7 Old-School Ecommerce Failures That Are DESTROYING Your Business

7 Old-School Ecommerce Failures That Are DESTROYING Your Business

Twenty years ago, ecommerce was in its infancy. Customers were scarce, but competition was even scarcer—if you knew what you were doing, or were even moderately good at figuring it out as you went along, you could have raked in a steady living selling a few niche products online.

By 2001, online B2B sales had already reached $700 billion annually. Amazon, founded in 1994, saw its first profitable year in 2003. In 2009, ecommerce was accounting for at least 4% of all global sales. The web had reached its adolescence, and there were plenty of ecommerce customers to be found throughout the developed world—and plenty of competitors trying all kinds of schemes to get their attention.

These were the Wild West days of the web. It was a web where guns-blazing tactics were a necessity for ecommerce success—outmarket, outblog, outspend, and you’d have the bigger site with more customers.

Times have changed, and ecommerce is no longer in its infancy. Ecommerce sales now account for 7.5% of all retail sales in the United States—not to mention B2B sales—and that number has been rising steadily.

source: ycharts.com

The online marketplace is no longer the Wild West, either. The Law has come to the Internet in the form of search engine delistings for bad SEO practices, ad networks that are ever-more sophisticated, consumers that are ever-more-savvy, and competition that is smarter, leaner, and hungrier for their share in this more mature market.

And if you haven’t changed with the times, your business is going to get chewed up and digested like so much cud for your competitions’ cattle.

The Out-of-Date Ecommerce Model We Still See EVERYWHERE

We won’t get into all of the mistaken and poorly executed tactics we see among many outdated ecommerce sites—cheap-looking design, lack of mobile responsiveness, unclear product pages, etc. These specifics are all important, but even more pressing are the irrelevant money-making models at the foundation of many ecommerce businesses.

It takes more than a website, a blog, and a PPC campaign to be successful in ecommerce.

So many of today’s ecommerce entrepreneurs—those who have been in the game for years and those who are just starting out—are stuck in the old mode of doing things. The Wild West way of doing things, where a bigger gun and a faster draw ruled the day. Their approach to ecommerce is rooted in the idea of beating the competition through brute force: more SEO effort, cheaper prices, more marketing channels, growth gimmicks, etc.

Having these among your strategies in a larger ecommerce strategy can work… But if they’re the be-all end-all of your business you have a major problem.

Because none of these things create profit.

Customers create profit, and they do it over a lifetime, not with a single purchase. SEO, price competition, and the rest can be great ways to grow awareness and build interest, but they aren’t going to make you money unless you’re turning that awareness and interest into a lifetime of valuable sales.

And figuring out if your old-school digital marketing efforts are achieving that goal is harder than it sounds. Just ask rocket scientist-turned-SEO expert Sean Work:

You might rank higher for more keywords than your competitors, but are you seeing more sales as a result? You dropped your prices on Amazon and are winning sales from other vendors with the same products, but is your profit margin high enough to make those sales worthwhile?

Today’s ecommerce businesses need to be smart, not just tough. You need to find the right ways to not only win sales, but to increase your profits. You need to tend to your ecommerce business like a carefully maintained garden, not a rough-hoed ranch.

Here are seven ways you might be screwing it up. I delve into each of these issues and more in an upcoming book, Ecommerce Evolved, but here’s a taste of what you might be doing wrong and how to fix it.

  1. Failing With Funnels

Is getting each prospect to make a purchase still the end goal of your ecommerce business? If so, you’re failing to implement the power of the sales funnel, where an initial purchase is just the beginning of your customers’ lifetime value.

Building an effective funnel, with upsells, downsells, remarketing, subscription revenue, and more, is how to make a modern ecommerce business consistently and reliably profitable. It’s the way to get top customers worth more than 30x the typical occasional buyer.

An initial purchase is a sign that your customer is about to start raining down value. Don’t fail to get your funnel in place.

  1. Not Setting Tripwires

Pushing customers straight to a big sale is a way to make a quick buck a small percentage of the time. Setting nearly-invisible tripwires—low-cost purchases that will have your prospects tumbling neatly into your funnel—is the smart way to ecommerce riches.

If you have a solid core offer after your tripwire, it can even be worthwhile to sell your tripwire at a loss to drive more downstream profits. One company saw a 15% sales jump in their core offer practically overnight after implementing a tripwire. That’s worth a bit of a loss leader upfront, don’t you think?

