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This is a guest post by Stephen Tanenbaum, the co-founder of UGallery.

There are hundreds of e-commerce sites supporting the sale of any particular product or service, with hundreds — if not thousands — more on the way.

Just look at the numbers. E-commerce continues to grow by double digits each year. Online shoppers spent more than $225.5 billion in 2012, according to the U.S. Department of Commerce. That’s an increase of 16 percent from 2011.

For some entrepreneurs interested in their next venture, the allure of a digital retail experience is simply too much to ignore. Without having to purchase or maintain physical infrastructure, startup costs are low and scale is basically unlimited. It’s an attractive space, and not a day goes by without hearing about a new e-tail company being formed or a brick-and-mortar brand digitizing aspects of its marketplace.

Unfortunately, with potential comes saturation. This clutter — the existence of thousands of e-commerce companies all with similar value propositions — has become the biggest barrier to entry.

So, to be a successful e-commerce company in the long-term, here are six things you’ll want to consider:

1. Niche now, evolve later

Have a great idea for your e-commerce business? Guess what — at least a hundred others have the same idea, many of them having already implemented it online. That’s why it’s important to break initial ideas down, to segment them even further, and narrow your focus. This reduces competition from the outset.

Take Airbnb. When the company launched, it was an online portal for renting space on a stranger’s airbed or couch. This was a very focused play. Airbnb didn’t immediately launch offering home or apartment rentals, etc. That came later. If they had, perhaps they wouldn’t be who they are today.

Airbnb focused on a niche, became successful, and then evolved by expanding into other areas. This is key for an e-commerce company. Start “small,” start niche. Then, once you master that particular market, you can mature and look towards adding new focus areas and growing the business further.

2. Remember, people can’t touch what you’re selling

When developing an e-tail experience, remember that the products and services are initially virtual for interested parties. This is one of the disadvantages for any e-commerce company, as opposed to a brick-and-mortar brand. Experiencing something in-person can be critical for conversions and sales.

With this in mind, design — not just aesthetic, but template — becomes critical, as it can often close the gap between virtual and in-person interactions. At the most basic level, this means appropriate product / service imagery, descriptions, and categories, enhanced by added features to instill confidence when buying.

Serena & Lily, an upscale home décor e-commerce biz, excels at this, as they offer on-brand product descriptions that speak to the things its target demographic care about. They also provide an effective “Make Your Bed” feature, so users can mix-and-match bedding combinations and see what they would look like on an actual bed, transforming a virtual experience into something more touchable and concrete.

3. Design is important, but don’t forget performance

This rule is simple enough. In any digital marketplace, effective, smart design resolves the chasm between a virtual and an in-person product or service experience. Design is critical. But, let’s not forget the engine.

Performance matters. A slow site, for instance, is unsurprisingly a huge stumbling block for any company. Per Compuware, every 2 seconds of load time on your marketplace is equal to an 8 percent abandonment rate. That’s significant. By dropping load time from 8 to 2 seconds, the rate of conversation increases 74 percent.

That’s why, from the home screen to credit-card entry, it’s important to make sure your site is built with speed and ease in mind. This means spending time on design, while also having a firm understanding of site / purchase process flow, plug-ins, cloud, provider mechanics, and more. It’s easy to build a marketplace today, but to build a marketplace that runs smoothly and efficiently can be a differentiator.

4. Don’t chase trends, focus on community building

Last year, Tadashi Yanai, CEO of Uniqlo’s parent company said, “We don’t chase trends.” It’s an adage that has treated the popular retailer well. It’s also one most e-commerce companies would be wise to follow.

Every year, new trends crystallize in the e-commerce space, trends that we think will improve our business and position us for greater immediate and long-term success. In reality, though, depending on your business, trend-chasing can be more of a diversion to actual success, as some things just don’t work for everyone.

Take gamification, for instance. While valuable in certain contexts, some companies have integrated pointless gaming mechanics into their purchase process for no apparent reason other than to latch onto the latest trend. Sometimes, a trend even becomes the business model of the day. Flash sales, anyone? While gamification, flash sales, and other timely trends can be and have been implemented successfully, they don’t work for everyone and should be considered carefully.

What we can agree on, however, is that community is core to any e-commerce marketplace.

To cultivate a continued sense of community across your offering, integrating social is key. Social media integration enables interactivity on and away from your site, allowing users to promote products and services and share their experience. The recommendation aspect is important for lead-generation, but it’s also central to community-building as users can engage one another to form a collective identity around your brand. So, while other e-tail trends come and go, the importance of community always remains.

5. Collect as much data as you can and personalize

Building a great e-commerce community means speaking to each user as an individual, pre- and post-purchase. A successful e-commerce website incorporates multiple end-user touch points throughout as part of the experience. Each interaction is an opportunity for insight on that person, which, in turn, enables targeted campaigns to drive retention, reduce abandonment, and foster long-term brand loyalty. Amazon is probably the best example, as with every visit, it becomes more in tune with your preferences.

This requires having well-thought-out analytics capabilities and a comprehensive marketing plan all in advance of launch. Data will be the lifeblood for on-site product / service discovery, as well as targeting and personalized campaigns, with third-party automation vendors like InfusionSoftSilverpop, or Marketo providing the technology needed to automate personalization at scale.

6. Don’t expect to make money (at least not right away)

Last but not least, remember, building a truly successful company from a revenue and profit standpoint takes some time. After you set up shop, don’t expect to suddenly see results. As with any business, it takes a fair share of growing pains before you see the traction you want. Calibrate expectations accordingly.

Based off my own experiences, these are just a few high-level tips to keep in mind when starting an e-commerce company. E-commerce vets, sound off in the comments. What else should be considered?

Stephen Tanenbaum is the co-founder of UGallery, a leading online art gallery offering curated, original art for sale from the nation’s most talented mid-career and emerging artists.

E-commerce image via violetkaipa/Shutterstock

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