A rundown of the ten most common ways e-commerce businesses die, and how to avoid them

If you dig into those shops that either quit halfway or fell flat in e-commerce operations, you will find: although the result is always closing the shop, or swearing never to touch e-commerce again, the reasons they left are all different. Today, let's share with fellow entrepreneurial enthusiasts the common ways e-commerce businesses die, and how to avoid them.

It is said that the paths of successful e-commerce businesses are all alike, while each failing e-commerce business fails in its own way.

The ten most common ways e-commerce businesses die:

01. Pure selling-goods mindset

02. No capacity to produce quality content

03. Pure KPI mindset

04. Lack of understanding of new media

05. Worship of tricks and techniques above all

06. Pure doer faction

07. No forward thinking or strategic vision

08. Profit above all

09. Speculation without investment mindset

10. Out of "ammunition" and provisions

Below, we analyze each of the above ten ways of dying one by one. If some of the cases feel familiar, that shows this analysis is based on genuine cases.

Pure selling-goods mindset

This is the continuation of the traditional marketing mindset of traditional brands in e-commerce operations, or rather, still doing e-commerce with a traditional marketing mindset. In fact, traditional brands also have a selling-goods mindset in traditional channels; to put it plainly, the selling-goods mindset is the wholesale mindset.

Either build a whole batch of goods behind closed doors, or follow and copy big brands to put together a batch of goods - in the apparel industry, for example, they follow European and American fashion magazines or big brands, and then the whole market seems to use the same designer. This selling-goods mindset means there is no overall plan before product development, and once pushed to market, they do not care at all how sales go. Wholesale was originally a one-shot deal: the distributor takes the goods back, and whether you sell them or not is your problem.

When this selling-goods mindset is used to do e-commerce, the conflict between the two immediately stands out. The essence of e-commerce is retail, and retail is about the overall operational capability of a brand; it requires the integration and matching of all kinds of brand resources.

? Copying and counterfeiting a batch of goods;

? Casually assembling a batch of goods from the wholesale market;

? "Anyway, the warehouse has plenty of stock" - the most typical idea.

? A classic manifestation of the deep-rooted traditional marketing mindset of traditional brands in e-commerce operations;

? The selling-goods mindset is the wholesale mindset;

? A manifestation in e-commerce operations of traditional marketing's lack of brand building.

No capacity to produce quality content

Commentary

A brand is a synthesis of quality content, and an e-commerce shop, like a physical shop, is a scenographic and theatrical representation of quality content. Whether it is a brand that performs excellently in physical stores or one that stands out in e-commerce operations, they all reflect this. Conversely, those dead e-commerce businesses and those about to die all lack the capacity to produce quality content.

Countless fallen e-commerce pioneers reveal one thing: these e-commerce businesses without content production capacity only know crude discount promotions. In physical stores, they sit and wait for customers to come; in e-commerce, they rely entirely on platform traffic. Brands without quality content mostly feel low-end and crudely made, with no distinct brand flair.

Manifestations

? No planning and creative department at all;

? Knowing nothing about the use of online media;

? Merely parasites on e-commerce platforms;

? Surviving entirely on promotional activities.

Root causes

? Traditional marketing thinking still dominates e-commerce operations;

? A lack of deep understanding of the essence of e-commerce.

Pure KPI mindset

Commentary

There was once an article that flooded social media called "Performance-ism Destroyed Sony." Everyone knows performance means KPI. If performance-ism really did destroy Sony, then countless traditional enterprises in China have been destroyed by this fashionable concept. In China, whatever concept is fashionable, the big bosses are bound to be interested in learning and doing it, and whatever concept the big bosses learn and do is bound to be distorted in actual execution. Unfortunately, the e-commerce operations of many brands die precisely on this distorted KPI.

To what extent is this distorted KPI taken? The big boss calculates the input-output ratio even down to a single cent, now given the fashionable name conversion rate. If you feel there is no way to convince the big boss on conversion rate, then do not discuss any so-called proposal with him.

For example, if you discuss new media marketing with the big boss, he will surely say, "If I put out this message, you must bring me how much conversion rate." Or, "I give you this much money, you must bring me this much sales." Simple and crude.

Manifestations

? Talking big about conversion rate in everything;

? KPI as the core, with no chance for trial and error;

? Planning, creativity, and any innovation are all impossible.

Root causes

? A mentality of wanting to win but fearing to lose - continue only if there is profit to be made;

? Disguised management surveillance, thinking this way employees can be firmly controlled.

Lack of understanding of new media

Commentary

Many brands' e-commerce shops are in fact "information islands" in the internet world. Apart from relying on the e-commerce platform's own promotion tools, these e-commerce shops are almost "cut off from the web." Later, they developed to the point of posting all kinds of annoying promotional ads on Weibo, ** groups, and ** zones. But fundamentally, this simple and crude pushing of promotional information does nothing to help the shop communicate with the online world.

To this day, many e-commerce shops still exist in this "information island" state, let alone anything like social e-commerce. In other words, their understanding of new media is still nil: they think registering an account on Weibo or WeChat is new media marketing, they regard copied-and-pasted chicken-soup platitudes as content production, and they treat self-aggrandizing advertorials as brand communication.

Manifestations

? Rushing in droves to become prey for WeChat marketing, micro-marketing, and pyramid-scheme training;

? Rushing in droves to register WeChat official accounts, then within a few months not knowing what content to post;

? Thinking that bidding on keywords on Baidu is online marketing.

Root causes

? Still dominated by traditional marketing thinking;

? Knowing nothing about the role of new media in brand marketing or even in e-commerce operations;

? Relying on hearsay about how new media marketing works.

