Common pitfalls to avoid when setting up an online business

Jim Cassidy

Guest blogger

Communications Mobile Innovation Apps News

When a business decides to setup an online or ecommerce channel, it can either be one of the best moves they make or a series of booby traps waiting for the unprepared. The good news is there is a vast number of articles, books and experts to help businesses steer a safe path to success. In my 13 years working in the digital marketing world, and learning from mistakes I have made and seen others make, I believe taking heed of the following will see you right.

Expectation management

Going online is not a silver bullet for a failing business or a shortcut to increased market share, revenue or profitability. In fact there are NO shortcuts to financial Nirvana by going online, do not let anyone sell you the idea that building an online business is easy or can be done with a “hands off” approach. It can’t. It takes a large amount of planning, research and hard work to launch and build a successful online business.

Not having a business/marketing plan

You may believe that your product or service will sell fantastically well online, and that all it takes is the right web presence and the orders will come flowing in. This is known as the “build it and they will come” Field of Dreams approach. Rather than taking this approach, some common sense research and planning will go a long way to alleviating future problems.

1. Do you understand your supply chain? Or does your existing supply chain have to change to deal with the online orders?
2. Who are your target customers? (profile, market / location, user personas).
3. Who are your competitors? What do they do well? Differently from you?
4. Have you the right internal personnel with the right skills to manage the online business?
5. Have you set aside budget for marketing and advertising?
6. Is there a market for your product or service online? If you are offering a “me too” product/service you have to find what makes your product/service unique. While competing on price can lead to short term gains it allows potentially more powerful companies to out muscle you by reducing their prices and putting you out of business. If you are offering a product or service that no one else is offering online that should also sound alarm bells. You have either found a unique product or niche in the market, or there is no market for your product. Either way do the research to find out.

Going on a solo run

There is no getting away from it; the internet is a complex place and can be quite technically challenging even for the experienced digital native. It’s the sheer pace of change that can be most daunting. You will need outside help; from making sure you choose the correct platform to optimising your site for search and analytics. There is so much work to be undertaken from within the business (order fulfilment processes, market segmentation, sales and marketing material, staffing etc.) that out-sourcing the more digitally demanding elements of launching an e-commerce site is a good idea.

Don’t let perfect get in the way of good

A school of thought from “The Lean Startup” says that you should work towards getting an “MVP – Minimum Viable Product” and then get it launched. I believe this is an absolute fundamental key to success. This does not mean you launch a poorly thought out, designed or developed website. It means that you get to the point where you can successfully sell your products or services online; then put in place metrics that allow you to really see what areas need work, what areas are working, and what areas aren’t working at all. This will reduce the amount of time spent “guestimating” what your customers may or may not want and avoid wasting valuable time, money and resources on the wrong areas; which will not be productive in generating additional revenue or value to your customers.
This can be quite tricky for the majority of people/businesses because they incorrectly believe that the site must be correct to the Nth degree before paying customers see it. This ideology is nonsense because the work really only begins on a website once it goes live. Many websites undertake user testing and focus groups before they go live which can be very beneficial, but for those that cannot afford that type of research, getting the site live will be the largest focus group you could want. Failure to launch is a very real problem.

No metrics, no optimisation, no chance
“What gets measured gets done”.

Too often, people focus on the wrong metrics, or worse, don’t have any at all. There is no excuse for not having an analytics package that will give you vast amounts of information about what’s happening on your site. Google Analytics is free – you may have to hire a specialist to configure it to capture all of your e-commerce goals – but once done the information is easily accessible. The type of product or service you are selling will determine what the key metrics for your business are. It’s not always as obvious as saying that “revenue” is the key metric. It is undoubtedly an important metric but you must also look at what other metrics are going to allow you to forecast ongoing success. A non-exhaustive list for an e-commerce site would be the following:

Revenue, visitor numbers, returns, on-time delivery, funnel optimisation (cart abandonment etc .), return visits, % conversions from source (social media, blog posts, email marketing, market influencers), product and product category metrics, average order value, average order profit, and customer satisfaction score.

A website that offers a subscription service would also find that their churn rate (the rate at which customers drop/leave your product). If you are measuring new subscriptions and not looking at churn; failure is not far away.

The reality is you can measure pretty much everything on a website. This is a blessing and a curse as it can lead to paralysis by analysis, information overload. You need to figure out which are the most important metrics and build your growth strategy around them.

There are entire books and websites devoted to this topic and there are a number of other items that need to be covered off in your launch and growth strategy.

Security and fraud prevention
Clear returns policy
Social media strategy
Mobile/responsive design

So, to put this as succinctly as I can; plan for launch, plan for growth, hire the right people, get the product live, measure everything and act on what’s important.


Jim is CEO at Code Institute

Jim is a lecturer in eCommerce and Digital Strategy for The Digital Marketing Institute and Retail Excellence Ireland. He is passionate about giving Irish businesses a platform to operate on a global scale.