Table of Content
- 1.Top Reasons Why E-commerce Businesses Fail
- 2.Fundamental and Execution Aspects of an E-commerce Business
- 3. Not having a business idea that makes you different
- 4. Unaware of customer desires and needs
- 5.Improper business model and analysis
- 6.No clear strategy and commitment on business
- 7.Not aligned with the right business partners
- 8.Not paying attention to website optimization
- 9.Negligence in website design and quality hosting.
- 10.Not focusing on quality images and sales text
- 11.Financial constraints can cause a business to fail
- 12.Poor checkout process and Back-office mismanagement
- 13.High Shipping cost is one of the factors to consider.
- 14Pushing customers to fill in personal information
It's no surprise that e-commerce businesses have become the new normal and a way to quickly build a brand and massive revenues. Today, seven out of ten people own smartphones with high-speed internet connections. And they all prefer to shop online rather than in physical stores. This opens up a tremendous opportunity for entrepreneurs to acquire leads and grow their e-commerce development businesses.
Although this has created a world of opportunities for entrepreneurs, starting an e-commerce business is not as simple as creating a website and waiting for sales to come in. In order to be successful, it is essential to be aware of the pitfalls that might lead to failure.
In this blog post, we'll explore some of the most common mistakes that e-commerce entrepreneurs make and provide tips on how to avoid them.
Top Reasons Why E-commerce Businesses Fail
"I used to run a beauty product eCommerce store and it failed. Judging from my past experience, I would say these are the main reasons for eCommerce projects’ failure.
- Poor choice of platform or software tools that don't work well with the store's technology stack or existing systems.
- Poor initial estimate of cost and timeline for development.
- Strong competition in the marketplace which leaves no room for innovation.
- Lack of understanding of how to listen to customers' needs and their buying habits, which leads to a product being poor in quality or being difficult to sell.For example, beauty products are not always easy for customers to test out in stores before they purchase them. This makes it hard for stores to sell these types of products online.
- Lack of knowledge about technological standards for eCommerce"
"1. Lack of understanding of the proper role of e-commerce
As the owner of an e-commerce development company you may have heard the saying: The business is not B2B or B2C, but H2H (person-to-person). In any business, there are five types of people with their own unique goals: customers, partners, employees, investors, and potential customers. In addition, many internal and external systems may need to be integrated to facilitate easy access to information across departments and your partners.
2. Lack of planning
Any successful effort requires careful planning, and the same is valid for e-commerce projects. A typical e-commerce project should start with a discovery call. A good, comprehensive discovery call should include discussions focusing on the following.
The short-term and long-term goals of the company. Pain points and wish list
- Stakeholders or store operators
- System (external and internal)
The output of this discovery call and the insight of the market or competitors should become the core input of the e-commerce strategy in the e-commerce planning stage. Some of the activities and deliverables in the planning phase include surveys, digital roadmaps, requirements specifications, and wireframes.
Lack of planning is often the failure of many e-commerce companies. Many people who want to become entrepreneurs rush into the e-commerce field with the attitude of crossing that bridge when you get there. But they were so wrong. Although e-commerce is a straightforward business model, it involves many intricate issues, and those with less information tend to ignore these issues.
You need to research e-commerce and understand it better before you can get your business online. The website is often set on the best platform recommended by Google or an e-commerce company. Neither situation takes into account your business or its unique needs.
Result? You may end up with an e-commerce store that cannot adapt to the unique needs of your business. You may not be able to add functions. You want to your online store because of the restrictions of the platform. Due to platform limitations, you may not be able to add cool features to your store. Your website may not support a lot of content, even though your business needs it. The problems you may face due to a lack of planning can be severe.
Proper planning also involves viewing your e-commerce site from the user's perspective. Because in the final analysis, the future of your e-commerce website is in the hands of the user or customer. The plan should include an outline for creating an e-commerce website. Consider how to make it easier for your customers to browse your store and browse products.
3. Lack of understanding of overall goals
In many cases in the planning phase, it is easy to focus only on business goals and forget the human factors in the business. A well-balanced planning phase should also consider the five types of people in your business-customers, prospects, partners, investors, and store employees.
4. Platform focus
Companies dangerously place platform choices before business needs time and time again. Your business needs should be the priority, not the platform. The ideal process is first to understand and define your business goals and people's needs. Then find a platform that meets these needs and goals. Choose a platform that meets your business goals, not the other way around.
Choosing the right e-commerce platform is one of the most critical steps you need to invest time in in the planning process. As I said before, every business is unique. Every business has a unique customer base, product catalog and operating methods. The most popular e-commerce platform may not be suitable for your business. It takes experience and in-depth knowledge to understand the difference.
Just another website
Understand this:Your e-commerce website is not just a website.If you do it correctly,it will be a creation that will bring you the best digital experience center closest to your revenue, profit,user experience goals and lifespan.Customers loyalty.
One of the most naive mistakes many companies make when doing business online is with the same name. Even shopkeepers who insisted on the old way of doing business now realize that they must have an online business. Now the first place where customers or potential employees find you is the Internet. Not being online will automatically reduce your credibility.
