by Giulia Greco Marketing
May 21, 2018 12 minute read Leave a comment
10 common mistakes in managing an ecommerce and how to avoid them
Managing an ecommerce is one of the most formative experiences ever for an entrepreneur. It allows you to learn practical aspects difficult to deduce from a master in business management or from a business course.
The lessons learned by running an online store often arise from mistakes made. And every mistake brings with it an improvement, as long as it reflects on what could have been done differently.
Today we will share with you ten mistakes frequently made by those who start managing an ecommerce. Avoid these “missteps” and you will achieve success faster.
Error # 1: underestimate math
frequent mistakes in running an ecommerce underestimate math
If you ask any experienced entrepreneur what is the most important thing to know to run a business, he will answer: math .
When you start to manage an ecommerce, you often consider your business as a simple hobby and you tend not to pay due attention to mathematics.
For example, a sector where demand is high does not necessarily offer great prospects in terms of earnings. In fact, if the selling price of the product is low, you may have to sell much more than expected to make a good profit.
Formula for calculating profit
Business math works in a very simple way. To calculate how profitable your business can be, use this formula: Profit = Demand * (Turnover – Expense).
To simplify, let’s take an example. Let’s assume that 20,000 users are looking for your product (let’s assume such a large number to include both searches with the main keyword and those with long tail keywords ).
Assuming that you can reach even half of those users, you would have 10,000 potential buyers. With a 1-2% conversion rate, you would make 100-200 sales. If the average order value was 100 Euros and you had a net profit margin of 30%, your profit would be 3,000-6,000 Euros.
Of course, these are only rough estimates. However, whatever sector you have chosen, if you understand this mechanism well, you will know what to expect.
When running an ecommerce, skipping calculations can be expensive. Even when the average order value is very high, never forget to consider the costs, otherwise your profit margins may not be the ones you hoped for.
Error # 2: don’t design how to find a space on the market
frequent errors in managing an ecommerce not finding space on the market
Often, anyone who starts managing an ecommerce leans towards the dropshipping model . This means competing with hundreds of merchants who offer the same products to the public.
The risk is that of not being able to differentiate yourself from others. Your shop may remain “one of many” and not provide any added value. Not to mention the inevitable competition from giants like Amazon .
Inquire about the competition
If you start managing an ecommerce, plan how to find a space on the market. Do not throw yourself headlong into a business, thinking that you have identified a good sector, without looking for information on competitors or on the market situation.
For the sector you have in mind, an unbeatable company may already be present on the market, with all the products you want to offer. In addition, this competitor of yours may already have hundreds of reviews , thousands of likes on social media, a popular blog and great media coverage . If there is no room for you on the market, you risk not confronting each other and facing a real disaster.