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Steer Your Online Shop Away From the Road of Death

Mari Oksanen Written by Mari Oksanen - Jun 23, 2014

When you establish an online shop, you can select the road to life or to death. Jani Lehtimäki (Nethit) has worked with online shops for a long time, and he shared with us the biggest pitfalls on the road to successful for online shops.

1. Dancing Off to War

If you have not prepared a business plan and cost and profit calculations for your online shop, you should do that now. Do not mislead yourself by leaving expenses out of the calculations. The same laws apply to online business as traditional business.

You can begin the calculations by mapping out those who search for your products with the search word tool, and estimate how many of them would come to your online shop. The free Google keyword tool is sufficient for this. You should also check the stakeholders that you can utilise.

Number of Visitors

After this, you should think about how many of the visitors would become paying customers. If the number of customers is 1 out of 100, the purchase percentage is 1, etc.

Purchase Percentage

You should understand what kind of an online concept you are using, and select products suitable based on this purpose. The average purchase price should be more than EUR 45, normally the average purchase price is clearly higher online than in a traditional shop.

Average Price

When you have thought about all the factors above, you will have the formula that creates the online shop revenue (visitors x purchase percentage x average purchase price = R).

An example: 10,000 visitors X 1 % purchase percentage X EUR 100 average purchase price = revenue EUR 10,000

If the margin is 50 %, profit is EUR 5,000, and expenses should be reduced from this.

The formula is a three-factor multiplication, and therefore if any of the numbers are doubled, the revenue is doubled.

2. Underestimating the Workload

Allocate resources properly. The online shop platform helps you with maintaining products, printing documents, categorising products, additional sales, but the online shop does not run itself. You should reserve enough time to learn how to use it.

A great deal of time will be spent to consistently create and maintain product information, as well as continuous optimisation and development that require proper monitoring and analytic skills. Systematic marketing also takes up a surprising amount of time.

You should make a realistic estimate on whether your own time will be sufficient, or whether you should hire an employee for the online shop, or perhaps several. You should include the employees in your calculations.

3. Selecting Your Partner Based Merely on the Price Tag

Take the time to carefully select your cooperation partners. An online shop goes out of date faster than your phone, and it is important to take this into consideration in the calculations, as well as in selecting a partner.

Who is developing your online shop and its different areas? The platform, content, payment service, delivery methods? Who will provide you with support and guidance? Your shop will lose sales if it is not maintained and developed – make sure you have access to experts.

4. Not Noticing or Addressing Buying Obstacles

Buying obstacles have a great impact on profit. For this reason, invest in tackling them from the very start. Keep this in mind when selecting platform and shop services, as well as when developing future content.

Usability, product information, pictures and purchase processes should be carefully reviewed. After the initial careful review, it is important to consistently and repeatedly review them.

Tips for Success

Here’s Jani’s tips to avoid these pitfalls and steer your online shop safely towards success.

  • Crunch the numbers and do the necessary calculations before establishing your online shop to make sure your idea is viable.
  • Be ready to invest in your online shop.
  • Select your partners with care.
  • Make sure to deliver on the promises you make in your online shop.
  • Be careful when creating product related content:

Calculations4an-online-shop

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