7 Reasons Why Ecommerce Businesses Fail and How to Succeed in 2021
Did you know 22% of ecommerce businesses fail in their first year?
How is this possible when 18% of all retail sales are online?
In this article, we’re going to show you why ecommerce businesses fail and how you can avoid being a bad statistic.
7 Reasons Ecommerce Websites Fail: The TLDR Version
Let’s get through the seven reasons ecommerce websites fail in “Too Long, Didn’t Read” (TLDR) style for those of you in a hurry. If you want to know more, click on any heading to jump to that section.
The first reason is simple: lack of investment in a good website hosting, professional design, and solid marketing all lead to ecommerce failure. You need a plan for where to invest to get the best ROI in the early days.
There are between 12 and 24 million ecommerce websites. Failing to understand the competition and create a niche product will probably lead directly to ecommerce failure. Ecommerce startups need to understand how they will stand out.
A poorly-designed ecommerce site doesn’t appeal to customers. Sounds simple, right? It is simple to say, but design is complicated. Failing to partner with a great design company will just bump up the failure rate when your site is included.
Lack of free shipping sends 40% of shoppers away. This is just one thing that can go wrong at checkout. The average cart abandonment rate is 68.8% for ecommerce websites. Getting checkout wrong costs a lot in lost revenue.
Inventory management and marketing relates to product photos and descriptions. This is the sole ‘shop window’ for ecommerce websites. Not spending time perfecting these just drives up the failure rate.
Investing in ads and marketing is huge, but also costly. Ecommerce websites should have an SEO-focused content marketing plan to ensure they rank highly in search engines. This will bring ‘free traffic’ that is more sustainable than paid ads.
Without a plan for how to bring their products to market, ecommerce websites invest randomly or not at all in advertising. When the results don’t come in, investment drops off. The death spiral to failure is then well under way. The answer is a better plan.
The Good News for Ecommerce Stores
Ecommerce is big business and it’s only going to get bigger. The percentage of retail sales that will be ecommerce is expected to grow to 22% in the next few years. No one can deny the widespread use of online shopping. The real trick is knowing how to use it to grow your business.
We’ve already given you the TLDR version. Now let’s do a deeper dive into each of those seven reasons so you can understand how to avoid problems with your business.
Ecommerce Startups Fail Because They Don’t Plan Their Startup Costs
Lack of investment is one of the main reasons why ecommerce launches come crashing down. Many people imagine they can start an ecommerce business for $50. While that may be true, it just isn’t realistic. There may be a unicorn success story like this, but it certainly isn’t common.
Instead, a new ecommerce store needs to plan its first steps to account for all the costs involved in launching an online store properly to break into the competitive retail market.
Solution – Develop a Realistic View of the Costs and Then Plan Capital Investments
To help you develop a better plan, we’ve put together a list of most of the areas of investment your new venture is going to need.
Setting up Your eCommerce Store
- Domain registration
- Web hosting
- SSL certificate
- Ecommerce platform costs (Shopify, WooCommerce, etc)
- Design costs
Any Relevant Licenses, Permits, and Insurance
- May not be applicable to everyone
- Permits and Licenses vary by location
- Payment gateway subscription fees
- Payment gateway transaction fees
- Merchant account costs
- Initial inventory purchase
- Shipping for inventory renewal
Other Relevant Software
- Customer communications
- Use a Professional Graphic Designer
- Image Licensing Fees (if required)
- Store stuff in your garage!
- Or not, but plan for how much storage will cost.
Hiring a Team
- Unless you have all these skills, you’ll need a team to get started.
- As you grow, you may also need additional help.
As you can see, this is a longer list and almost certainly can’t be accomplished for $50. Instead, you should start planning your cash flow around the big milestones.
Here are the first three major steps:
- or develop your initial inventory.
- Set up your website.
- Launch some initial advertising to generate sales.
Those three steps are common when starting an ecommerce business. You’ll need the cash flow to get through all three. After your first sales come through, hopefully there will be more capital to invest in growth.
Launching Without a Business Plan Leaves You Vulnerable to Retail Giants
Your business model should take account your customer base, product categories, and how your product offering differs from everyone else. That last one is about finding the right niche for your business. If you’re trying to sell everything to everyone, then your biggest problem is going to be retail giants such as Amazon, Wal-Mart, and eBay.
Instead, take time to consider what you’re going to sell, how to market it to people, and why anyone should buy your product in the first place.
Solution – Determine Your Niche
By having a specialty or a niche, you can target your ideal audience and sell unique products that won’t be found at a big box retailer. Do a bit of research to see how you can create a sought-after specialty.
Here are five steps to find your niche and get going:
- Discover what people are interested in and will buy. There are a few ways to do this:
- Do some keyword research with tools like Google Trends or a keyword research tool such as Ahrefs or SEMRush. If people are searching for your product idea, then you’ve got a chance.
- Check Out Your Competition. Don’t try to compete head-on with companies that dominate their markets. Look for a different product or a different angle.
- Examine Your Margins and Profits. If each individual sale doesn’t make too much money, then scaling up will be difficult. Products in the $100-$200 range do well, but prices may need to be lower for Amazon sellers.
- Buy into your niche. Websites with some performance history are for sale. Buy one you are interested in and then focus on making it work. This could save thousands in startup costs and months in development time.
