The rule of the seven P’s! Ever heard of it. Prior, Preparation and Planning, Prevents Piss Poor Performance! This rule of thumb applies in many walks of life, but there’s one sure fire method of taking a business down – and that’s deviating from your plan or not having one in the first place.
My friend started an online gift business and although it did fairly well at one point, it hit the skids and started on the slippery slidey slope to e-commerce oblivion.
The major failing was trying to get too big too quickly and targeting too broader product range. Remember one thing from online business, and that is to sell within a niche, a small product range, for example, why not start out targeting personalised wedding gifts for a specific market before spreading your wings into other areas.
She started out by sourcing all her products, and created a business plan which passed the banks inspection. This was the days prior to credit crunch when obtaining a loan from the bank was a sinch! Armed with a 4 figure loan, she proceeded to purchase a domain name, an ecommerce system and loads of stock.
Problem 1: She decided to opt for an e-commerce system that a friend was building. Her friend was taking an MBA and was a decent developer but just hadn’t had the programming time to spend improving his existing platform. She was left with a half baked online shop with little functionality and a developer who suddenly decided to relegate himself to obscurity ‘down under’
Problem 2: From the outset, she initially ordered too much stock. Even though it was Christmas launch, the website had very few visitors from natural search and no customer base. Importing a 20ft container full of gifts from Hong Kong was a bad decision before getting established, and paying for warehouse space with unsold stock can be crucify your profit margins.
Problem 3: Veered off from the original business plan and tried to follow the trends of larger companies. As a smaller trader this can be a suicidal business strategy trying to expand into other product areas before testing the market. The said business owner fell foul of not realizing and ‘adlibing’ her strategy from day today. The up shot and the only way of gaining some revenue back was to create an Amazon shop and sell at very low margins or at a loss.
Problem 4: Switching e-commerce systems 3 times in 2 years was also a negative aspect and time consuming process.
Don’t Look a Gift Horse in the Mouth When It Comes to e-Commerce Extensions
An e-commerce platform can be an expensive business -so it pays to research all the different systems out there before committing to a project.
When planning your costs, ensure you fully spec out all your functionality you will need to grow your business. Ad hoc development costs can turn out to be astronomical and once your tied in with a web developer, it can be difficult to get free. Research how well supported each ecommerce system is, how many plugins, extensions does it support, are the right ones for you. A common problem I have seen numerous times is when a client requires the Google shopping feed compatibility to display their products in Google shopping feed. Their existing e-commerce platform didn’t support it, so they paid through the nose for bespoke customisation.
Ensure to spec out your project properly – drill down into the detail, read as many white papers, testimonials and case studies as you can – it’s probably the most important decision you will ever make for your online business.