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4 things I learned while failing at eCommerce

September 15, 2020

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A few years ago, I started an eCommerce store with a friend of mine. Not to make money (thank God) but to get more familiar with a typical Shopify setup and learn the in's and out's of eCommerce. Sadly, we had to close it down this year. I’d like to blame COVID but if I’m honest with myself, the writing was on the wall and COVID may have done us a favour by speeding up the inevitable.

Don’t get me wrong, it was fun. I met some wonderful people and learned a ton of new stuff. I wouldn’t trade it for the world but I also learned a lot of things the hard way. You don’t have to. Just read this and you’ll no doubt breeze your way to fame and fortune.

So here are four things I learned that stand out to me. You’re welcome.

1. Setting up Shopify is the only easy part - sort of

We typically only see the front of a Shopify website. The cart with items, the checkout and the feature pages but behind the system is a whole world of features only exposed to the seller. Rich reporting dashboards with baked in insights, product and inventory management, integration with shippers, currency options, etc.  And they're all neatly available in an app too that conveniently dings whenever you get a sale (best sound in the world BTW.)

All this is at your fingertips and included in the most basic package of Shopify. I found myself pleasantly overwhelmed with the features when I first opened this up. Everything is thought through and it’s easy to see why over 820,000 merchants are now using the Shopify platform for their stores.

Margins are way smaller than people think they are. The simpler you can keep things, the better. Be like the fidget spinner.

 

However, it doesn’t take long to start hitting walls. Need a beautiful looking content page? You’ll need to install a plugin to help you with that. Need delivery management? That’s another charge. Combining products in different box sizes? Another charge. And so on. It doesn’t take long before your cheap monthly cost is the size of a small car lease.

Data can also be a barrier. Each product needs titles, small descriptions, large descriptions, weight, size, pictures, SEO titles, SEO descriptions etc. Some people have these ready but we didn’t and I often found myself writing these late at night which isn't ideal. If you have a lot of product SKUs, this can be daunting but also a great thing to prep ahead of time. It's also important to note, Shopify product schema isn't necessarily universal. A great place to get your template from is https://schema.org/Product. Fill it out and then populate in Shopify. That way you will always have it available for other stores like Facebook Marketplace for example. 

2. Choose your products wisely

Imagine selling ketchup. It can easily break because it’s glass, it’s heavy, it goes off after a period of time, it freezes in cold temperature and it’s rather bulky. It checks all the boxes of a hard product to sell.

Sounds crazy.

Did we try to sell them? You bet your ass we did.

That and others like it. We over-bought and ended up throwing out hundreds of dollars in stock due to expiry dates coming and going. Our shipping rates were high due to large box sizes and weights and we had a few breakages here and there (we probably got lucky on that one).

It's so important to carefully consider the consequences to your products. T-shirts sound simple at first but there are multiple sizes and colours to contend with so how many should you order? In Canada we have very cold temperatures - can your product withstand sitting on someone's doorstep for hours? If you are ordering local, what if that person runs out/goes out of business? There are so many questions and there are usually ways around them but make sure you've thought of all the scenarios.

A great example of a good eCommerce product is fidget spinners (other than the fact that they've had their day in the sun). Light, small, unbreakable, high value/margin. In a small closet you could fit thousands of them, you can package them up in tiny boxes with minimal padding. See where I’m going? Just invent the next fidget spinner.

Easy.

3. It’s easy to lose money

So you have your bar of chocolate that cost you $4 and you’re selling them for a sweet $7 each. That’s $3 in your jeans right? Oh, if only it were so.

There are many hidden cost in commerce that your cost-per-unit can be a lot more that you think. When factoring in costs, make sure you consider the following:

  • Packing material
  • Boxes/Bags
  • Stamps
  • Stickers
  • Postage
  • Storage
  • Photography
  • Shopify costs
  • Gas, internet, phone
  • Printing
  • Website costs + development
  • Returns
  • Breakage/defects
  • People hours, how much is your time worth? How long are you spending on this endeavour? Divide by the # of products.
  • Your dog eating 20% of the chocolate and having to get his stomach pumped for $300 (yes that happened).

There are certainly more factors to consider but do you see what I’m getting at? It’s no wonder that people demand a 50% wholesale discount if they are reselling products. Margins are way smaller than people think they are. The simpler you can keep things, the better.

Be like the fidget spinner.

4. Attribution is everything

To continue the thought above, numbers matter. Metrics matter. One great thing about Shopify is the level of reporting that comes right out of the box. Total sales, where users are coming from, top sellers, abandoned carts, etc. all set up and waiting for you. However, you need to combine these sales metrics with your own otherwise it’s only half the picture.

It’s important to get to things like Cost Per Product, Cost Per Sale, Customer Lifetime Value - basically: metrics that matter. These are the metrics that allow you to make business decisions and they are vital to the lifeblood of any company. These key metrics let you make decisions like "should we scale up?”, "buy more product?”, "hire more people?" or in our case, “get new ID’s and change counties?”

Metrics will come from all sources and combining them will be the trick. For example, Google Analytics for website traffic, Social data, App data if you are selling through that, payment data if you are using third party tools, CRM data, etc. Whatever it takes to get the whole picture so you can understand how people got there and what they did.

I realize how unhelpful that last bit is but seriously folks if there’s any place where you should spend money to get help - this is it. Perhaps someone like us (shameless plug).

Parting thoughts

I’m painting a bad picture of commerce here. Obviously it can be highly successful and should absolutely be considered for any retail company. Just go into it with eyes wide open. It’s not as simple as spinning up an eCommerce site and waiting for the dings in the app to start. If you’re not careful you could be racing around the city dropping off bottle openers that you forgot to include in over 30 orders wondering why you’re not making a profit.

 

Hypothetically of course.

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