How to Avoid 5 Common Pitfalls of E-commerce Selling


A common misconception held by new online sellers is that it’s a “low risk” way to build a business and make money. The level of risk is generally miscalculated, though. There are some concerns to be aware of when selling online, especially through multiple e-commerce platforms.


There are various risks associated with being in retail in general. You’ll run into problem customers who will leave negative reviews. You’ll deal with sketchy partners along your supply chain. You’ll go up against a slow demand or a slow supply. You’ll struggle with your return and exchange rates. Your margins will always feel too low.


Aside from the everyday risks of retail and business, though, there are also some serious security threats and concerns that can get you into hot water on the e-commerce marketplace.


What do you need to be aware of to protect yourself as an e-commerce seller in the craziness of the digital world?



image via National Debt Relief


1. Business Can Stop Booming.

When you’re selling on a third party platform like Amazon or eBay, that third-party controls your account. If you don’t meet certain criteria, you have a poor seller rating, or you receive a number of customer complaints, the platform reserves the right to lockout and suspend your account.


This essentially closes your doors, stops your business, and halts your main stream of income. They’ll delist your items and remove you from public visibility until you can resolve the main issues, like responding to customer complaints or removing certain prohibited items from your product lineup.


Sellers cringe—rightfully so— at the thought of a third-party just shutting them down without warning. You don’t want anyone but you controlling your ability to reach and sell to customers. With one mistake, your business and income could be removed.


To mitigate this risk:

  • Sell on multiple platforms. Don’t limit yourself to a single third party.
  • Sell on your own website. This gives you greater control over your sales and reach.
  • Respond to customer feedback and complaints quickly. This is where most lockouts occur.
  • Don’t sell prohibited or counterfeit items, which is one of the main reasons for permanent shut down.


2. Your Platform Gets “Paused”

This third-party platform also controls your marketing. These platforms use search engine algorithms to determine who gets seen at the top or who wins the Buy Box, but these algorithms are always changing. That means your marketing strategy also needs to be constantly transforming to try to beat their system—even though it’s an impossible system to “beat.”


These sites also have total control over the pricing of their advertisements. Right now, Amazon pay-per-click ads are fairly priced, but larger companies are paying tens of thousands of dollars a month to grab the main ad spots on Amazon. That means prices are quickly rising, and marketing on these platforms as a small business seller may one day no longer be feasible.


It’s also important to note that Amazon promotes its own brand first. If your products are in competition with Amazon goods or FBA items (and you’re not FBA), then your product is likely to lose out on the marketing game.


The same is true if you use social media as your main source of marketing. If you find and engage with most of your customers on Instagram, you’d be in a lot of trouble if Instagram shut down tomorrow. All of your customers would vanish into thin air, and you’d have to start at marketing square one.


To mitigate this risk:

  • Have lead generation processes on your site that allow you to create a separate customer list that you own (off of third-party sites or social networks). Your business is only as strong as its private customer list. (If you were to sell your business, only your email list of customers would count in the valuation.)
  • Acknowledge your selling platform as a resource—and a competitor.
  • Have a strong marketing consultant like Seller’s Choice on hand to keep you updated with the most effective strategies for your e-commerce business.
  • Learn how to best use social media as a marketing tool (but not your entire strategy) with these resources.


"Selling counterfeit goods can absolutely ruin your business and halt your  plans of growing as an online seller."  -Click to Tweet-


3. Counterfeits Kill Dreams

Most individual sellers want to source their goods as cheaply as possible to get a strong markup and margin. When procuring products, especially overseas, you might take the supplier’s word for it when they tell you their goods are original, high quality, and well made. You may not get the opportunity to visit the factory yourself and they have good testimonials, so you assume they’re being honest.


Selling counterfeit goods can absolutely ruin your business and halt your plans of growing as an online seller. You don’t just lose your credibility or standing. Your account could get pulled from third parties permanently. Your business could get shut down by the government. And you could even get sued personally by angry customers who were injured in some way by your counterfeit goods.


Even if you’re not selling counterfeit goods, other sellers posing as you could be. They could even end up selling fake products on your same listing. This could ruin the integrity of your business, cause you to lose customers, and generate friction with Amazon.


To mitigate this risk:

  • Hire an independent contractor on the ground where you’re sourcing goods to check out the factory first hand.
  • Learn how to check for counterfeit goods in your industry.
  • If you find out you’re selling counterfeit goods, get ahead of it. Pull the products and apologize to customers. Tell them you will replace it or refund it.
  • Learn how to deal with trademark and copyright claims on Amazon.


4. Play Foul, Blow the Whistle

The e-commerce supply chain is complicated. There are lots of incoming and outgoing goods that are exchanged on a daily basis. It can be hard to keep track of what is and isn’t allowed in different locations.


It’s possible that you could actually end up in the middle of some sort of illegal activity, completely unknowingly. This usually comes from moving prohibited items through certain countries or states.


For example, if you sell a CBD oil that contains THC, it may not be not legal in all states even though hemp-derived CBD oil is legal. If you don’t have complete control over who is purchasing from your site, you could be inadvertently selling illegal products. This would quickly get your business shut down by the FDA, and they could come after you personally as the seller as well.


Also, there are some business owners who just let some things slip. You might forget about your taxes or neglect to update the license for your business. Neglect is still illegal.


To mitigate this risk:  

  • Work with a lawyer who will keep your business in strong legal standing.  
  • Register and license your business at initiation and annually.
  • Pay your taxes.
  • Do your best to understand the laws and regulations surrounding your products.
  • Don’t sell prohibited items, especially on third-party platforms.



image via Repricer Express


5. Identity Theft.

Although the public is more educated now, identity theft is still a huge issue for buyers and sellers on the internet.


Phishes and spoofs are especially still rampant against sellers. Scammers will impersonate Amazon, eBay, or Shopify and ask you to log into your account or click a link. When you “log in,” they’ll grab your username and password so they now have access to your account. The scammers might then sell fraudulently through your account, or they might redirect profits into their own bank account.


To mitigate this risk:

  • Don’t open any emails from senders you don’t know.
  • Install software packages that protect against viruses and block potential scammers.
  • Train your team members about internet safety.
  • Have a separate bank account for business. Don’t connect your personal accounts.
  • Set up daily or usage alerts from your bank account and credit companies.


Don’t Let it Stop You.

There are some serious risks and threats to security when you put yourself out there as an e-commerce seller. You could have your identity stolen, your business shut down, or be sued or involved in illegal activity.


Don’t let that scare you off from selling online. There are always risks when you go into business, but the rewards are significantly higher—especially in e-commerce. Take the precautions to protect yourself, your customers, and your business while you’re operating in the online sphere.

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