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Episode 10 - Common Pitfalls for Shopify Stores

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 Hello Scott Austin here and welcome to the 10th episode of Our podcast. I'm a Shopify expert that is focused on small and medium-sized businesses. And as such, I talked to a lot of owners of eCommerce or perspective commerce businesses. Through as many conversations and interactions, I've been able to see what things lead to a successful store and business and what things don't. So I thought it'd be useful in this episode to discuss those things that I've seen that tend to bring a new business down or at least prevent it from being successful. So here are 10 common pitfalls in eCommerce businesses there in an order that I think flows well and not ordered in any sort of priority fashion. 

So the first pitfall is that the product is not unique in today's industrialized world. It is very easy to make a commodity product say a tee shirt. And there are massive companies out there that operate on efficiencies of scale that can make a tee shirt cheaper and more reliably than a small company can. So a small companies t-shirt must be different. Maybe it has a unique design or is made of highly sustainable bamboo fabric or something else unique. Think of successful brands on Shopify. One thing they have in common is product differentiation. So in your store, you're going to have to have a product or a service that is unique that isn't made by somebody else that can stand out in the crowd, that you can use that uniqueness in your marketing, in your advertising to draw people in to your site and down your conversion funnel.

So the second pitfall is that there's no product-market fit and product-market fit has a few different dimensions to it. The first one is simply is the product that you're selling something that people want, are you going to be able to sell it? Another dimension to it is the financial aspect to it. Can you make this product at a low enough cost with enough markup in it that you can profitably run your company? If you can make this product for $50 and customers are only willing to spend $60 for it, that only leaves $10 for things like marketing and customer acquisition. And it's probably not going to be enough money or even worse. I've seen products out there that they can make for $50 but customers don't want to spend more than $40 for it because that's what the competitive environment for that product is selling it. So you have to be able to have a product that people are willing to buy in enough volume and with enough profitability to build and sustain your business. And one of the things to look at when judging your product-market fit is a really simple concept that a lot of people use. And that is for a brand new store, focus on getting your first 100 sales because it's a lot harder than many people believe. I've unfortunately seen many stores that launch and never get to that a hundred sales milestone because they don't have a good product-market fit. So it's really in the early part of your product development to be talking to as many potential customers as possible to evaluate your idea, your product, and have them help you with the product development. You know, one thing I've done in the past and products that I built out is to sell them at farmer's markets and that's a really great venue because you're face to face with people and you get to talk to them and see what their responses to it and understand is this something that they like or not like or what improvements they would need to see in it before they would purchase it and then you also can get feedback on things like pricing. Do they see the value this product provides?

The third pitfall is too much focus on store functionality. To oversimplify, there are four areas in eCommerce business efforts can fall into. The first is product development, identifying the product-market fit and creating a unique product. The second is infrastructure, website payment processing design in those types of efforts. The third one is operations, fulfillment, accounting, inventory, and those types of operations, and the last one is marketing, customer acquisition, whether it's done through social, direct advertising, SEO, et cetera. On a side note, you may remember that I covered these four buckets in detail in episode three of this podcast. If you haven't listened to episode three I highly encourage you to go back and listen to it. It's actually one of the most listened to episodes that we've had so far now of these buckets. The infrastructure is actually the easiest one. There's a whole army of Shopify experts like me and many others out there that can build just about anything for your store. All too often I see store owners that are way too focused on building more functionality into their stores when I believe that they should instead be building customer acquisition channels. Let me illustrate it with some math. Let's say a store has a conversion rate of 2% which I consider to be a good rate and 100 sales per month. My recommendation without knowing anything else about that store would to be focused on doubling the traffic to the store, which would then get the sales to 200 a month, but some stores instead will spend that effort on increasing the conversion rate of the existing traffic through the store and if they improve the conversion rate by 10% dill, increase the it from a hundred sales per month to 110 sales per month, which is why most often the case for growing your business usually will involve adding more customers to your store, more visitors to your website. All too often I see stores that are focused on activities on their website, new features, new functionality, when they really don't have the customer volume to justify that type of effort. For example, a store that's doing just a hundred sales per month, you shouldn't be thinking about building out a loyalty program. I've had customers ask me to add a loyalty app to their store when they don't even have repeat customers yet. You can also argue there's a cart and a horse scenario going on here, which is absolutely true, but in general, stores need less functionality than most store owners think about and what they really need is more marketing.

Now the fourth bucket is going to make a lot of sense after what I just said and that pitfall is not being focused on marketing. The hardest part of building an eCommerce business is acquiring customers, having a great product and building an engaging website do nothing to bring people to it. Customer acquisition is a never-ending process of trial and error across a wide range of sources like advertising, organic search, social influencers, press, et cetera. To be successful, an online store needs to execute well on driving traffic to the store, hence the need for marketing.

And the fifth pitfall is not spending money on advertising. While it is possible to have a successful online store without paying for advertising, those stores are very rare exceptions. I've worked with many stores that have a small flow of customers from non-advertising sources, things like social or SEO. They even have decent conversion rates, but to grow their business, they need to scale up their customer acquisition. And the only way to do that quickly in a short amount of time is through paid advertising. Customer channels like social and SEO, while very important and you should focus on them, do not provide quick returns. They are long-term investments. Many stores hesitate with advertising because their pricing model doesn't support it. An ad campaign is going to cost 25 to 33% of the revenue it brings in and that's if it's executed well. So the product margins that you have need to support that level of spending. And that takes us back to the concept we were talking about earlier. Under product-market fit, we need to make sure that the price that you're charging for your product allows you enough margin to pay for your marketing to pay for your advertising and still be profitable.