  1. Focusing on Your Front End

Your ecommerce site, your social media, your PPC advertising and organic search—-that’s all front-end, customer facing stuff that needs to get done, but it isn’t where your real business is.

Funnels, tripwires, and the other real tools of successful ecommerce businesses are all backend devices. Your customers never see the careful planning and cunning structures you put in place. Building out the backend of your ecommerce business is where the real bucks are.

Stop setting your sights on the perfect website. It needs to be good, but what your customer sees is just the tip of the iceberg.

  1. Ignoring Recurring Revenue Streams

Pour tons of time and money into acquiring customers. Get them each to buy something, hopefully making a bit of a profit after all those acquisition costs. Rinse and repeat.

When you spell it out like that, the old ecommerce model doesn’t just sound inefficient, it’s downright insane. Why would anyone run a business that way, especially when it’s so easy to turn a single purchase into a steady stream of recurring revenue using a subscription sales model.

image source: forentrepreneurs.com

The bulk of your customer acquisition costs all go towards getting that first sale. After that, it doesn’t take much more effort to get a sizable chunk of your customer base to purchase again, or even to sign up for regular, ongoing purchases—subscription purchases that automatically charge and ship each month, giving you reliable income that you can use to grow your business and pad your profit margin.

  1. Manual-Only Marketing

Are you still manually clicking “send” on every marketing email, painstakingly composing and approving each post on your social media channels, poring over your PPC campaigns for hours each day and trying to figure out what’s working?

Time to take your ecommerce business into the twenty-first century. There are literally thousands of ways you can automate portions of your marketing, freeing up your time to focus on creating more core value and actually delivering better marketing ROI by allowing algorithms to crunch incoming data and allocate your spending accordingly.

Automated marketing is actually more effective with customers, too. According to research conducted by Pardot, 77% of customers want new information and media at every stage of the sales cycle. Manually tracking each customer’s journey is impossible for a growing ecommerce business, but creating email drip campaigns, landing page series, and other marketing media with automated triggers keeps your customers happy and helps reel in more sales—all while you sit back and watch.

  1. Stopping At Small Data

Speaking of data, most ecommerce businesses are still stuck in the small time. You’re probably tracking the basics, like revenue per customer, conversion rate, etc., but that limited data can only tell you so much. Superficial, bare-minimum data tracking leaves loads of useful information out, and is going to hold your business back.

If you want Big Growth, you need to take advantage of Big Data.

Big Data means looking at all of the data points you can about your customers and your target audience. Media consumption patterns, purchasing behaviors, deep demographics, etc. Not just about your customers, either, but about new product opportunities, new marketing channels, competitive trends, and a whole lot more.

And of course, when this Big Data crunching is automated—when you’ve set up the right tools and services to collect and analyze relevant Big Data for your business—you get simple, actionable information that can put your ecommerce business a big step ahead.

image source: qubole.com

Working with Big Data isn’t something you can do on your own—it takes a reliable partner with the resources and experience. We love the people at TowerData.com, and there are other providers, as well. Do your research, and make sure they can help you achieve concrete results, not just throw a lot of numbers at you.

  1. Commodity-Based Ecommercing

Old-school ecommerce: Find out what everyone else is selling, and try to sell the same thing better/cheaper.

New-school ecommerce: Find a unique way to solve a consumer problem, and leave your competition in the dust.

If you’re a “me too” retailer, jumping on every popular product bandwagon as it passes by, you’re leaving behind your real profit opportunities. The most successful ecommerce entrepreneurs don’t get stick in the trap of vying for consumer attention for commodity goods, they use private label or OEM products to build a personal brand that forms a unique relationship with consumers.

They cut out the competition by offering something different, and by developing effective strategies for communicating that difference to consumers.

Don’t follow the crowd. Start your own. My book will tell you how to do it, step-by-step, and you can always check back here for more tips!

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Tanner Larsson
Studly Husband, Super Dad and serial entrepreneur. Tanner is also the Founder of 80/20 Media an ecommerce incubator and the CEO of BuildGrowScale.com.
Tanner Larsson
Studly Husband, Super Dad and serial entrepreneur. Tanner is also the Founder of 80/20 Media an ecommerce incubator and the CEO of BuildGrowScale.com.