CEO Thomas Stridiron Names the Top 10 Reasons E-Commerce Ventures Fail

These days, practically anyone can start an e-commerce website with a little business savvy and a few online tools. Keeping the business afloat and profitable, however, is a whole other matter. According to Forbes, e-commerce companies have a 90-percent failure rate. Before you get yours up and running, it can help to see why so many online startups fail to soar after getting off the ground. Here are the top 10 reasons why e-commerce businesses fail:

1. Lack of Market Need for the Product

Beats by Dr. Dre costs less than $10 to make, yet sell for about $200 to $700. The substantial markup is not what’s surprising though—the biggest surprise is how the product has managed to lord over the headphones market. According to INC.com, Beats controls around 70 percent of the headphones market.

"You've got to be lucky enough to identify a problem where you think you can help," said Jimmy Iovine, who created Beats along with Dr. Dre. The secret to their success was that they were able to build a product that fills a need. If your product is not able to do so, your e-business will likely perish. 

You should have done ample market research first before venturing into any business.

2. No Cash Flow

Many e-businesses hit a bump in the road when they do not have enough money to keep operating. According to a U.S Bank study, around 82 percent of startups fail because of poor cash flow management. Some of the common cash flow mistakes include overestimating future sales volumes, not allocating expenditures appropriately, and not having an emergency budget.

Most online businesses require lower overhead costs, giving room for a potentially healthy cash flow compared to a business model that is heavy on overhead expenses.

3. Having the Wrong Team

Any successful business person will tell you that success is largely based on the quality of the people you surround yourself with. “It's all about finding and hiring people smarter than you. Getting them to join your business. And giving them good work. Then getting out of their way,” says business mogul Sir Richard Branson. Every team member must be on the same page, having the same passion and sharing the same vision. Otherwise, you could just be counting the days until your business bellies up.

Having the right team working for you will you scale faster and give you more freedom.

4. Overwhelming Competition

Too often in the e-commerce world, startup businesses are looking to sell the very same products sold by established retailers. If you do not provide something unique or that improves on what larger retailers offer, then you’ll most likely be gobbled up by the competition.

Find a market segment or a niche with unfulfilled needs. Address these needs and you will potentially dominate this segment with little or no competition at all.

5. A Problematic Website

A good e-business website offers plenty more than just appearance—every aspect needs to serve a business objective. Otherwise, the design is just problematic. According to marketer Larry Neilson, common symptoms of bad website design include slow loading times, outdated web design, poor content management, and poor user experience.

6. Poor Product Images and Videos

Poor quality images and videos turn people off. They are a huge distraction, not to mention they don’t provide anything of value to your website visitors. Poorly resized, low res, over-compressed, pixelated, or otherwise badly taken images and videos are a bane to a website’s existence. You want to provide your customers with a strong visual representation of your products to entice them to buy your products.

7. Not Using Online Marketing Tools

Marketing tools are as important to e-businesses as they are to any other type of business. Whether in the real world or the virtual realm, marketing is all about establishing connections with your consumers, and as such, you need to use all the tools at your disposal to achieve this. Examples of effective marketing tools to use are email marketing, content marketing, search engine optimization, local, and social media, and pay-per-click advertising.

8. Impatience

‘Overnight success’ doesn’t really happen overnight—it takes a lot of hard work and persistence to achieve it. You need to give your e-commerce business the time to grow. It may take a few weeks and even months before you start seeing some profit, so you have to be patient.

9. Lack of Passion

A lot of startups have founders that lose interest in their e-business projects over time. As a startup owner, it is important to be endlessly passionate about what you do. If you do not love your business, you are not going to give it the time, attention, and nurturing that it needs to succeed. According to Technori, stress, setbacks, boredom, being overworked, and an overall lack of motivation are four of the biggest reasons that e-business founders lose their passion for their job.

10. Ignoring Customer Feedback

Online businesses have the ability to gather customer feedback in real time through surveys, polls, and comments on social media posts. Make use of these opportunities to learn what’s important to your audience, what you’re doing well, and where you need to improve. Ignoring what your customers have to say is a cardinal sin in e-business, so once your customers start giving you feedback, act on it ASAP.

There you go. Ten of the most important things you should consider why tech and business often fail and why you should not be doing them. There are other factors that can affect the business, not just 10; that’s why we’re opening up the discussion so we can hear your suggestions, comments or feedback.

Share us your thoughts and let’s start the conversation about why start-ups fail and how they could bounce back. The online business space is fast-evolving and NOT adapting can just leave you in the dust of the tech-crunchers.

Give us your ideas on how we can easily adapt to this fast-paced industry so we can all ride the wave, keep up, and develop the technology for other businesses. Let's connect the dots, brainstorm, and curate our ideas then filter it to what works, what doesn't, and the most effective ways to running an e-commerce business today.

Sources:

How Dr. Dre's Headphones Company Became a Billion-Dollar Business, inc.com

8 Reasons Why Ecommerce Businesses Fail, practicalecommerce.com

Insure your startup against failure: Top 10 reasons why startups in e-commerce fail, cashdealkart.com