How to make a site successful?

I recently launched a website selling women's fashion accessories and have been driving traffic to the site using Google Ad Words, some online banner ads and link exchanges.

I've received nothing but compliments on the site and it's products, and everyone seems to think it looks very professional. But so far, our conversion rate is only about 1 sale per every 2,500 visits. How does this compare to the averages (if any are available)?

When launching a new site, I know it takes time to get established before orders pick up (we're not even indexed on Google yet), but this seems unusually slow. I read that a site similar to ours, that has now been around for 5 years does over $4M in annual revenues. They get a lot of PR and probably spend a ton on it.

I thought that I could start slowly, with little up front costs, then reinvest most of the profits into marketing. But now I realize that to make a site successful, I'm probably going to have to sink a lot of money into advertising initially and plan on running losses for quite some time in order to get known.

I'd like to hear what kind of experience others have had. Has anyone here built a really successful site without sinking a ton of cash into marketing? Can it be done using "guerilla" type strategies and plain hard work doing your own PR, developing links, etc?