3 Scary eCommerce Mistakes to Learn From

Mistakes happen. What makes a smart businessperson is ability to learn from them. What’s even better is to learn from other’s eCommerce mistakes!

eCommerce Mistakes: Learning What Not to Do

Here we’ve bought together three scary eCommerce mistake stories to help you avoid going through the same embarrassing – and costly – experiences.

These eCommerce mistakes serve to remind us that big and small failures can affect any business, no matter their industry or size. What really matters is how you learn from them.

Mistake #1 – Holiday Blackout

The Background

One of the most important aspects of your online store is performance and speed. Research suggests that 40% of visitors will leave a site if it takes longer than three seconds to load, and 79% won’t return after a slow experience.

This means it’s vitally important to make sure your site runs well at all times, but it’s particularly important during the holiday season which can bring a massive spike in sales and push your infrastructure to the max.

The Story

Let’s set the stage: it’s the run up to Black Friday one of the biggest events in the US shopping calendar. Best Buy, one of the largest stores in the States, is advertising blockbuster deals like discount iPads and bargain HDTVs.

The day comes, traffic floods to the Best Buy online store, and the whole thing crashes. At 6.15am. The site remains down for most of the day, and the company’s dedicated app suffers from a serious case of downtime too.

It’s impossible to say how much the company lost in this catastrophe, but we imagine the results weren’t pretty. Customers were unable to browse or complete orders for most on one of the most important days for retail.

The Takeaway

So, what can we learn from this? Well, the Best Buy horror story goes to show that it’s better to be safe than sorry when it comes to investing in reliable infrastructure. No matter how big you are, you’re not immune to technical hitches if you don’t pay attention to your site’s performance.

To ensure you don’t make the same mistake, it’s worth investing in performance analysis. Check out CreativeMinds’ Magento performance improvement services.

Mistake #2 – Too Many Returns

The Background

To run a successful business, you need to be optimistic and have confidence in your ability as well as the products you want to sell.

Meticulous planning is essential, and when adding up the numbers you need to take every aspect of your business into account – including the amount of returns you might get.

Offering a good returns policy is important for any business, particularly when you operate online where buyers can only make a decision based on images, descriptions, and the opinions of others.

A clear, concise, fair returns policy gives customers a sense of security, and can inspire trust that will make them more likely to buy from you. But what happens when returns negatively impact your cash flow?

The Story

Indian entrepreneur Anuraag Guptaa detailed why his eCommerce start-up failed, and the tale hinges on customer returns.

While Guptaa had experience in the industry coupled with extensive knowledge of the products he was selling, things still went badly wrong. After two years of running SHOPORTS.com, he had no choice but to close as the business was operating at a loss.

The reason? Over-optimistic forecasting. One of the major problems was the return rate, which turned out to be much higher than expected. Guptaa estimated they would be in the 20% range, but they actually reached 30-35%. This negatively impacted the business to the point where it was no longer financially viable.

The Takeaway

While it’s been over a decade since Guptaa launched and subsequently closed his store, the same mistake could easily be made today.

There are two main takeaways from Guptaa’s unfortunate failure:

1) Ensure that your estimations for sales and returns are realistic rather than idealistic. It’s always better to err on the side of caution.

2) It highlights how important a smart management system for returns, such as the Product Return RMA extension for Magento 2, can be.

Mistake #3 – Poor Customer Service

The Background

A positive experience for shoppers is essential to retain business and even gain new customers. Quality service should be the gold standard for any company, whether bricks-and-mortar or online.

It goes without saying that poor customer service can have dire consequences for a business particularly in the online world where anyone can leave a negative review. We’ve talked about the importance of positive customer reviews in the past but put briefly positive customer reviews can inspire confidence and faith in your business – two things you desperately need for a successful store.

So, what can we learn from a company that failed to do that?

The Story

Here we have the story of Shop.ca. While the company still operates, its history is one that’s been marred by poor choices, as detailed by Canadian Business.

Shop.ca was highly unique at the time of its launch. Instead of selling its own products, it was set up as a directory of retailers – recruiting 850 stores and listing 15 million items across 4,000 brands. Shop.ca would then get a cut of each sale made as a result of buyers going through the website.

The intention was to revolutionize the Canadian eCommerce market which, at the time, was plagued by ‘duties, brokerage fees, and shipping costs’ far higher than in the US, making for a ‘miserable and expensive’ experience for shoppers. As it turns out, Shop.ca offered a miserable experience of its own.

The article from Canadian Business points to many problems that lead Shop.ca to file for bankruptcy. Reasons include excessive investment in marketing; untrained personnel; and clashes amongst higher management.

But one reason stands out above the rest: bad consumer reviews.

The company was not prepared to face the massive backlash from customers who faced constant shipping delays, out of stock products, and difficulty in reaching customer service. These took a big toll on customer retention and overall satisfaction.

The Takeaway

The sorry saga of Shop.ca shows us that we always need to be prepared to give customers quality service or face the consequences. Even with a business model that has low margins for each sale, the customer can and will demand the best. After all, the customer is always right!

With digital sales it only takes customers a few clicks to share reviews, and positive ones can be vitally important to boost sales. With the Product Review Incentive extension for Magento, you can offer customers a discount coupon in exchange for writing a review – and of course you can moderate them before they’re published to the site!

Final Thoughts on Making eCommerce Mistakes

Like anything in life, running a successful online store is a journey. It’s unlikely that success will happen overnight, and it’s unlikely that you won’t make some mistakes somewhere down the road – what really counts is how you bounce back and learn from them.

What’s the most important lesson you’ve learnt as a business owner? Let us know!