Fundamental and Execution Aspects of an E-commerce Business
"Every entrepreneur will give different answers to the above question because they are based on their subjective experiences. Here is my answer based on my unique experience of running an e-commerce startup as well as talking to other fellow entrepreneurs.
"I have divided it into two parts:
- Fundamental aspects: These are useful for entrepreneurs looking to get into e-commerce.
- Execution aspects: These are useful when the startup is pushing for the growth phase.
A) Fundamentals aspects
Focusing on launching a marketplace & not on solving a problem: Too many first-time eCommerce entrepreneurs make the mistake of not focusing on the problem they are solving. In other words, their startup story revolves around the marketplace/software they are building rather than the problem they are solving.
#1 Founders focus on building software before testing their idea
If an entrepreneur has not validated their idea enough and starts focusing on building the platform. It causes more harm than good because much of their time will be spent building something which others may not want.
#2 Lack of focus
One of the biggest causes of e-commerce project failure is lack of focus. Being a niche player is a much more viable option than going generic. Focus on one location, one product initially.
#3 Not focusing on numbers from the start.
E-commerce is a number game. The more you are on top of your numbers/matrices, the better-informed decisions you'll make. So, an entrepreneur must never disconnect from charts in the case of an e-commerce startup.
B) Technical/execution aspects
#1 Not having a great customer service
Customers are the king, period. This is even more so in the case of e-commerce. Amazon has spoilt the consumers beyond repair. So, they expect the same from everyone.
#2 Not having a streamlined checkout
Too many distractions like coupon codes and upsells on the checkout page do more harm than good.
#3 Not having enough patience
I read somewhere, about 90% of e-commerce startups fail in their first 120 days. So patience is a prized virtue here.
#4 Not having a great content marketing strategy
Crucial to the survival of any e-commerce company unless you have an infinite amount of budget to spend on advertising and trust me, even that will not save you if you don't spend it wisely. Paytm is an example.
Not having a business idea that makes you different
"I think the number one reason that I've seen cause ecommerce projects to fail is the lack of differentiation or a sustainable and unique advantage. A lot of the time a business starts from an idea and a determined person, and that's wonderful, but if that idea is something that already exists and is incredibly saturated then you need to be crystal clear on what makes you different. For example, when I was running DealsDirect, which grew to become the single largest online-only retailer in Australia, our competitive advantage was sourcing. We had better practices, better connections and as a result were able to secure the best deals that kept customers coming back again and again. Too often recently I've seen great businesses with a lot of potential, but they just aren't offering anything significantly unique. Great branding and packaging can't save you in an overly saturated market."
Unaware of customer desires and needs
"E-commerce stores fail more often because they primarily sell the wrong products to the wrong people at the wrong prices. This can be attributed to an inherent lack of market research and awareness about consumer needs and wants. Incomplete market knowledge can cause brands to market their products to people who aren’t interested or set a price that their competitors can easily match, which sets them up for failure. Proper market research provides a deep understanding of the customer and the industry’s elements and facilitates strategic planning; necessary to succeed."
Improper business model and analysis
"eCommerce projects fail due to poor strategy and planning. Not understanding the proper business model, requirements, and objectives is why online stores sink within the first few months. Many online stores don't use an eCommerce platform that is symmetric with their business.
Instead, they lean towards a popular eCommerce platform that mismatches with their business specifics. Furthermore, not factoring in the interests of customers, partners, stakeholders, and other entities leads to an eCommerce business that doesn't satisfy their expectations.
Not conducting a holistic analysis of their business, alongside studying competitor data and the industry, leads to wrong decisions. At times, their site looks very generic and lacks good user experience. Other times, store owners get complacent and build a site, hoping that that will be enough to draw traffic, but it fails due to being just another site. Lastly, not maintaining and upgrading the site results in a mediocre website."
No clear strategy and commitment on business
"1. No clear strategy.
Those who start their eCommerce projects get too absorbed in creating it that they don't have a clear strategy. Many people think that eCommerce works itself. It won't do everything on its own, so you need a plan, and your strategy needs to be clear. Many people think that once they've done the initial steps, everything else will follow. They forget that it's something that requires continuous effort.
2. No commitment.
This is very similar to the first one. Some eCommerce projects start and do fine, but after a while, there's nothing else happening. The owner should make it a big commitment. Like I've said, an eCommerce store doesn't work on its own. Even if you assign people to work on specific parts, you, as an owner, have to commit time to it. Without commitment, efforts will not come to fruition.
3. It stopped with launching.
Yes, you've launched your eCommerce store, but the experience for those trying the store is poor. You've poured too much effort into how everything works inside. You forget to focus on the customer side. This happens more often than people think. If you want to succeed at an eCommerce store, you have to give as much consideration to the customer side of things as you do with the back-end side."
Not aligned with the right business partners
"Collaborative e-commerce development projects don’t always go as planned. It’s super important to align yourself with the right partners; otherwise, partnerships are often not worth the time and effort. While a project may sound good on paper, you want to make sure your goals, values, and priorities align. You also want to be really clear about your working practices and boundaries. What tools will you use most consistently for the project, and can the other team integrate easily into your processes? These questions are really important to address upfront because you want to eliminate bottlenecks ahead of time so that the project flows as seamlessly as possible."
