As someone who lives and breathes e-commerce, I spend a lot of time reading questions and answers about how to generate money with an online store on Facebook groups, Reddit, and Quora.
There is a lot of repetition, with people asking the same questions that others have asked. It gets tiresome, but it highlights some very frequent reasons why internet shops fail to get off the ground.
One of the most common reasons new stores fail is misunderstanding what it takes to thrive as an online company. Shopify has created a lot of misconceptions, thanks in part to their own marketing, that the software can make you rich. “How to Become a Millionaire with Shopify?”
I Googled.
There you have it, a list of articles, the most popular of which were all authored by Shopify, making it appear simple. Every day, 2700 people become millionaires! That’s complete nonsense. While some people find Shopify to be a useful tool for achieving business goals, the success of their business will not be due to Shopify.
Shopify will not make you wealthy. Certainly not, by a long shot!
Now, I’m not suggesting there aren’t some important tidbits in that list of articles. I’m suggesting that Shopify will not make you wealthy. It can’t be. What’s the harm? Because it is only software. A device, Nothing else. Your shovel is not responsible for the growth of your garden. The gym will not make you thinner.
However, numerous people out there will tell you that Shopify will make you money, which is a completely false notion. The fact that Shopify makes this claim is both sad and dishonest. Building a business, especially a successful one, requires far more than a single software package.
The truth is that many people are successful in their e-commerce endeavors. New stores fail far too frequently. When I sought to locate true success and failure data for Shopify-based companies, I found pages and pages of publications with headlines like “Why 95 percent of Shopify stores fail.”
When I try to locate particular figures for Shopify firms, I come across various stock analysts that discuss the significant churn rate (think revolving door) for new stores on the Shopify platform. According to Jan Barta, an analyst, “77 percent of clients churn off before their first anniversary.” Because Shopify is publicly traded, these figures may be found in their annual reports.
The first misconception is comparing a shopping cart with a marketplace.
Tonight, I was in a prominent e-commerce Facebook group where someone asked, “Where should I start – eBay, Amazon, or Shopify?” That’s an excellent question, but the initial response was, “I do Amazon, eBay, and Storenvy for my channels.”
I installed Shopify last month for a cost of $200 per month, but I didn’t generate a single sale, so I shut it down after the first month. “I immediately recognized his issue: he assumed they were all the same. After I explained that they were not the same, this gentleman said, “I didn’t realize the monthly cost was only to keep the store open.” The monthly subscription generates no marketplace or traffic. Once I realized what was going on, I bailed. “An audience accompanies a marketplace.
Among the numerous major marketplaces are eBay, Amazon, and Etsy. A marketplace has a large number of sellers. To list and sell products on their website, you must pay a charge. They own the customer, and there are often extremely strong restrictions in place around how you interact with clients. Attempts to redirect people who buy from you on the marketplace to your own site are prohibited, resulting in your expulsion from the site. People will buy from you, the unknown seller, more easily than they would if they found your website since the marketplace is a reputable brand that almost always backs up the customer.
NEW FOR 2020 –Shopify now has a marketplace called Shop. It’s an app-only marketplace that’s still in its early stages, so the search is abysmal. They will make improvements in due course. However, it does necessitate the use of Shopify Payments to qualify, which excludes many stores. It’s too soon to tell if this will help stores sell more. It’s possible. The issue, in my opinion, is that shoppers must perceive the value of installing the app. Only time will tell. Shopify stores are the only ones that can access the Shopify marketplace.
The disadvantages of a market
You do not have control over the customer or the relationship with the customer. You must follow the regulations of the market. When there is a disagreement, they usually side with the customer. This can be aggravating. They have influence over how prominent your product listings are, and visibility is fast becoming a “pay to play” game. They have the right to end your relationship at any time. Amazon is notorious for suspending and terminating merchant agreements for what appear to be minor infractions. Sometimes the customer is incorrect. It makes no difference. You’re still doomed. Even so, it is feasible to make a lot of money selling on one or many marketplaces.
Your own online store
You own the domain and get to choose your own name. To get started, you’ll need shopping cart software. Depending on what you choose and the features and capabilities you require to run your online store, you may require more than that. Shopify is one of many shopping cart brands. It’s well-known and well-liked by new and smaller businesses. However, it is not superior in terms of brand recognition.
While it is a strong option, it may or may not be appropriate for your business. You should not rely on advertisements for your cart selection. Creating a specification and selecting a cart based on your company’s specific requirements is critical.
Numerous aspects distinguish shopping carts from a variety of other outstanding options. BigCommerce, WooCommerce, Salesforce, and Magento are among the well-known leading contenders. Each is distinct from the others, and before deciding on one, you should have a clear understanding of the technologies required to conduct business. Otherwise, you’ll be replacing your cart software in no time. I’m not going to go into detail about their distinctions in this essay. Please contact me if you want to know how to choose the best cart.
What exactly is the distinction between a web store and a marketplace?
There are numerous distinctions, each of which is significant. It’s critical to grasp these distinctions so that you can tailor your business plan properly. I’d also like to emphasize that it’s not an either/or situation for many online firms. Many companies have more than one internet sales channel. You may elect to sell on marketplaces as well as on your own website.
The first distinction is that you must bring an audience.
