Common Reasons Why E-commerce Businesses Fail

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Common Reasons Why E-commerce Businesses Fail

E-commerce offer numerous benefits such as being open 24/7, fewer overheads when compared to traditional shops and the ability to reach more clients geographically. It is becoming easier to setup and successfully run an online business but about eight out of ten e-commerce businesses fail within the first 24-months of going live.

In recent year, consumers are increasingly using mobile devices to research and shop online, offering fantastic revenue returns for small business owners. Any e-commerce business has a bright future as discussed in Does my Small Business need an E-commerce website? Although each small business is unique, there are common crucial items to ecommerce failures. Being aware of these possible pitfalls will have a significant impact on the success or failure of your business.

Related: How Much would it Cost my Small Business to Own a Website?

1. Poor marketing strategies

What use is it having an online store selling a product that thousands need in their daily lives but no one knows how to find your website? Your business can exist online but if no one know about it then its not going to make you any money. Poor marketing will not send targeted traffic to your website which means you will not be making enough sales to sustain the business.

Consider how you can get traffic to your e-commerce website. There are several marketing channels that combine digital marketing and traditional advertising strategies that will give your brand the online boost it requires. In The Small Business Guide To E-commerce Branding, we guide you on how you can use the following techniques to brand your small business e-commerce website and these include; –

  • Define your target market and work on serving them exclusively
  • Identify or develop your strong selling points and give your customers are reason to purchase from you
  • Focus on product quality
  • Focus on website user experience; from searching to ordering to unboxing
  • Build a relationship with your customers
  • Thoroughly express your brands ideals to the world. Also known as company values and missions.
  • Deliver what you promise or don’t promise what you do not (or cannot) deliver
  • Get feedback and act accordingly
  • Give back to your customers, to mention by a few.

Read the full article at The Small Business Guide To E-commerce Branding.

2. Wrong pricing

The price of your products is very to your visitors. With e-commerce, your visitors can easily compare your prices against your competitors in a fraction of the time it would take them to move around physical stores.

There are a number of factors that affect the final price of the products you offer. These include the base price of the product, warehousing, shipping and business overheads. If your prices are too high then customers may think you are over-charging them. If they are too low, they’ll think your quality is poor.

It is important you let your customers know the value of the products in relation to the pricing and were possible, breakdown the price into descriptive items eg shipping, installation, etc.

3. You’re getting the wrong audience

You’ll not be selling any of your products off your online store if you are getting the wrong audience. Your targeted traffic maybe coming from your paid and organise searches, your social media activities and your traditional advertising strategies, however this is all wasted unless the people interesting in what you offer are the ones arriving to your website.

Research about the marketing strategies you are using to attract traffic, are they using keywords that are too general or are they appealing to an audience that isn’t looking to purchase? Look into your keywords and marketing approach, continually tweaking them to ensure the right audience is reached and sent to your website.

4. Bad website design

For an e-commerce business, your website is your business. However good your marketing plan is or the advantages of your products and services, a poor performing website will not retain clients long enough to make a purchase. If your visitors are put off by the look of your website or struggle to use it, then they will leave for a competitors.

User is one of the most important element you must consider when creating a website. An easy to use e-commerce website will convert visitors to customer faster and more efficiently. A website that is not responsive website (that is one that doesn’t automatically adjust to different screen sizes like mobile screens), missing or poor search boxes, poor navigations, broken links, slow loading time, good photography and descriptions.

Improving user experience will give your website and brand the boost to become profitable. Get familiar with the reasons Why Visitors will Leave Your Website Within 15 Seconds in order to improve your conversion and retention rates

5. Poor customer engagement & support

Your customers should be engaged as often as possible. Provide them with the support they need before and after purchases. When customers feel ignored and unwanted, they will hesitate buying from your store. If you do not offer support after they purchase your products, then you will soon be out of business.

Use social media, email and following up calls to keep your customers engaged or to answer support queries. Join social media discussion, and keep your products and services in front of potential customers or those returning. Use industry-related discussions, to show your knowledge and credibility.

