Lessons learned from starting a failed eCommerce business

It was August 2019 when I decided to embark on the exciting journey of starting my own eCommerce business with 2 other founders. After spending five years in the manufacturing industry as a salesman selling rubber products and mouldings, I felt I wanted a change.

I still remember the excitement of brainstorming a name for our new venture and the days we spent building product pages and sourcing products from suppliers.

Fast forward 2 years later and we didn’t know the way forward. Sales dropped to levels where we barely had enough cash to pay our hosting package and we were sitting on top of thousands of dollars worth of excess inventory.

Needless to say, my co-founders and I decided to hang up our proverbial “boots” and called it a day.

I’m writing this post not to hinder you from starting and scaling your own business. In fact, I think the entire experience has made me a wiser, individual with lessons to pass on to those with ears to hear.

Here are the lessons that I learned from starting a failed eCommerce business.

Really know your competition

Every blog post or book about starting a business says that you’ve got to study your competition. But have you really done a deep dive into knowing and understanding your competitors?

We sure as hell didn’t. We only knew what products they sold and at what price points.

So really get to know your competitors, study everything about their business, from their best performing marketing channels to after-sale service. Even buy their products if you have to!

You have to get an idea of why people are buying from them. Is it because they are selling products for a cheap price or because their after-sale service is outstanding?

Don’t pretend to be something you’re not

Thinking back, this lesson is probably the one that I think is most important.

You see, our goal was to become a large homeware retailer selling various products from a broad range of manufacturers and brands.

We wanted to be the next big Wayfair or Overstock. But the problem with that statement is that there were already big players in the market with a huge product selection and even larger marketing budgets.

So we followed suit, signing up a wide selection of suppliers ranging from cookware to bathroom accessories. (I have to mention this was without any outside funding)

Some of the 5,000 boxes that we ordered without really having enough sales justifying the expense

The problem with this is that we were way in over our heads. Imagine carrying hundreds of different products, with limited space (literally one room) and 3 founders working full-time.

The end result was disastrous, we had way too much inventory that didn’t sell and marketing campaigns that were spread too thin because of limited budgets.

Be willing to marry your co-founder(s)

Well, not literally. Although I’m sure that some co-founders have ended up marrying one other.

The lesson to learn here is that you’ve got to really get to know your co-founders before you get into bed with them.

The reason for this is that you’ll be spending a lot of time together, so make sure that you actually like the other members of your team.

It’s a good idea to study their habits. Are they good at managing money? Are they known to be hard-working individuals who think outside the box?

Don’t sell other people’s products

Start a retailer they said, it’ll be fun they said.

If anyone comes up to me now asking if I think they should start an eCommerce business, I’d ask them “Are you selling your own line of products, or are you reselling other brands’ items?”

The problem with reselling products from other brands is that you’re basically at the mercy of their pricing. And with the rise in marketplaces such as Amazon, you’ll likely end up competing against your own suppliers for sales.

Conclusion

I hope that you’ve found these lessons insightful and that they can help you on your journey of building a successful startup.

Just as a side note, this didn’t end up in tears. Because I was the one in charge of our site’s SEO, I basically learned a lot on the subject and subsequently landed a job as a content manager at an SEO audit tool called SEOptimer.