One of the companies I previously owned was actually an E-commerce business. It was one of the ventures I've had in my career. We managed to generate millions and millions of dollars, in revenue every year. Even received the Online Retailer of the Year Award from Canada Post. So if you're considering starting an e-commerce business and feeling unsure, about where to begin I'd like to share three lessons I learned during that time before selling the company.
1. Conversion Is King:
When it comes to E-commerce conversion rates play a role. It's important to monitor the conversion rates, across pages. Additionally paying attention to the bounce rate and identifying where people exit your website is essential. Understanding where you are losing customers is vital for improving conversions.
During my experience running an E-commerce business I noticed a drop in customers at the checkout stage. Despite their interest, in the products and click "add to cart " we were losing customers by the time they reached the final purchase step. This was concerning so I started thinking about solutions.
To address this issue we implemented changes. For instance we added testimonials directly during the checkout process. Made efforts to streamline and simplify it. Initially our checkout process involved steps. We modified it to make it much more concise and user friendly.
Customers view the product. Click on it. If they decide to add it to their cart they can proceed as a guest without any issues. We found that by minimizing the number of steps involved in the process we saw a boost, in sales. Therefore it's crucial to track and analyze every aspect of conversion. Make sure to examine your data and carefully evaluate your website pages. You need to have an understanding of the situation. It's not, about the product itself. It's also, about the behavior of your customers and visitors you know. Once you have some products that are selling well it is important to make sure they are prominently displayed on your homepage.
2. You Need To Have A Content Strategy As Well As A Paid Strategy.
So initially we ran a number of ads, on Google using the Pay Per Click model. We were investing an amount of money to gain visibility. However at the start it was challenging to attract customers to our store because they didn't know why they should choose us. Therefore we heavily relied on advertising.
As time went on we also allocated a budget towards optimizing our website for search traffic. We created pages. Aimed to rank specific keywords on Google so that people could find us naturally without relying solely on paid ads.
Enough in the beginning stages 90% of our sales were generated through paid channels like Pay Per Click where we invested significantly to gain traction. However as time progressed and after a year within the company's journey the revenue distribution shifted considerably. It became a 60-40 split with 60% of our sales originating from sources such as free traffic from search engines.
Now I can confidently say that while this organic traffic is labeled as "free " it does require investment in terms of both time and resources to create content, for our audience. Nevertheless 40% now comes from paid advertising efforts.
To engage in E-commerce I think it's important to have your store, than relying on selling through Amazon, which already attracts a large amount of traffic. If you have your E-commerce store it's crucial to develop an organic strategy alongside a paid strategy.
3. I Wanna Share With You When It Comes To E-commerce, Inventory Kills.
Inventory management is crucial as having an inventory of products can be detrimental. It's important to consider the nature of your products. Whether they have an expiration date. Assuming they don't you may find yourself with a surplus of inventory and tied up capital. Therefore it's essential to exercise caution and prudence, in managing your inventory.
Speaking from experience when I owned an e-commerce company we had millions of dollars worth of inventory. Fortunately we were able to sell it all and recoup our investment. However had any issues arisen we would have been stuck with an amount of stock. So it's crucial to approach inventory management with care and mindfulness.
In the beginning stages it would be wise to start with a range of products. Test the market. Gauge your customers' preferences before expanding quickly with numerous product variations and large quantities. The temptation to buy quantities upfront should be avoided.
You know it's interesting that when I order a quantity the cost, per unit decreases significantly. However one crucial aspect to consider is what happens if the product doesn't sell. In that case you're left with a surplus of thousands of items that aren't moving. This can become quite problematic since excess inventory can be detrimental.
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