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Unable to Scale Your E-commerce Store? Top 3 Growth Pitfalls and How to Avoid Them

The ecommerce world is full of people who earn a fortune from it, but it is also not difficult to find those who suffer from enormous losses from their attempts. The question here is, what makes the difference between these two groups of entrepreneurs? Moreover, as the industry is getting more competitive and less tolerant of mistakes, many wonder how they could succeed within the increasingly crowded space. In this blog post, we will discuss some pitfalls that many ecommerce store owners are trapped in. Oftentimes, they fail to scale and blame it on luck when the truth is, in fact, they do not realise they are making these deadly mistakes.

1. Financial illiteracy

If you do not have previous experience in finance, you should hire experts to help you manage the business. In other words, make sure that you have someone on your team who knows the money game, such as a CFO, advisors, or consultants, well enough to direct your business from a financial standpoint. Many ecommerce entrepreneurs think there is no obvious benefit in dedicating resources to this area. However, this belief would do you more harm than good, especially when you are scaling. With their experience and knowledge, they would be able to offer you many insights and recommendations, such as budget forecasting and planning.

2. Line extension

Many dropshippers start their businesses by selling a few products with limited variations. Let’s take an example of a brand who sells bralettes when it is first established. With good marketing and business development efforts, they witness a big increase in your revenue in a relatively short amount of time. As more people hear about the brand, they receive inquiries from customers asking whether they are offering plus-sizes or more dynamic colours and patterns. This is when the store owner starts considering diversifying the products offered on their site. However, many are so eager with this idea that they fail to consider what they have versus what they need. Expansion of an online store involves more complications than you might expect, so the key here is to think and plan your strategies realistically.

The biggest problem that many dropshippers encounter is that they justify things too easily. For instance, you should think twice before making a large up-front investment in something that the minority demands, e.g. a few requests for plus-sizes as mentioned above. When you are in this situation, you should assess it from various aspects and ask yourself some questions, such as:

  • Are customers really willing to pay for the new products? How many of them would be purchasing them? (There is a difference between the fact that people say they are interested in a product and that they are paying for it).

  • How would the changes affect your capital and inventory? Would new launches spread your inventory too thin? (If you happen to find a winning product, the inventory might be too thin for you to scale it up. As a result, you may have excesses from other SKUs but no units left for the winner).

  • What would happen to your initial core product lines? Is it worth sacrificing your profit from them for the new lines? (You should keep in mind that the core items have helped you succeed and they proved to work perfectly well).

One method to test out your hypothesis and determine whether you should officially launch new lines is to run limited pre-sales. This would give you a gauge of whether and how much your customers are willing to pay for certain items. If it works out, then you may proceed with stocking up your inventory.

3. Transactional thinking

Many ecommerce store owners view the relationships with customers as transactional. However, this is not the best way to run your store, and definitely not the best way to retain your customers and maintain a high customer lifetime value. Instead, you should think about how you can foster meaningful connections with them and offer them the best you could. In particular, your strategies and priorities could be some of the following.

  • Consistently developing and testing products: You should have clear development cycles and calibrate your pace so as to keep delivering innovative products to customers. For that to happen, you ought to absorb customers’ feedback and explore the possibilities and feasibility of improving your products’ functionality and/or design based on their suggestions and additional market research. Afterwards, you can discuss the available solutions and alternatives with your suppliers or agent to customise the product hardware.

  • Leverage what you are best at: Instead of switching around and dropshipping as many types of products as you can, you might want to take a step back, reflect on what you are good at, and focus on that.

  • Maintain long-term relationships: Brands need to care about customers to thrive in today’s world. Rather than viewing your relationships as purely transactional, you should think about how you can nurture them and take them to the next level. For instance, putting a personalised note or sending a follow-up email after the purchase is a good way to connect with shoppers.

  • Build a strong and professional customer service team: Investing in customer support benefits you more than you might think. In fact, it is among the most influential sales drivers for many ecommerce brands. In particular, you should train the team thoroughly and take them through FAQs and common concerns expressed by consumers so that they know how to respond in a timely manner. If you solve your customers’ issues fast enough and treat them with the utmost respect, they will surely remember your brand, revisit your store, and even recommend it to their families and friends.

If you are planning to scale your dropshipping business, besides monitoring the metrics above, which mostly has to do with front-end development, you are also encouraged to work with a reliable dropshipping agent who helps you handle back-end issues. They usually provide a wide range of services from product & supplier sourcing to warehouse storage and ecommerce order fulfillment, or branded packaging & private labelling to quality inspection & product certification. With 30+ years of experience in logistics industry and 5+ years in dropshipping sector, Xianchao Logistics could help to bring your ecommerce store to a new horizon. Contact us today to find out more!

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