I ran an online retail company for seven years. In no particular order, these are the things that hurt us and killed our competitors:<p>1. Drop-shipping product is a cheap way to add lots of vendors with very little overhead, but the margins are slim, and customer service issues tend to take much more time and energy because you're dealing with a third party.<p>2. Good customer service people are worth their weight in gold. By 'good', I don't just mean people who are cheery with the customers - I mean that they know when to bend over backwards for a customer, and when the customer is simply a lost cause.<p>3. Thanks to Amazon, no one wants to pay for shipping. We experimented with every possible variation, from passing true shipping costs along to absorbing a percentage, to free shipping. We eventually settled on free shipping for orders over a certain price point. Shipping costs almost never correspond with a customer's perception of value for the shipped product. Bottom line, be sure that you're really charging enough for shipping to stay in business.<p>4. The simpler the checkout process, the more sales you'll have. Our conversions jumped 30% when we switched to a one-page checkout form.<p>5. Recurring sales are the foundation of your business. Build your list, and send (at least) monthly emails.