Worship of tricks and techniques above all

Commentary

Today, books analyzing, applying, and practically implementing all kinds of e-commerce operation tricks and tactics are overwhelming in number, and most information on Weibo and WeChat is of this kind, and these tricks and tactics are entirely dependent on Taobao and Tmall. In other words, in many people's eyes, Taobao and Tmall mean e-commerce. But it must still be said: although Taobao and Tmall occupy the vast majority of e-commerce share, that does not mean they are the whole of e-commerce.

We have spent too much time studying all the messy rules of Taobao and Tmall, and these rules change every year and every moment. So much so that many people think that once they thoroughly understand these rules, e-commerce operations will be smooth sailing, and traffic and conversion rates will come effortlessly.

But right now, it is precisely these shops that are proficient in tricks and tactics that are mired in difficulty. It can be said that tricks and tactics did not save them.

As everyone knows, the reason shops painstakingly study tricks and tactics is to attract traffic - to use the various promotion tools and tricks and tactics provided by the platform to channel traffic into the shop. Of course, these tricks and tactics can bring part of the traffic, but never all of it.

Manifestations

? Mastery of tricks and tactics becomes the whole of e-commerce operations;

? Traffic thirst syndrome.

Root causes

? No deep understanding or rational planning of e-commerce and its operations at all.

Pure doer faction

Commentary

Most people currently doing e-commerce operations come from traditional brand transitions. These big bosses all achieved today's success in physical channels through their own hard struggle, so they are all true doers. These doers slog away quietly and without complaint in their e-commerce business. Their catchphrase is "do real things, work more." Any idea that deviates from their values, understanding, or thinking is regarded by them as empty talk, theory, unrealistic, unworkable, and so on.

In physical channels, they indeed carved out a place for their brand through their own genuine substance, which cultivated in them a habit of only knowing how to work and neglecting to think. They reaped results, but they never knew how those results came about. Just like today, in e-commerce operations, they still reap losses, confusion, and other outcomes, but they still do not know what caused all of it.

Manifestations

? Busy.

Root causes

? Chaos.

No forward thinking or vision

Commentary

No planning, no strategy - this is almost the current state of all brands in e-commerce operations. Some are here to clear inventory, some have a bit of spare money to play around with, some have nowhere left to turn in physical channels; in short, few have a clear, scientific, and feasible strategic plan for e-commerce operations.

Why is there no planning? On one hand, they are torn because physical channels are being hit by e-commerce, and the physical channel base camp cannot be abandoned. Second, e-commerce is just a dispensable drain for the brand. Third, they have no clear understanding of the role e-commerce plays in the brand or even how it matches the brand's future development.

For most brands that still rely on physical channel sales, e-commerce has become a veritable chicken rib: watching others do e-commerce in full swing, they feel unwilling to accept it. But if they do it, their ability falls short of their ambition.

Manifestations

? Mudding along;

? An appendage to brand sales.

Root causes

? Physical channels first, e-commerce as a drain.

Profit above all

Commentary

Doing business of course requires making money; that is perfectly justified. But everyone knows that to make money you need investment, to make big money you need a team, and to rely on a brand to make big money and lasting money, you need an even more awesome team and even greater investment.

Such a simple truth, yet it runs into problems with many e-commerce practitioners. In their view, making money is a must, and only making money matters most. So, under the guiding thought of profit above all, they put together an e-commerce operation team centered on sewing-machine operators, warehouse keepers, repair workers, and so on. Do not think I am joking - in many traditional enterprises, the e-commerce operation team is pretty much a "ramshackle troupe" assembled by pulling people from various departments.

Do you think the big bosses do not want to hire professional, awesome people? Of course they do, but the investment is too big; better to randomly find a few people in the company and slowly figure it out. But this figuring out was no small matter - it figured e-commerce right into a pit.

Manifestations

? A ramshackle troupe;

? Saving money as the everything.

Root causes

? Short-sightedness.

Speculation without investment mindset

Commentary

There was a certain big boss preparing to launch a new project. He gathered people and prepared to start. From the initial project approval in December 2013, the e-commerce shop had to open in March 2014 - already the most absurd plan in history. Then it was to go public in September 2014. Such a huge-span upheaval was already jaw-dropping. During this period, he convened a so-called marketing elite think tank for project discussions, and then someone born in the 1980s proposed making a micro-film to attract the attention of the post-90s generation, thereby igniting the market and firing the first shot for brand sales. The big boss adopted and executed it immediately after hearing it. Question: how would the e-commerce shop side coordinate? The big boss actually hemmed and hawed and talked about something else.

The most classic thing about this case is the fantasy of using one micro-film to ignite the market. A new brand, a new e-commerce shop, actually relying on one micro-film - this ignores basic business logic and sounds like a tall tale, but it really happened. Why do such bizarre things happen? To put it plainly, it is the big boss's speculative mentality: win it all in one battle; with just one tiny micro-film, conquer a whole territory. How tempting that is - no one could refuse such a sudden bit of happiness. And such things happen to many big bosses running e-commerce, and will certainly continue to happen.

Manifestations

? Fantasy.

Root causes

? Speculation.

Out of "ammunition" and provisions

Commentary

Financing, spending money to blast the market, driving up sales, thereby obtaining a higher valuation, then carrying out the next round of financing, constantly moving the IPO date earlier; once the "weather changes" and follow-on financing cannot keep up, collapse is inevitable!

Manifestations

? Always financing.

Root causes

? Next time will be better.

Conclusion

The e-commerce world is already a red ocean, but doing e-commerce is still a suitable entry point for entrepreneurs. Understand clearly the common ways e-commerce businesses die; know yourself and know your enemy, and you can fight a hundred battles without defeat.