Working in the e-commerce industry I spend a lot of time in forums and industry chat groups reading content from entrepreneurs as they try to learn from each other how to overcome obstacles and make their online stores more successful.
Reading the e-commerce discussions on Reddit, Quora, and in a few Facebook and Linkedin groups lately, I’ve started seeing some trending ideas. I decided not to include screenshots of the comments because I don’t want to personally attack anyone who shares advice on these forums or to spread bad vibes. I understand that most people are just trying to be helpful and I don’t want to single people out.
There are no “one size fits all” solutions in the e-commerce industry. And although I don’t doubt most commenters mean well, some share insight from their specific circumstances that can be potentially dangerous if applied to a wider context. Which is why I wanted to share a few moderating thoughts to counter 3 of the oversimplified ideas I see frequently spread in e-commerce communities.
1. “E-commerce has had its day, if you didn’t establish yourself 5 years ago, it’s too late for ads to save you now, and anyone saying otherwise is trying to sell some crummy get-rich-quick course.”
As with many popular ideas, the above idea being shared a lot in forums is based on truth. E-commerce is not the same ecosystem it was a few years ago. It was a whole different ball game for early adopters. And a lot of the people that made easy money early on are now selling online courses or consultancy services, promoting the idea that overnight success is still possible with their simple advice (that often costs $99.99).
But despite the increased competition in the ecosystem and the gurus inflating expectations, opportunities in e-commerce continue to grow. Consumers love that it’s easy and always accessible, and in 2019, e-commerce represented 13.7% of the $25.038 trillion retail market (a cool $3.43 trillion). And yeah, that percentage is projected to keep growing.
There are still lots of opportunities for high-quality stores. It’s definitely not easy for anyone (including the gurus, despite what they may say), but the shift of consumer preferences towards online purchasing is not slowing down. The average Click-Through Rates for Facebook e-commerce ads has tripled in the last 3 years. And all this means that new high-quality stores CAN definitely still become profitable businesses if they communicate their value and differentiate.
2. “If you’re a small business doing paid advertising, you have to advertize for the sale. Coca-Cola might have the advertising budget to waste on building funnels, promoting videos and content, or running contests, but small businesses need to focus on ROAS meaning, product promotion.”
With the tight budgets of small businesses, it’s understandable e-commerce stores worry about wasting money on vanity marketing and advertising. Gratuitous “Branding” is definitely not what anyone needs when they’re still at the stage where every purchase is crucial for offsetting their overhead costs.
But avoiding vanity spending doesn’t mean they should go directly for the sale. Most small stores need branding more than ever, in order to build trust and demonstrate their value. If you are a brand that’s never been heard of before and you don’t sell super impulsive/trendy items, you have to build a connection that differentiates your store from the competition.
This means it’s not always cost-effective to create advertising campaigns that go directly for the sale. Website visitors who are retargeted (i.e. shows ads after they have expressed interest in your store, social media accounts or ads) are 70% more likely to convert, and retargeting ads have 10x higher click through rates. To get the best ROAS for your campaigns it’s increasingly important to merge Performance and Branding, and new e-commerce apps and store plugins are making this a lot easier than it used to be.
3. “Anyone worrying about low campaign performance isn’t cut out for working in e-commerce. Getting advertising to work ALWAYS takes a lot of time and investment, so if you can’t handle losses, you should get out while you can.”
Recently I have been surprised that even in forums that were created to ask questions and share advice, the above condescending response to new store owners has been popping up more and more. When someone asks for advice regarding how much to invest to test ads, or expresses concern that they haven’t seen a lot of results yet, often someone will chime in with an oversimplified comment about how new store owners just need to get used to heartbreak because e-commerce is hard.
And sure, maybe some people need to hear encouragement to stick things out through low months or lower their expectations. Because it can take months/years for stores to become profitable. But suggesting that new store owners aren’t “tough enough” to handle e-commerce work if they are worried about performance is just spreading negativity and being unhelpful.
Although it is obviously true that “success takes time”, the condescending comments in these forums emphasize “waiting”, and takes the focus off doing proactive problem-solving. What the “be patient” advice glosses over is that it’s not just waiting that eventually improves your store’s results. Success comes from gathering information, trying new things, changing strategies, and learning what works.
Throughout my time managing ads for e-commerce stores, I’ve been shocked a few times by how long some businesses will run terribly performing ad campaigns. Success takes time but that doesn’t mean you should leave a terrible campaign running for a year. After a period of learning, campaigns need to be reviewed for profitability, and optimized to improve performance. If you’re spending more than you’re making with your ads, analyze what’s working and what’s not. And then be ready to make changes.
The bottom line is, the world of online advice may sometimes feel divided into two opposing camps: Ad “gurus” trying to make things look easier than they are, and frustrated entrepreneurs spreading unhelpful negativity and burst the “easy money” bubbles. But the reality is definitely in the middle ground between these two camps and its important to read advice critically.