Make it a point to collect feedback from your customers to know where to improve and to build trust with your existing and potential customers.

6. Complicated payment methods

A simple purchase process is what every customer wants. Customers prefer a checkout process with fewer steps and less intrusive personal information. If your checkout process is long and complex including multiple steps then your consumers will likely give up before finalising the purchase.

Favour simple checkout processes to avoid abandoned carts. You can let your customers checkout as guest or register as an option if they wish to have their details and orders recorded. If they choose to register, then they will likely return for another purchase. It is also important to provide several payment options preferred by your customers to easy the fund transfer process.

7. Shipping and return policy

It is common nowadays for e-commerce businesses to deliver (ship) your product to your doorstep. Furthermore, customers expect to receive their package within the next few days free-of-charge or at an inclusive low price. If your e-commerce business has not made provisions for package delivery then your customers can as well find your store and shop offline. Or worse, choose your competitor.

Shipping, with next day delivery, has been the norm. Package delivery can be an expensive venture for an e-commerce start-up struggling to make enough orders. It cost the e-commerce business to fulfil the short delivery time pledge while moving one or a few packages. The more orders received, the cheaper to ship.

What an e-commerce start-up can do is to specify delivery dates up until order are more frequent to justify the next day delivery. Trying to compete with the more established e-commerce retailers who are able to ship at low costs within a few days will severely dig into your profits. Find an acceptable delivery schedule and confidently communicate this to your customers before every purchase. Make sure you provide your customers with a shipping calculator so that they know precisely how much its going to cist them long before they move to the cart. This will guarantee they will not be angered by a sudden spike in cost.

8. Poor product inventory; poor product search, poor product categories

Inventory management can be one of the most important operations for a starting e-commerce business. Buy too much inventory, and you could strain your cash flow. Buy too little inventory and you might be missing out on sales or even disappointing customers. It is important to find your sweet spot depending on your starting budget and your customers expectations.

Without implementation of a quality and well-managed inventory management system, you e-commerce business will miss out on a lot of potential revenue. You have to make sure products are available for purchase and dispatch at all times. Customers who regularly visit your website and find out of stock items will likely loose trust in you and probably stop coming back.

There are tools and systems that have been developed to give you real-time tracking of stock to know which products are doing well and which need to be reordered. These tools and systems will not only save you money but will prevent you from missing out on potential sales when products are sold out. You have to be aware of the required restocking time suppliers need after a reorder has been made.

9. Very good Competitors

The requirements to join e-commerce are very low which has resulted into too much competition. E-commerce gives business great growth opportunities even the smallest of businesses. But most start-ups cannot survive in the face of well established competition. This is a often the problem new e-commerce businesses will face when they seek to sell the very same products that are offered by many other store and established competitors.

When it comes to having an e-commerce business, the most important thing that you need to remember is that you are not the only one. Competition is a factor in any business industry however with e-commerce businesses, you can be sure that there is a business out there selling what you’re selling, no matter what niche you are in.

Competition can actually be healthy for your business and you shouldn’t hesitate going for it. Choosing to sell mass market products means you are competing with so many other businesses and if your competitors include trusted big names, then you are not going to come out on top.

You can be sure that there is a store out there selling what you’re selling, no matter what niche you are in. But that is not to say you shouldn’t go for it; competition can actually be healthy for your business. The problem comes in when new online stores are trying to break into the market with products that compete with big online retailers. Opting to sell mass-market products means you’re competing with so many more other stores and chances are that when competing with trusted big name retailers, you’re not going to come out on top.

So what should you do? So starters, don’t make you website look like those of bigger businesses. This means not communicating to your website visitors that they will get matching prices, delivery and user experience similar to those bigger businesses. Though you should use them as inspiration. See what they do and learn from it.  Find your own niche. Find products that are in unique and original and find ways to offer valued, personal service that helps you stand out from your competition.

10. Forced registration

Nobody wants to have their personal details spread all over the internet. Every e-commerce business needs to gather personal user information including customer details, product options, delivery address and payment details. These are crucial to complete the sale and are normally collected during the checkout stage.