Not paying attention to website optimization
One of the main reasons that most eCommerce projects fail often comes down to poor SEO optimization, as even if you have unique products, there is no guarantee that they will end up ranking well on Google and be seen by potential customers, which means fewer website visitors and fewer sales conversions. It is for this reason that eCommerce businesses need to put more effort into applying SEO optimization techniques right from the start.
This means establishing your important keywords because when customers search for any product through Google, they will usually pick up the topmost suggestions. As such, it is essential to pay good attention to optimizing your website to be SEO-friendly.
Negligence in website design and quality hosting.
"The reasons are straightforward: a lack of investment in quality website hosting, competent design, and effective marketing all contribute to e-commerce failure. To get the best ROI in the early days, you need a strategy for where to invest. Customers will not buy from an eCommerce site that is poorly designed. Sounds easy, doesn't it? It is easy to say, but it is difficult to do. Failure to collaborate with a quality design firm will only increase the failure rate when your site is featured.
Another reason is the lack of a marketing plan. Without a plan for bringing their products to market, e-commerce websites invest in advertising haphazardly or not at all. When the findings aren't in, investment dries up. The fatal spiral to failure has then begun. A better plan is the solution. The last reason is the lack of maintenance. Proper maintenance is one of the most concerning aspects of any eCommerce startup. If you do not effectively maintain your system, your business will fail. You must test all of your site's functionalities. You must, in fact, perform this testing operation regularly for updating purposes. You cannot provide a better platform for the customer unless the system is updated. As a result, you must adequately maintain your site to reduce the likelihood of failure.
Better business planning is the key to any company's success. You must conduct thorough business planning before launching an eCommerce venture. As a result, you must devise a strategy for promoting your website. You must also develop a proper business concept. Otherwise, you will not be able to survive in the real-world market. Furthermore, it is a time-consuming operation. As a result, you must continue your technique in a timely and efficient manner. When something does not function the first time, you must determine and re-plan your task."
Not focusing on quality images and sales text
"A picture is worth a thousand (1000) words, as the phrase goes. Shoddy products will lead to customer dissatisfaction. Instead, utilize high-quality photographs and expert design services to leave a lasting impression on every visitor. Of course, pictures aren't the only thing you'll need. You should also include an excellent description and a strong sales copy for each item you offer. Images and sales text will boost your marketing performance. Instead of running advertisements that bring in customers who do not buy, utilize attractive images and excellent sales text to boost your conversion rate."
Financial constraints can cause a business to fail
"There are no proper communication channels, so goals, strategies, and other essential things are hindered. People don’t have a strong enough business plan that can assist them in long-term success and development. Selling the wrong products and not understanding what your target market wants is a primary reason why such projects fail because businesses fail to satisfy their customers.
Lack of an effective marketing plan and strategy can be harmful to a business’s success. Financial constraints can cause a business to fail because owners don’t have enough working capital to run the day-to-day expenses.
Poor checkout process and Back-office mismanagement
"Lack of SEO Optimization:
A lot of ecommerce entrepreneurs think that if they build a website, it will receive traffic. Not investing in SEO can kill the growth of your ecommerce website.
Poor Checkout Process:
The checkout stage is probably one of the most important stages of the customer experience journey. Having poor design or a lack of payment options can deter many customers from making their purchases.
Website design is very critical for increasing conversion rate. If people can’t find their products on your website in five seconds or less, they will likely switch to another store.
Poor inventory management and support services can lead to customer churn and a lot of bad press.
High Shipping cost is one of the factors to consider.
One of the most important factors that get an ecommerce website up and running is quality content. This includes high-quality images along with catchy and detailed product descriptions. These are important to engage users with your products and convince them to make a purchase.
One of the most important aspects of running a successful ecommerce website is SEO. If you are not working on your SEO, chances are your website won't be ranking well on Google. This will result in poor performance of your website and won't be able to engage many customers.
High Shipping Cost
Shipping cost is a huge factor to consider for customers when making a purchase. Customers often compare shipping prices of different products, and if your shipping costs are too high, they are likely to consider another store. Therefore, it is important to keep your shipping costs relatively low when you are new in the business."
Pushing customers to fill in personal information
“One of the most recurring reason’s I have seen eCommerce projects fail is that often they’ll deploy with the drive to benefit the company and not the customer. What happens in these cases is that the customer or client experience is bogged down by recurring factors like extraneous add-ons or pushing for specific personal client information they might feel comfortable filling out. These are indicative of a company that values metrics over a smooth customer experience in which they can simply fill out their information, purchase and move on. This can also include issues where the eCommerce portal isn’t quite working and is left only to frustrate the client instead of helping them.”
E-commerce businesses fail for several reasons, including poor planning, a lack of marketing, poor customer service, and not adapting to the changing trends. However, with careful planning, and a desire to learn from mistakes, it is possible to avoid these pitfalls and build a thriving online business. This guide will help you deal with the challenges and pitfalls of the e-commerce market, no matter if you are a startup or seeking to take your existing e-commerce firm to the next level.
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