Common Misconceptions About E-Commerce that Refuse to Die

We daily get a few enquiries for creating e-commerce websites. Some are quite well thoughtout but most are naive to put it mildly. In a lot of these enquiries i see some misconceptions that refuse to die. Usually these are disguised under the term 'startup', as if by being a startup you are forgiven common mistakes. In fact if you are a startup you should be more focused and should have done your homework more thoroughly.

Misconception 1 - E-commerce is easy, you dont need to have business experience to succeed online, just luck and a well designed site.

Tired of doing a job, fed up with the rat race, start an e-commerce business, thats the basis for many decisions to get into the e-commerce. The same people would never imagine opening a physical store. Why is online different? Or the better question is what makes online business appear easier then a physical business? A basic fundamental misconception - online business is easy.

Misconception 2 - You will get customers easily online and sales will zoom as soon as you launch the website.

'Build it and they will come' seems to be the mantra for many e-commerce dreamers. Somehow the fundamentals of marketing and build up seem to be skewed online. The reality is that you have to work just as hard for every sale online as you would have to do in the real world. Successful e-commerce companies work on their offerings, marketing messages and market strategies just as hard as any offline firm except that their offerings are digital rather than physical. But digital does not necessarily mean easier.

Misconception 3 - E-commerce produces obscene profits for those who make it.

A friend recently told me about a prospective customer who had registered more than three dozen domain names and wanted my friend's company to help him monetize them. For this person owning the domain name was as good as owning gold. His expectations were unrealistic and his notion of online markets was warped to put it mildly. But this is more common problem than it seems. Hundreds of entrepreneurs hold onto some flimsy idea or concept execting it to make them rich overnight. Thr dream being to sell the business to a VC or a large corp. If you are entering the e-commerce arena you better have something more than a fancy domain name

Misconception 4 - Real world experience and expertise translates easily into the online world.

Over confidence stemming from real world experience is fatal flaw especially in the world of e-commerce. There is a steep learning curve even for the most experienced business person when they take their business online. Customer behaviour changes drastically online along with expectations and anonmity. E-commerce is as much analytically driven as the real world shops are relationship driven. E-commerce is about insane attention to statistics and numbers. Unique visitor, bounce rates, conversions, funnels etc. can be confusing to busines owners more used to simple walk-in customers.

Misconception 5 - Running an e-commerce store is much cheaper than a real world store.

This misconception is fuelled by web design agencies that design e-commerce sites for clients at throw away prices. But e-commerce is much more than a catalog and a shopping cart. Its a process, its a journey, its an iterative experience in ever improving the customer experience. Its not a cost, its an investment. Sooner or later those who try to pull down on cost realize the truth - running an e-commerce business is not cheap.

I have highlighted these misconceptions not to discourage anyone from e-commerce, hell, thats our bread and butter, but to give a reality check to those who have not given it serious thought.

Ideally we would like people to

  • Carefully plan their ventures considering all the factors.
  • Have realistic expectations from the venture
  • Commit to the long term and see it through to profitability.
  • Enjoy the experience as its wonderful and unique.

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