Some products, especially digital, non-refundable products do not require you to register as a customer to make payment and download your item. Do not, unless if required, force customers to register on your website to make a purchase or search for products. Make sure your customers can comfortably use your website and when you require them to register or sign in, handle that information with at most care in order to keep their trust.

11. Poor product details

From a survey conducted about online shopping, customers sited not being able to physically see and touch products as the number 1 challenge they encountered. Your online shoppers will never be able to physically pickup the products you sell and have a good look at it, so you’ll need to provide strong visual representations of the products your business provides, along with matching descriptions.

Poor quality visual representations (photos and images) or limited product descriptions will almost definitely cause you to loose sales. Endeavour to always provide high quality photos/ images that display your products from multiple views and be sure to include rich unique detailed descriptions. Remember that most customers don’t only rely on pricing to make the choice to purchase, so entice visitors with great photography and descriptive detail.

12. Low website traffic

Nothing will kill your e-commerce business faster than no traffic to your website. You can have the best products and website user experience but if no one is arriving to your website then no one is buying from your store. If you want to make sales, you need traffic, not just any traffic but a good amount of targeted traffic.

One of the fastest ways to drive traffic to your website is through paid searches. It is very effective but expensive, so you have to make sure you understand how it works before investing a lot of money. A more cost effective strategy would be to have great products; in high demand and well priced. It is also important to know how to Drive Traffic to Your Small Business Website, where you’ll learn how to use social media, AdWords campaigns, SEO good practise and more traditional marketing strategies to get the leads your business needs.

13. Sufficient Investment and dedication

We know from “How Much would it Cost my Small Business to Own a Website?” that is relatively affordable to start an e-commerce website. Your business, along with your competitors, can now move your brand online to reach more customers.

Invest in a good website, built to a high standard with all the features your customers need to improve their shopping experience. Signup for superb hosting solutions to keep your website available with reasonable load times and good email reputation. It is advised to hire an experienced web management team who have the time and knowledge to tweak your website to meet the needs of your customers. Develop a well researched product that not only satisfies the needs of the customer but possesses the minimum quality your brand reputation needs. Plan an effective marketing strategy that uses online and offline advertising methods to get visitors, convert them to customers and retain them for more business.

The better you plan, the more worthwhile your financial investment will be.

14. Your website is missing crucial communication channels

When your e-commerce website visitors are impressed by your home page, products and website contact, they will probably want to know more about you. They will hope over to the About page to know more about your business, to the Contact page to know where to find you and talk to you and see how to follow your social media pages. When they find these pages missing or with vague information, then you may loose their trust and their money.

Before a visitor purchases from your website, they will go look over this information to know whether there is a way to contact you, when they need to. If your location and contact information is not available, then you are going to have a hard time establishing your potential customer’s trust and money.

Be sure to include an About Us page, a Contact Us page, options to follow your on social media, rating, review options or any other options you can use to build trust and a strong relationship with your customers.

15. Give it time

E-commerce businesses need time to grow. It takes time to get all the technical bits working correctly, developing an effective marketing strategy and attracting the right traffic to your website. Many times business owners imagine their businesses will start earning immediately. But that is not the case. It takes time to get all the e-commerce business aspects tweaked out to attract the traffic you need and retain your customers.

Conclusion

As you give your business time to grow, remember that e-commerce is a great way of starting a business which offers you the ability to start selling with minimal investment. Do your research from production to market planning. Research and learn from successful e-commerce businesses in your niche. Don’t make the mistake of believing it’s as simple as putting up an website as fast as possible and uploading products up without consideration.

By applying the ideas above, you will avoid the pitfalls that befall 80% of e-commerce businesses causing them to close within 2 years. We hope you succeed in your e-commerce ventures.

Share with us your challenges and solutions in the comment section below or get in touch through email at hello@dpro.design and we will be glad to help you through your e-commerce journey.

Related: How Much would it Cost my Small Business to Own a Website?

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