Planning to Open an E-Commerce Startup? 7 Misconceptions You Should be Clear About

misconceptionsAfter the recent Flipkart’s Big Billion Day and Great Online Shopping Festival sales, many entrepreneurs and off-line retailers are looking to get onto the e-commerce bandwagon. With dreams of earning billions in sale and ever encouraging media reports of investors putting in money into e-commerce, I am sure most entrepreneurs across India would be planning their online venture to the best of their abilities. Even traditional business owners with no experience of retail are now looking to get into this space and have marked up certain funds for the venture. While the whole scenario presents a very rosy picture, in reality e-commerce could be a money pit.

Here are some of the most common misconceptions about e-commerce businesses that most of the entrepreneurs have before they start up a venture. In case you are planning to open an online portal then below pointers would definitely shed some light on how to approach your venture.

Misconception No.1: E-commerce Means Having A Website

This is the biggest misconception that not-so-IT-experienced entrepreneurs have. It is believed that to start an online business, you just need an e-commerce portal with products loaded on it. It is assumed that a simple off-the-shelf e-commerce solution is all you need to start your online store and once you are ready with your website, money will roll in.If you are among the ones who believe in the same, then I would say you are not prepared for e-commerce (at least not yet).

It is important for entrepreneurs to know that e-commerce is much beyond than having a portal with products listed. Infact, I make it very clear to my clients that having a website is just 10% of what an e-commerce business is all about. There are a lot of other very important aspects to this business like marketing plan, order fulfillment, branding, shipping, competition analysis and strategy modification, stock management, customer satisfaction,etc which plays vital role in success of an e-commerce venture.

So before you put in your money in e-commerce, think about all the aspects mentioned above and have a clear understanding (including tentative costs involved) of each.

Misconception No.2: Once My Website Is Up I will be Rolling In Money

Just like traditional brick and mortar business, e-commerce has its own challenges. If you are already having a successful offline business, then a simple example to make you aware of what e-commerce is would be to imagine that you openup a retail store outside the city limits with no markets, no population and no road to reach your store. Yes, that is exactly what e-commerce is as a new venture.

To make your off-city store profitable, you will have to make a way for customers to reach you, and you also need to plan, invest and materialize a strategy to attract customers to your store. For that, you would invest in branding activities, sales& promotion strategies, giving out deals and do everything that you can to get customers at your new location. Same way for your e-commerce store, you need to have a clear marketing plan in your mind that will not only promote your brand but also aim at generating sales. This whole exercise needs constant inputs and progress is to be checked at regular intervals. You should know that NO SALE means NO Profits. In absence of a well thought of marketing plan, most of the inexperienced entrepreneurs would burn their money and ultimately land into a cash crunch situation.

Misconception No3: Everyone In E-commerce Is Making Money

Most offline retailers believe that everyone having an e-commerce portal is making money. Such a misconception allows them to calculate their investment appetite in a wrong manner which they come to know about only once they have pumped in all the money into the venture. Currently most of the ecommerce businesses are in investing and advertising mode. They are working to capture market share and have more and more customers listed with them.

For a small to medium level entrepreneur it is important to understand that besides creating a website, you need money for marketing, logistics (delivery of products), sourcing, warehouse, employees engaged, customer satisfaction, and incorporation of technical tools to run the business. With a fixed percentage profits, the volume of your sales has to be quite high to make your business a profitable venture. While calculating your breakeven point, you need to figure out your target sale volume and methods to achieve it.

Misconception No.4: Retail Customers & Online Customers Are Alike

Do not confuse your experience with retail customers as firsthand experience of dealing with online customers. Customers at your retail store might be visiting you because of your established presence over the years OR maybe because you are located in a market with a high footfall and are selling exclusive brands. Online customers have a lot of choice for brands and have a very high expectation rate. As customers purchasing from online portals cannot see, touch or try the products that you are selling, you have to present your products in the best possible manner to accurately let them know what you are selling. For clothing business, right from color of the product, size, fit, fabric everything has to be just PERFECT. Because if it is not, you will be getting a lot of product returns which means unnecessary overheads and yes – NO SALE.

Misconception No.5: I Know It All

It is good to believe in yourself and be positive. But being positive while exploring a business like e-commerce without accurate calculations and a well thought-off strategy is like assuming you will fly like an eagle when you will jump off the cliff. It is very important to check whom you will be competing with and you need to answer yourself about how you are different from others. You need to find out, if your business model (and products that you are selling) is in direct competition with other big e-commerce portals? And if so, then what unique factors are you presenting to your customers and why they should buy from you?

This thought will push you to explore what USP you can have over other competitors. You need to be different to make a mark on your customers. Find it how you can do it.

Misconception No.6: I Don’t Need Plan B

You always do need a Plan B and in e-commerce you certainly need one. A typical scenario that lands e-commerce businesses in soup is when they invest heavily in procuring stock without having an alternate sales route. Like any business, the profit and ultimately sustainability of business depends on selling of products and money rotation. In case, the products you have stocked are not selling online you need to have a Plan B to dispose them and get cash again. It is important to explore marketplaces like,, etc to sell your products online.

Misconception No.7: I Know How To Sell Online, I See People Doing That All The Time.

Yes, Google Ads, TV Ads, Facebook Promotions etc are some of the prominent tools that you would utilize in promoting your business but let me share with you an example of one of the failed sales strategy adopted by a portal. One of my clients engaged some novice internet marketing company to launch their Google Search campaign. Through the campaign they were generating a single click to their website for 30 Rupees for a product whose profit value was 300 Rupees. Though the company was very happy that they are generating clicks and web traffic by spending on Google Search but an insight into the campaign revealed that they were spending almost 900 rupees (30 clicks approx) through Google Ads to generate a single sale. So instead of making money from profits they were actually paying 600 Rupees from their pocket per sale through Google Search Ads. Sales from SEO and Facebook fared well for the client and it was suggested to increase their exposure to other mediums and wind off Google ads campaign.

While we all know various tools and advertizement options available, you as an entrepreneur should either understand and have a clear path of how you would sell or should engage an agency to provide you various metrics for advertising options suited for your business venture.

As a parting shot, I would say that this article is not meant to discourage entrepreneurs from venturing into ecommerce or other online businesses, but to clear the misconceptions that most of the first time online entrepreneurs have. The firm belief in these misconceptions makes them rash in taking decisions, due to which they ultimately lose their money. If you carefully think about all the scenarios before committing yourself into the venture I think you would be in more comfortable position when you are over with the hangover of business launch. With proper planning and money management you can beat the best and yes success will be ultimately yours.

I firmly believe that with the number of web users and online buyers increasing by the day, the sector definitely holds a lot of promise for both the young entrepreneurs as well as the seasoned business men especially in country like ours where the relative IT penetration still has a lot of ground to cover.

About the Author:

Vishal Batish is an Internet Marketing consultant with 10 years plus experience in the field. Over the period of time he has worked with some top notch IT companies including INC 500 businesses. Besides being an independent project consultant, he also runs number of e-commerce portals and has a digital marketing agency. 

Disclaimer: This is a contributed post. The statements, opinions and data contained in these publications are solely those of the individual authors and contributors and not of iamWire and the editor(s).

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