Why NOT to have an e-commerce website

Why NOT to have an e-commerce website

This post talks specifically to established business owners and aims to explain the principle differences between two types of website. They are e-commerce vs. authority (or identity). The reason I’m writing this is that most established business owners have one thing on their mind: “How can I increase revenue?”

How can I increase revenue?

Of all the reasons to have a website, I think that increasing revenue is a fantastic idea. This is the reason why most established business owners want an e-commerce website. As they see it, having an e-commerce site is the cheapest way to stay open 24 hours a day, 365 days per year without increased staffing costs. The appeal of turning your business into a vending machine that anyone can drop their coins in any time of the day or night is compelling.

Unfortunately this approach can miss the mark in some significant ways. The worst part is that most web developers and lesser ad agencies aren’t prepared to give good advice. They just smile and say “do you want one category or two?”

Communication mismatch

I really want to make this point clear. In this two sided conversation between a business owner and someone capable of building a website they aren’t saying and hearing the same thing.  The established business owner says “I want a website“.  What he means is “I want more revenue“.  The ‘web guy’ hears “I want a website” and understands that to mean “I want to put my business online with the latest technology in a way that automates things and integrates social blah blah blah“.

It’s surprisingly easy for the business owner to get sucked in and start talking about features, design, technology, security and all the unimportant nitty gritty details. This could result from a few different influences. The first is that he doesn’t really have a grasp on the basics of business: traffic and conversion. This isn’t so hard to imagine since many business owners are in businesses or niches that chose them. As they mature in business the focus will come. In this case he fails to ask for a website that increases revenue because he doesn’t how to articulate that yet.

The second reason he gets sucked into the details without making his goal of increased revenue clear is more pernicious because he has decided to outsource his expertise.  He mistakenly assumes that the individual or firm he has hired knows best and that they are focused on traffic and conversion. Unfortunately, fewer ‘web guys’ and ad agencies than you would hope actually understand and focus on these all important pillars of successful business. There’s a simple reason for this lack of focus: The details are easier than the strategy.

Be painfully clear as you set expectations

As the business owner, it is your responsibility to set the focus on traffic and conversion and to steer the correct course during the project. Never assume that your web guy will do it for you. Even if he gets you more traffic, that doesn’t mean he knows how to increase conversions (front end or back end sales) and so he usually misses the mark.  He’s not negligent. He just doesn’t have the experience or authority to communicate with your niche in a way that makes them buy.

E-commerce vs. Authority (Identity)

Let’s look at another type of site that has potential to increase your revenue: A blog.  “That’s absurd” you say.  Well, it might sound absurd for a minute, but keep in mind that you are the expert in your niche, not your web guy.  Your customers buy from you because they trust you.  Even a well qualified ad agency will have to do a hefty amount of research up front to get to know your clients as well as you do.

Many business owners fail to recognize that their authority in their market can do more for sales than an ecommerce website. Another benefit of authority is that it gives you leverage when you do make overtures toward ecommerce online. Rather than starting from zero and trying to get people to buy your wares at the first contact, you instead give them something up front and later roll that trust into a sale.

When it comes time to get traffic, which means backlinks and engagement, the “deal flow” is higher with an authority site than for an ecommerce site. It’s also less competitive, since the quality of the content suppresses the tendency to haggle about price. As your authority and identity within a niche or market increase, your clients interest in buying from yourcompetitors will decrease. They’ll assume that you really are the expert and so they had better buy from the source.

But I still want an e-commerce website, so give it to me now

So you insist.  OK then.  Let me suggest that you start with a blog and use an e-commerce plugin.  Roll out one product at a time. Let those products come as you provide valuable information and other content to your community and establish trust and authority. You might also notice that this is a fruitful field for testing offers.

Make sure you are creating a fit for your business.  If your bread-and-butter product is a high ticket item that is custom every time, then stop trying so hard for the nickel and dime products. Sites like Amazon.com will beat you every time on those. Make sure that your website is either leaning on or establishing authority in your market as the clear leader for those custom products.

No matter what you do, recognize that both an ecommerce website and an authority blog will require content production.  If writing isn’t your thing you can accomplish a lot with a cheap video camera, or even a nice microphone for audio content, but you will still have to produce the content. Without content you won’t get traffic, establish trust or authority and in short, you website will fail.

If you’re interested in having me work with you on choosing the right platform for your next web project, use the button below and request a quote.

Photography Credit: Justin Hall

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4 Responses to “Why NOT to have an e-commerce website”

  1. Jeremy Erickson April 22, 2010 at 11:24 am #

    Awesome post Dan, I struggle a lot with some of the issues your talking about in your post. I like your thoughts on authority vs ecommerce. It’s easy to build ecommerce, but building credibility and authority on a product is so much harder and more valuable.


  2. Alison@howdoesshe April 29, 2010 at 1:08 am #

    Thanks for this Dan! I know what you are talking about!

  3. Joe August 13, 2010 at 8:16 pm #

    Dan, you clearly are rock star material.

    I love the image of you going for a run and then hooking up with a primo photographer for a shoot at the Hard Rock. I’m sure you look great even without the post production touch ups but even more so with the pics he took.

    kidding aside, I love the value you give to people. hope we meet someday

    • Daniel August 13, 2010 at 8:23 pm #

      Thanks Joe. As it turns out, none of the photos have been retouched. I wouldn’t be surprised it we run into each other at a conference some time.

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