So let's move on to the sixth pitfall and that is using a mindset produced by dated best practices. As an example, the book, the four-hour workweek, it was a very inspirational, influential book for entrepreneurs when it came out. But this book was written in 2007 which now 12 years ago. And that 12 years is the point, the Internet and more specifically, e-commerce has changed drastically since then. In 2007 setting up a website that could collect payments was much harder than it is today. Unbelievably harder than it is today. In 2007 reselling products alternately known as drop shipping was much harder than it is today. You actually had to go out to the source manufacturer, develop a relationship personally with them, and import those products into the country and then resell them. And today there are lots of services that can do that for you really quickly and easily. So today you can create a fully functioning store, the product catalog of thousands of items that looks professional in less than a day. So a business model of selling thousands of widgets from Alibaba and a generic Shopify store will not be successful today as it was back in 2007 so it's important as entrepreneurs that you ground your belief in the best practices of today and those best practices keep moving and evolving all the time. Used to be very easy to build your business on Facebook advertising, for example, just a few years ago, but today it's hard to build your business just on Facebook advertising.

Moving on to pitfall number seven and that is not managing the business day today. Again, the store that runs itself concept from 2007 is faded. Today's successful store owners are constantly working. They're doing things like innovating on their product, exploring new distribution channels, managing advertising campaigns, building press and industry relationships, tweaking their conversion funnels, building on and executing their merchandising calendar. Their to-do list is never-ending and always growing. Your business is going to need constant care and feeding. Running an online business today is not a part-time job.

Pitfall number eight, not embracing your David Role in a world of Goliath for a new online business. The old adage that people buy from people, it's very true. One of the ways that your store will differentiate itself from the Goliath of the world like Amazon, Walmart, and the Chinese manufacturers is that it is not a global corporation. Instead, it is run by real people with real names. Small stores should leverage this advantage over the bigger players. Your about us page should detail that people at the company and the story of those people, not the product or the mission. You will need to be confident and willing to talk about yourself and post your photo. Many people say they're too shy or too humble to do this. It's very natural for most people, including me, but I'm out there building my brand by doing this podcast. I also create many tutorial videos that feature me and the Shopify ecosystem is full of successful stores who store owners tell their personal story as part of their brand. Remember fortune favors the bold. The best way to get more comfortable in front of a camera or by talking about yourself is to just do it. If you look at videos of stand-up comedians over their career, you'll see their comfort on stage grows over time. The same is true for bands and their music videos or any other field. Most people aren't naturals in this role, but most people can learn to appear natural in this role. It just takes getting started and continuing to practice.

Pitfall number nine, not creating content. There are many ways that consumers make purchase decisions. Some look at the price, some want to see reviews, some want scientific research, some want to see the product in action. Some want to know who they're buying from. There's not just one way to sell your product. You will need to give different customers different information to lead them down the conversion funnel. As such, you will need to create different types of content. In order to satisfy these different needs, you'll need to be able to produce product descriptions, general copy product and lifestyle photography, user manuals, customer support tips, videos, illustrations, and more. A simple product photo in price won't be enough to sell your product. Successful store owners think nothing of creating a new landing page for a new ad campaign and optimizing the copy in photography on that page for the intended audience, and then they quickly see how the customers respond to that and iterate on that. It's a never-ending process of test, learn, iterate, and great content is another way that successful stores differentiate themselves.

Now, here's my 10th and last pitfall. Not Putting the product in the marketing out there in front of customers. Reid Hoffman, who's the man who sold LinkedIn to Microsoft for $30 billion has a quote that goes like this. If you are not embarrassed by the first version of your product, you've launched too late, and I agree. And for this discussion, let's expand the idea of the product to include our product and all of the marketing content around the product. Your business will learn much more from how consumers interact with the site and the products than it will by hypothesizing how people might interact. I'm a big proponent of shipping website changes quickly to see the consumer response and then using what is learned from that response to iterate on the experience. In other words, the speed of e-commerce doesn't allow you to do everything perfectly. You must be comfortable with good enough or good enough. For now, let me use this podcast as an example. Again, my original plan, which should create 10 full episodes before launching my podcast, but back in May, I realized the foolishness of that plan. So I created my first podcast episode and shipped it. Now it's September and this is my 10th episode, but I've been shipping and learning so much over these past months. I've been interacting with listeners and getting their feedback on what they like about the podcast episodes and today I think that my podcast is better then if I had waited until I had a full 10 episodes before shipping it. So successful stores are constantly putting more information, putting more content, putting more products, putting more marketing in front of customers and seeing what works and what works they do more of, and when things don't work, they also learn from that.

Now, I've just gone over 10 common pitfalls for stores. I'm going to summarize these 10 pitfalls by saying the opposite, and that is the things that make successful stores a successful Shopify business typically has a differentiated product that is plenty of quality content that is used in marketing and advertising by a team that is constantly trying new things and improving their conversion funnel. Although that's just one sentence. It a lot of effort. Building an online store, as you all know, is not an easy endeavor.

For every one of the rules that I've discussed here, you can find an exception, someone or some business that has succeeded despite not following these rules. While there are always exceptions, that doesn't mean that the rules don't apply. That said, these rules are only my opinion. Hopefully, they give you insight into common pitfalls that other stores had been caught by for you to be successful. You'll need to know your business, your products, your customers, your competitors so well that you'll know when to follow rules and when to follow your own expert opinion.

Thanks for listening.

JadePuma is a certified Shopify Expert. If you need any help with your Shopify store, we can help.