7 Costly Mistakes e-Commerce Entrepreneurs Must Avoid

Published on June 12, 2023

One would be hard-pressed to come up with an example of a product that consumers are not yet buying online in 2023. For 2022-2024, the expected CAGR for retail e-commerce is predicted to amount to no less than 8 percent. The rise of e-commerce truly permeates all aspects of our lives.

With a burgeoning industry comes a plethora of new e-commerce businesses. A great many e-commerce entrepreneurs never make it through their first year, however, because they make critical errors that end up being irreparable.

I have been a mentor and coach of tens of start-up founders in the past few years through my membership in the BetaBlox-panel. My experience helping budding e-commerce entrepreneurs made me identify the following 7 common mistakes made.

Overlooking Operations: The First Missteps

1. Too many entrepreneurs underestimate the importance of introducing standard operating procedures (SOPs). Without SOPs, solutions for problems constantly need to be ideated, which is a very impractical and resource-intensive way to work. If there are repeatable tasks, you should create an SOP and learn to delegate. For example, if I never standardized admin-related tasks such as bookkeeping, client onboarding, and new employee setup – I would never be able to delegate this to another team member. If I can’t delegate anything, I’m still working in the business, whereas I need to be working on the business.

2. Entrepreneurs will also often fail to take themselves out of the business. The tendency to want to continue to tend to every detail of what needs to be done is a very human one, but when entrepreneurs do not step up to lead and manage their business, the company suffers.

3. Another mistake is correlated with the previous one. A lack of trust in other people will often cause important hiring decisions to be postponed indefinitely, which then causes entrepreneurs to not delegate and stay endlessly stuck in the weeds of daily operations.

The Marketing Pitfalls: Costly Oversights

4. On the marketing front, e-commerce entrepreneurs will often fail to take advantage of the many free marketing channels that exist. Among the completely free services they have available at their fingertips are:

  • Google My Business
  • Bing My Business (mind that with the popularity of ChatGPT, Bing is poised to take market share from Google)
  • Facebook Shopping
  • Facebook Pages
  • Google Listings
  • Bing Listings

All of these services help businesses gain top-of-funnel visibility with prospects. For many of our clients, all of these free listings can add up to 3% – 5% of their revenue, which can mean millions for a large company. Not making use of them is a missed opportunity.

5. Another marketing-related error that starting entrepreneurs will often commit is failing to measure the right metrics. The metrics that should matter the most to any e-commerce business are:

  • Where traffic is coming from (in other words: which marketing efforts are yielding results?) – this is a leading indicator meaning that you have access to this information immediately.
  • The return on investment (the impact of marketing on sales) – this is a trailing indicator. You will not be able to read this from your dashboard in real time.

Sales Strategy Slip-ups: The Final Hurdles

Finally, I noticed that entrepreneurs will also often make the wrong sales decisions.

6. Entrepreneurs will often not focus enough on sales. It is normal for a starting business (whether in B2B or B2C) to attribute early growth to referrals. The problem is that referrals alone will never allow a business to scale and grow sustainably. Marketing efforts that generate and nurture leads and an efficient sales process that turns these leads into new clients are something no e-commerce business can go without.

7. Finally, those e-commerce businesses that invest sufficiently in sales will sometimes make the mistake of not measuring the correct KPIs and, even worse, not measuring anything at all. As a result, they either underinvest or overinvest in certain channels. I’ve talked to many entrepreneurs that will pick up the phone and/or email potential prospects on a whim. Without measuring how many calls, responses, rejections, etc., you’ll never truly know if your sales department is successful or not.

There is no lack of opportunities for entrepreneurs in the burgeoning e-commerce market. In this article, I discussed common mistakes made in the areas of operations, marketing, and sales. Those entrepreneurs who manage to avoid the costly mistakes of not managing their business efficiently, not making use of free marketing tools, not measuring their marketing effort efficiently, and underinvesting (or wrongly investing) in sales stand the best chance of capturing a piece of the future.

Darwin Liu is the founder and CEO of X Agency, an integrated digital marketing agency of growth engineers with offices in Boston, Massachusetts, and Nashville, Tennessee.

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