Marketplaces invest much in increasing traffic to their websites. When you own a site, you must generate traffic for it. It becomes more difficult than that. “Just traffic” is insufficient. It must be focused on traffic. This signifies that the people who sell your site are interested in what you have to offer and are prepared to buy. There are numerous ways to drive traffic, but in the beginning, it virtually always necessitates the expenditure of funds.
Advertising is usually the quickest way to bring in customers. Social media, identifying influencers to write about, talk about or post about your products, and search engine optimization is other traffic sources (SEO). It takes time to build an audience and a huge amount of content, so paid methods are mostly available for brand new stores. Over time, you can add email marketing, referral marketing, and affiliate programs to boost sales, but these are not effective tactics until you have actual sales volume.
Difference #2: You must earn their trust.
The marketplace customers purchase from you mostly because they believe the marketplace will look after them. You are relying on their brand trust rather than your own. Even with this amount of assistance, sellers who don’t have a lot of positive customer feedback will see slower sales until they build up a solid reputation. When you operate your own business, you must establish confidence and appear trustworthy from the start. This is a significant amount of labor.
Your store must seem to be reliable. This implies it works well, looks fantastic, is well-organized, and has well-written shipping, refund, and privacy policies. Customers must be able to contact you as well. Stores that do not offer a local address and phone number appear less trustworthy and perform poorly in most circumstances. The spelling and punctuation must be flawless. Product images must be clean and consistent. Original and well-written product descriptions are preferred. Your site must be safe. This is only the beginning of the process of establishing trust.
Increasing brand trust
Aside from the physical criteria I just described, you must also create a brand. Customers choose Amazon, Walmart, and eBay because they trust the brands they buy from. They’ve got it. Your brand-new establishment does not. The topic of how to develop a trustworthy brand can become quite extensive. In the interest of brevity, I’ll limit it to three areas: brand exposure, social proof, and, most importantly, a distinct value proposition (UVP).
the brand’s visibility
It’s all about being noticed. Everywhere On social media, YouTube, the Internet, and, if you can afford it, on television or radio. While it is possible to gain a lot of social presence through your own efforts, most branding requires spending money. Branding initiatives focus on the top of the marketing funnel (if you’re unfamiliar with the marketing funnel, you should learn more about it). This means that it does not always result in direct and quick sales. Branding raises awareness of your company’s existence and fosters trust.
Social evidence
Simply said, social proof is other people stating positive things about your brand and products. You’ll want to collect ratings for your products as well as opinions about how fantastic your service and store are. You want your customers to inform their friends about your business. You want social media influencers to talk about your business and products with large followers.
Exceptional Value Propositions
Before you open your store, you should think about and create a UVP. Your unique value proposition addresses the question, “Why should I buy this product from this merchant?” What would you say if I asked you what
Amazon’s UVP is?
Amazon has a huge assortment of products at reasonable costs. Furthermore, I may have my order, no matter how modest, delivered to my house for free within two days. Furthermore, I know that I can return it for $1 with no difficulty if I don’t like what I got.
That’s an extremely competitive UVP, and I’ll add that you should be aware of it. While you are not required to match it, you will be competing with it. Consider Amazon when developing your own distinct value offer. Customers want excellent service and products at reasonable costs.
Why bother if running your own store is more work?
It’s yours because it’s yours. You have complete control over the UVP, goods selection, site visibility, and business conditions (like return policies). Visitors to your site are exposed to everything you have to offer, not just one product at a time. You can re-market to people who have already visited your website or purchased from you. You can offer upsells and cross-sells. This raises the number of sales generated by each site visitor and customer. You might ask for references so that your current clients can refer new customers to your business (a referral program is one of the cheapest ways to acquire new customers).
When you do business in a marketplace, you are subject to their restrictions as well as the level of visibility they choose to provide for your products. Your products are always displayed in comparison to the competitors’. So, while the cost of creating your own internet store may be higher in the beginning, the potential is far greater in the end.
Prior to launching your online business
Do your research. There was a lot of it. Recognize where your products fit in the market in terms of competitiveness and pricing. Recognize your client. What do they like? What are their pain spots, and how does your product solve or create a desire for them? Understand the marketing funnel so that you can work with customers at all phases of their purchasing journey.
Plan a budget and learn about web marketing. Before you choose your software, choose which features you must have, which you would like to have, and which you do not require. Will you drop ship or keep products in stock? Can you deliver within the short delivery periods that customers demand if you drop ship? Here’s an essay I wrote about the 4 key elements of a successful e-commerce website.
Create a business plan. Establish goals and Key Performance Indicators (KPIs) (KPIs). You need a yardstick to see where you’re progressing so you can invest your time and money effectively. Be prepared to put in a lot of hours at first. Little effort seldom produces results. Eventually, you’ll be able to hire help and relax more.
With an internet store, you can make a lot of money.
Now that you have a better understanding of what it takes to set up and maintain an online store, it’s evident that Shopify will not make you rich. Shopify will not make you wealthy.
Can it be one of the many tools you’ll employ to help you develop a great business?
Yes, but that doesn’t mean it’s your best option because it’s one of several similar products, and “best” necessitates a great fit for your needs. Many elements are required to develop a successful e-commerce store. The most critical things you’ll need to get started are a great business plan and the willingness to put in a lot of effort, as well as some money to start your marketing.
Prosper as you go!