How to fail online (by believing these myths)

This is the stuff failure is made of.

Myth #1: An online business is cheap to run.

In our survey (findings to be published here next week) we found three quarters of retailers who are already trading online are spending less than $2,000 per month promoting their online business. When you want to stake a claim online, your marketing spend is also the rent you pay.

An online business is not cheap. It has low barriers to entry and low(-ish) CAPEX to get started; but that does not make it cheap.

The bigger you want the business to grow the more you have to spend. The amount of money you spend is proportional to the amount of money you make. There are a few exceptions for very early adopters or innovators, but let’s face it that won’t be your business.

If you only want to dip your toe in the water, you can’t surf the wave.

Myth #2: All you need is a website and off you go.

Launching a website is like selling cold drinks from your caravan in the Outback. Everybody may want one – if they could find you.

The estimate is that there are close to a million eCommerce sites in the US alone. If you consider that this would include sites like Amazon and eBay and so forth which suck up a huge proportion of online spend, then you get the idea that the online world is a really big mall and your shop is going to be down a side entry near the toilets. (Amazon is estimated to account for over 20% of eCommerce sales.)

Setting up the website is the easiest part. If you are struggling through this process right now, you may find it disheartening to think that it will only get tougher. But it very much is like raising kids.

You may think giving birth is the hard part, but it only gets harder.

Myth #3:  My key to success is to replicate my offline business into an online version

I have called omni-channel a pipe dream, for the very reason that most retailers want to simply replicate their business online.

You may have a successful boutique in Terrigal, St Kilda or Cottesloe where you sell a great range of designer labels at a good price with great service. You may THINK you are successful because of that, but that is not the full story.

The truth is you are successful because you are the only boutique selling that range at that price in that suburb.

The problem is when you go online, all three of you (and a thousand others) will be selling the same stuff at the same prices, and your location does not matter any more.

MOST independents survive/prosper because their location is their only Point of Difference – which is the one thing the internet makes redundant.

Myth #4: An online business is easy money – you make money while you sleep.

It’s a business (unless you treat it as a hobby) and any business takes hard work. If there was easy money to be made, there would be a million people ahead of you in the queue.

You DO make money while you sleep, but the business also NEVER sleeps. While you are sleeping you may be making money, but you are also receiving complaints, running out of stock, having traffic issues etc.

You must create a business model that is capable of dealing with a 24/7 cycle, and it really isn’t easy. (Re-read this post on the Digital Jungle and study the graphic to get a sense of the complexity.)

Myth #5: I won’t be affected by online retail.

This one is not so much a myth is wishful thinking,

Morgan Stanley estimates that eCommerce sales will double to more than one TRILLION dollars by 2016. And it won’t stop growing either.

You can choose to be part of it, as long as you are realistic and smart about how you go about tackling the opportunity.

Next week we will share the findings AND give you simple action plan that you can follow to get started.

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