Five Pitfalls to eCommerce Success - And How to Avoid Them

January 21, 2015

By: Magento Partners,

Sean Percival, Venture Partner

, 500 Startups

Five Pitfalls to eCommerce Success - And How to Avoid Them

Sean Percival is a Venture Partner at 500 Startups, a Silicon Valley-based incubator that has invested in over 900 companies and maintained an unwavering focus on eCommerce. He has come up with a list of five common “rookie mistakes”—and offers advice on how to avoid them. 

1. Company founders often have more passion than experience. If you find yourself in this situation, be sure to hire people with deep experience in eCommerce. And continue to build relationships with leaders and experts in the industry.

2. New companies have trouble providing efficient shipping solutions. Your customers are happiest when their orders arrive quickly. If you don’t have the capabilities of today’s e-giants, find vendors that do. Be sure to give customers more than you promise—and offer discounts if you make a mistake. Conversions are expensive, and those incentives can turn one-time shoppers into repeat customers.

3. Young firms have unattractive margins—so fix them early on. The sooner you test or change your prices, the fewer customers will be affected. There’s no need to offer discounts on first-time sales or to pursue customers who expect them. (Instead, extend those offers later on to capture lost conversions.) Finally, seek out unexpected sources of revenue—such as selling survey or shipping data. Investors like to see sales numbers trending in an upward direction.

4. Fundraising isn’t easy—but it’s easier when you speak VC lingo. Venture capitalists are scared off by easily avoidable phrases: “subscription commerce” is too trendy; “lifestyle brand” is too narrow; “curated artisanal experience” means too small; and “celebrity endorsed” implies that a famous person has his hands in the pie. VCs want to hear about your idea, your numbers, and your plan. And here’s a side tip: investors tend to back fewer projects in Q4. Catch them earlier in the year.

5. New companies often bungle marketing—so test many tactics. There are so many marketing channels from which to choose, it may take a few tries to find the ones that reach the customers you want. Remember, the majority of sales are made to repeat customers, so engage your current customers through a variety of outlets—SMS, targeted emails, phone calls, you name it.

The lesson is simple: your company may be new, but there’s plenty to learn from established companies. Take a page out of Sean Percival’s book and ask yourself if you’ve addressed these five common pitfalls. They may be the key to helping your new business thrive.

About Sean Percival
Sean is a Venture Partner at 500 Startups with a focus on Bitcoin and digital currency. He’s a recognized, leading authority in digital business, media, entertainment, online marketing, and e-commerce, working with high-profile startups and companies including MySpace, Tsavo Media, Docstoc, and Mahalo among others. His projects and insight have also been featured in Forbes Magazine, The Los Angeles Times, TechCrunch and at SMX: Search Marketing Expo and many more.