The 7 Mistakes Entrepreneurs Make When Launching an Ecommerce Startup Ecommerce can be a gold mine for entrepreneurs – if done correctly. Make sure you avoid these major blunders when launching your online-retail shop.

By Stephen Tanenbaum

Opinions expressed by Entrepreneur contributors are their own.

As we continue to rely on technology for its simplicity and convenience, everything from books to cars are now available online. And many entrepreneurs are jumping on this wave, because when done correctly, ecommerce sites can provide a crucial competitive advantage, giving digital players a chance to go toe-to-toe with traditional brick-and-mortar titans

Ecommerce is also quickly becoming the preferred way to buy. Indeed, 70 percent of shoppers surveyed say they prefer to shop their favorite retailer online, according to a UPS study.

However, simply creating an ecommerce site is not a guarantee of success. The eight years I've spent on the front lines of my own company UGallery, an art ecommerce site, have humbled me to a point where I can now impart a few points on what mistakes to avoid when running a successful ecommerce site.

1. Putting features above strategy. It's easy to be impressed with your own website, but having the coolest, slickest, or sexiest ecommerce site is not a strategy. Leave the bells and whistles to the product team and focus on the big picture: What need do you fill in the market, where are the white space opportunities, what is truly innovative?

Establish a 12-week goal mindset where you set your topline goals at the beginning of the quarter and are accountable to finish them by the end. If a week goes by and you spent too much time updating small design elements or negligible features, you're stuck in a cyclical pattern. Make sure to focus on critical initiatives that will move the needle.

Related: 7 Strategies to Boost Mobile Conversion Rates

2. Inefficiently managing email lists. Grow your email list fast and early. It is one of the most effective ways to get people to your site later on. Add email list as a key-performance indicator when you're measuring success (not just sales or site traffic). If you don't, you'll find yourself down the road with a great site but no way to reach people (for free). You'll be stuck paying for eyeballs through advertising, sponsored content and other paid outlets.

3. Inaccurately measuring success. Compare year-over-year, not quarter-over-quarter, as ecommerce is highly seasonal. Comparing your June site traffic to May site traffic isn't an effective measure because summer months are typically slower. Compare June to June and May to May, just as traditional retailers do.

4. Not establishing a promotions strategy up front. Be deliberate with your promotions. It's tempting to run a sale when you want a quick bump of revenue but easy to go overboard or do something that isn't in line with your brand intention. Determine up front if you want to be a premium brand that never discounts, a discount brand that always discounts or where you want to be in between.

Related: Nasty Gal CEO Sophia Amoruso: 'Wisdom is Earned Through Experience, Particularly Mistakes.'

5. Choosing poor advertising partners. When it comes to advertising partnerships, ask for lots of data --reach, open rate, CTR, and frequency of the advertiser's sponsorships, among other metrics. We advertised on a prominent wedding site when we launched our wedding registry, because it was the biggest name publication in the industry. It turns out they send sponsored emails several days a week and brides are inundated. Needless to say our advertising did not perform well. It was sexy but not effective.

6. Hold your line when negotiating contracts. Contracts only become relevant when things go south. It's easy to sign a contract and assume there won't be any issues, and 49 out of 50 times there won't be. But for the one time that there is, it could have significant impact. Read, negotiate and hold firm when entering a contract. Think years down the road, not months.

7. Not understanding your supply and demand balance. More than just inventory management, understand the big picture of how your supply and demand are related. At a certain point, you have too much product and it doesn't result in more sales – it just results in an overwhelming shopping experience. Understand how many products someone can reasonably absorb on your site. Brick-and-mortar stores are limited by wall and floor space but ecommerce sites are unlimited. That doesn't mean every ecommerce site needs to embrace the long tail.

Related: 5 Tips to Stand Out When Selling on an Online Marketplace

Wavy Line
Stephen Tanenbaum

Co-Founder, CEO UGallery

Stephen Tanenbaum is president and co-founder of UGallery, an online art gallery offering curated, original art for sale from the world’s most talented mid-career and emerging artists. 

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