The Real Reasons Why eCommerce Businesses Fail

Dec 4, 2015 | eCommerce

Kevin Fouche

The Real Reasons Why eCommerce Businesses Fail

Posted by Kevin Fouche, Pixel Fish Director

Kevin handles the planning, design, launch and training of every website that Pixel Fish creates. He ensures that every website is highly engaging and aligned with our client’s goals. With over 20 years of design and web industry experience to draw upon, Kevin aims to pass on his knowledge to our clients and like-minded businesses wanting to grow their online presence.

eCommerce has been a godsend to many people who wanted to start their own business, but who simply did not have the resources to go the brick-and-mortar route. However, while there are success stories of businesses who leveraged the Internet to rise above the competition, there are just as many stories about businesses who set up shop online, and then sold absolutely nothing.

If you’re worried your business plan will fall into the latter category, as roughly 80 percent of e-commerce businesses do according to Practical eCommerce, it’s important for you to understand the real reasons that e-commerce attempts fail.

5 Reasons Why eCommerce Businesses Fail

Reason #1: No Real Investment

It seems easy; you open a website, use a basic store front design, and wait for the money to roll in. A bare-bones set-up can be made for anywhere from zero, to a hundred dollars and change. However, most of the time an ecommerce endeavour requires more investment than that. You need to have a website designer, an IT troubleshooter, an easy-to-find name, and it has to be constantly updated to be sure your customers can see what you have available.

It costs money to make money, and an e-commerce site is not a short cut into making more while spending less time, effort, and capital.

Reason #2: No Traffic

If a website goes up on the Internet, but no one is around to see it or hear it, is it actually there? eCommerce stores, just like regular, brick-and-mortar businesses, need to have a steady stream of shoppers to come along, make purchases, and to spread word of mouth. Site owners should invest in a marketing campaign, use social media, and even offer special deals as a way to garner interest among a customer base.

Without traffic, your site may as well not exist.

Reason #3: Lack of Long-Term Planning

eCommerce is less of a sprint to the finish line, and more of an endurance course. Businesses take time to grow, and even if they manage to strike a chord with their audience, businesses have to keep providing what people want in order to remain successful over the long-term. It isn’t enough to figure out how to set up a business, what you’re selling, and what it will cost to buy a website for a few months; you need to think in terms of quarters and years in order to make sure your business stays afloat.

Reason #4: Cash Flow Issues

Again, it takes money to make money. A business that doesn’t have any cash to deal with expenses (whether it’s paying the rental fee for a server, buying new inventory, etc.) is likely to experience serious problems right out of the gate. It’s important to look at what your operating expenses are going to be, and to make sure you’ll have the capital on hand to meet them without any trouble. Delays in payments, or dry spells in re-stocking your inventory, can be deadly for ecommerce businesses.

Reason #5: Too Much Competition

There’s always going to be competition, but for your ecommerce business to succeed you need to be able to keep up, if not surpass them. Sometimes, though, there’s simply too many people trying to provide the same service or product that you’re trying to provide. Often they’ve been providing it longer, and they can provide it at a lower cost.

If you can’t compete in one area, switch your focus into another where you can. If there are thousands of other dealers selling discount gaming platforms, then perhaps you could focus on used gaming accessories and games instead as a way to take a sidestep into a different niche, while still remaining in the sphere your business was originally geared toward.

For more help making sure your ecommerce endeavour doesn’t fall into the 80 percent category, simply contact us today!

Further Reading:

E-commerce review: WooCommerce vs. Shopify: Which is Right For You?
5 Time-Saving Tips for Ecommerce Web Store Owners5 Things Preventing Your Ecommerce Website From Making Money


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Kevin Fouché, Pixel Fish Director