marketplaces such as Etsy or via almost turnkey ecommerce solutions like Shopify or Volusion also have had an effect. These little ecommerce entrepreneurs can and do — in most instances — like success and life-changing profitability. All these tiny businesses must get a deal, if you will, on the business of being in business, such as accounting, operations, and marketing. However, these are areas that lots of new business owners are ready to oversee, and company surprises come from different quarters.

1. The Customer Is Always Right, But Not Always Wonderful

Ecommerce is a service company. The objective is to help shoppers find superior products and deliver those products in a handy way. Many new ecommerce businesses attempt to provide exceptional customer experiences — in keeping with businesses like Zappos — moving beyond what some shoppers expect.

For instance, there’s a merchant in the Pacific Northwest that recently got a customer request. A lab in Southern California wanted to grow algae within an alternative fuel project. The laboratory required large water troughs, very similar to what you could use in livestock operations, only made from transparent plastic so that sun may easily penetrate. Local brick-and-mortar shops told the laboratory that no such product existed. Water troughs, they said, are especially made to not grow algae. But the online retailer contacted a producer and organized for a particular run of water troughs. The lab was very happy and the merchant made a huge sale. Unfortunately, this isn’t how every client contact will go.

There’ll be lots of times when you are going to place customers first, trying to please themand they’ll be mean and nasty for you.

I’m conscious of a retailer that recently begun processing an order for a closeout item, only to discover that the item was damaged and not worthy to be sent to the client. Even though the product has sold for under the retailer’s cost as it had been discontinued, a shop representative contacted the manufacturer, which was no longer making the product, and even attempted to locate one at opponents’ online shops, only to find out that there were no more to be had. The merchant contacted the consumer, explained what had happened, and provided a $50 gift card for her trouble. The client — in reaction — yelled profanities on the phone and put a visceral message on the merchant’s Facebook page. At one point, she asked the merchant for $1,000.

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2. Carriers Eat Packages

FedEx, UPS, and the U.S. Postal Service generally offer very good shipping solutions, but these carriers also lose packages, and frequently they shed them when it matters the most.

Almost a decade ago, I started a specialty online toy shop in early February. That month is a normally slow time in retailing, and I needed to make sure that all departments, such as order fulfillment, were functioning well. By July, sending was running smoothly, things flowing out and being delivered right on time. All the carriers — the merchant used FedEx, UPS, and the Postal Service — appeared like they could do no wrong.

But in November and December of the first year, carriers dropped something like 11 percent of my packages. The carriers seemed to consume them. 1 post office at New York State dropped ten out of ten bundles it processed out of the firm –if memory serves — such as a second and third attempt to get merchandise to a particular client.

That identical holiday season, UPS returned two big boxes to us each had comprised a Radio Flyer Rock and Bounce pony — which was crushed. One had the clear imprint of a huge work boot on it.

Annually, new and established online vendors will see dozens or even hundreds of packages that fail to arrive — damaged or lost in the conveyor belts and trucks intended to carry them to clients. Be ready to handle both the cost of missing items and the issue of disappointed customers.

3. Fraud Is Everywhere

Earlier this month, a merchant I know had a huge order for over $5,000. The purchase included a gas-powered generator which was to be sent throughout the nation via second day shipping. PayPal and American Express had approved the sale. But something did not seem right. The generator wasn’t uncommon. It might be purchased almost everywhere. So why would you cover, in this case, $1,600 for express delivery?

The retailer researched the purchase. The telephone number on the order rang into a mobile phone with a complete voice mailbox along with a generic message. The billing address did not match what American Express had on file. Hence the retailer canceled the order. This is a smart move when you believe that online fraud cost ecommerce merchants an estimated $3.5 billion in 2012, according to CyberSource, which offers payment and risk management solutions and is part of the Visa family of businesses.

Do not assume that your company, however small, is immune to fraud. Sometimes, offenders assume that small retailers are less complicated and, thus, easier targets.

4. Be Explicit; No One Reads

Among the most surprising things that you discover about running an ecommerce company is that you will need to be amazingly explicit once you describe products, offers, and policies. Many, if not all your clients, will skim over this material and misunderstand what you meant or intended.

Take the case of a current online contest a merchant used to promote a specific brand of jeans. Entrants could win a $100 shopping spree for submitting a photograph of themselves at a pair of jeans. All the promotional material connected with the contest clearly said,”You will have to upload an image of yourself in a pair of jeans.” A range of Facebook posts also advised the prospective entrants that they would have to upload an image of themselves at a pair of jeans. An email included the announcement.

The web form used to enter the competition also said,”You will have to upload an image of yourself in a pair of jeans.” And yet, of the many entries received, not a single user actually uploaded a jean picture. Some uploaded family pictures of people in shorts, others included pictures of puppies.

Ultimately, a lot of those who entered the competition were angry, asserting that the instructions hadn’t been apparent.

5. You Will Never Run Out of Opportunities

The final thing to know about ecommerce is that it never seems to run out of chances. You’ll have your share of issues with inventory management, accounting, site design, and upset customers. But this is an excellent industry with the capacity to assist you achieve your targets.

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