4 REASONS E-COMMERCE BUSINESSES FAIL
Ecommerce businesses are booming. The COVID pandemic aside, online sales are expected to reach $4.5 trillion by 2021 and are expected to grow at a year-to-year rate of 15%. Not only is it relatively easy to start one, but unlike their brick-and-mortar counterparts, location isn’t a factor when it comes to sales.
Data suggests that as many as 90% of internet businesses fail within the first 120 days. So, it takes more than just a good idea and sheer will for your online store to be successful. It takes strategy and patience.
So what are some of the mistakes to avoid when starting your own eCommerce business? Here are a few of the culprits:
1. Poor product choice
It’s all about the niche factor. Take Sneha Prabeen, who started her business based on what she saw was a need in the bra industry – lifting the taboo of visible bra straps. Unless you have a great product idea that’s wholly unique and innovative, you’ll struggle to succeed. However, an absence of competition can also indicate there’s no market. There needs to be a demand for the type of product or service your selling.
It’s a good idea to do some market research before deciding on a product to sell online. Here’s a great resource to get you started and some tips to help you along the way.
2. Website isn’t user-friendly
There’s nothing more frustrating than a bad user experience on a website. It’s the equivalent of going into an unclean, disorganized brick-and-mortar store where the customer service is the worst. To avoid this, make sure your website includes the following:
- Great visual design – If you’re new to website design, check out our Website Design 101 blog post.
- Intuitive navigation – Your customers should be able to navigate your site easily. This means items should be easy to search on your site, and your products should be organized appropriately, among other things.
- Easy checkout process – If your checkout process is overly-complicated, it will most likely lead to cart abandonment. Our December 2019 issue of the Can-Do Quarterly has a great article on how to simplify your website checkout process.
- Reduce pop-ups – Try to keep pop-up banners announcing promotions and events to a minimum. Check out how JCrew.com does it, with a scrolling banner at the top that’s out of the way of your natural viewing area.
- Increased site security – Ensuring you have the most up-to-date software to deter potential hackers is essential to your business’s livelihood. PC Magazine offers an extensive article on how to secure your site.
3. No clear return policy
No matter how successful your eCommerce business is, you’re going to have returns. It’s just part of the industry. You can’t expect anyone to buy from you if they don’t know your return policy. However, if the process is easy, 92% of shoppers say they will buy again from the same online store.
For more on creating and implementing your return policy, check out Return Logic’s How to Write an eCommerce Policy That Will Skyrocket Sales.
4. Poor money management
Money management is one of the least glamourous aspects of running your own business, but one of the most crucial. Because of the low overhead of running an eCommerce business, you might think it’s easy money — not so!
Here are some money management tips to consider:
- Set up a budget and invest in bookkeeping software to easily track earnings and expenses. Think about your standard monthly costs and recurring costs. These may include web hosting fees, taxes, insurance, and storage, to name a few. Freshbooks is easy to use for eCommerce businesses, and Shopify offers a free template for tracking cash.
- Effectively manage your inventory. Decide what minimum amount of stock you want to have on hand and make sure you are tracking it. Here is a list of inventory management software.
- Invest in marketing but have a rough estimate of how much you will spend monthly on advertising for Insta and Facebook ad costs. A general rule of thumb is to use 5% of your business’ budget on marketing. Consider options that cost no money, such as blogging, email marketing, and word of mouth advertising.
- Be aware of seasonal changes and economic ups and downs — cue COVID-19. Business and financial forecasting is easy to do manually. Here are some templates to help.
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