- Leverage Amazon’s audience and platform. Unless you’re super-determined or have a product Amazon won’t sell, there’s not a great reason to avoid Amazon initially. Later, after your sales and customer loyalty develops, you can strike out on your own.
Following these steps should get you off to a good start and take you through part of the process of launching your business.
Poor Ecommerce Website Design
Designing an ecommerce website with a few nice pictures to show off your products and hoping for the best sinks many business owners. Poor website design directly harms your conversion rates. To be successful, ecommerce businesses need to focus on developing websites that work beautifully.
Here are a few things you can focus on to get the best results.
Design your website with functions that support personalized experiences for your shoppers. Personalized services boost initial sales, repeat purchases, and peer recommendations.
Personalization options include:
- Smart product page recommendations to show customers similar products to the ones they are already selecting.
- Deliver personalized best-seller lists or wishlists for your customers based on their shopping history, search history, or other attributes.
- Find creative ways to integrate use-generated content such as photos and videos across your website.
- Automated SMS and email personalized messages to boost your retention rates and brand loyalty.
Personalization isn’t complicated. Our team of experts can help you find the right ways to reach your individual customers.
Scannability and Navigation
Your shoppers want to find what they’re looking for quickly. You can help them by creating a website that is easy to scan and features navigation that enables shoppers to move where they want easily.
Boost scannability by using intelligent headings and shorter blocks of text. Pictures speak faster, so include pictures and visual navigation where possible.
Navigation through product categories helps people quickly assess your product offerings. Breadcrumbs, text signals on each page, enable users to move forwards and backwards through your site as they search for the products they desire.
Use Superb Auto-Correction
Sometimes autocorrect doesn’t work very well and online businesses turn it off. Bad autocorrect frustrates shoppers and owners. However, autocorrect makes shopping easier, which should be your goal.
Employ a better autocorrect function to solve this problem. New autocorrect solutions have features that allow you to redirect common misspellings to specific pages. They will also show you common errors and allow you to implement suggestions while people are typing.
Sympathetic interventions like these will improve your UX. They will result in improved conversion rates, better customer service, and more repeat shoppers.
Solution – Partnering with an Ecommerce Website Development Company
By investing in your website and working with a company who specializes in ecommerce website development, you can avoid failing due to a poor website. An experienced design team can work with you to create a great looking website that reflects your brand and looks professional while making sure it’s organized, secure, and quick to load. Visitors to your website will convert to customers, allowing your business to thrive.
Complicated Checkout Process
A complex or lengthy checkout process leads directly to cart abandonment. Customers frustrated by extra fields to fill in or confusing payment gateways will click away from the sales process. Your best plan is to make the checkout process simple and seamless.
Here’s how to design a checkout process that closes the deal effectively:
- Show off your security with visual cues such as security company icons and badges.
- Reduce the amount of typing your customers must do to complete the sale by using payment providers such as Amazon, Stripe, PayPal, and Google Pay.
- Don’t use any mandatory registration. Incentivize any registration with some kind of added value.
Implementing simple steps like these will make your checkout process much better for your customers. Lower shopping cart abandonment will directly cause an increase in sales and profits.
Solution – Streamline the Payment Process
Make sure your ecommerce web design includes a quick, simple checkout with popular payment gateways, like PayPal. Avoid having multiple payment screens, include the option to register with social media logins to save time, and build trust with a secure checkout.
You can design your own payment process, of course. However, there are many steps to be completed and you may benefit from expert customer support.
Poor Photography and Product Descriptions
Pictures sell products. Shoddy product presentation will drive customers away. Instead, use good photography and professional design services to make a superb impression on every user.
Pictures aren’t the only thing you need, of course. You should also describe each item you sell with an effective description and confident sales copy.
Pictures and sales copy will increase your marketing performance. Instead of running ads that bring in shoppers who don’t buy, use attractive pictures and effective sales copy to increase your conversion rate.
Solution – Adding Value to Your Brand with Quality Content
Adding multiple high-quality images of your products will make a great first impression. However, you also need to pair it with an in-depth, easy-to-scan product description that gives clear information and specifications while also connecting with the needs of your ideal customer.
While you can attempt these steps yourself, it may be better to partner with professional consultants to ensure consistent quality and results on every page.
Ecommerce Business Fails to Show Up in Search Engine Results
Research from PowerReviews is showing that 35 percent of shoppers begin their purchasing journey on a search engine. This is second only to Amazon for where the buying journey begins. For specialty and niche retailers, even more of their traffic comes from Google, Bing, and other search engines.
It’s impossible for an online store to stay open, much less experience success, if new traffic isn’t coming to their website. That’s why one of the biggest reasons an ecommerce business fails is because it’s not showing up on the first page of search engine results.
Solution: Ecommerce Search Engine Optimization
Ecommerce search engine optimization simply means leveraging key ranking factors to make a website more visible in search engine results.
- Using specific keywords in your product descriptions and throughout your website.
- Ensure your site’s performance meets expected standards. Site speed is a ranking factor, and it is almost entirely in your control.
- Publish a blog to capture more search traffic and generate leads.
Stores that do not look after their SEO will struggle to have the necessary traffic to generate sales. Traffic can be boosted by paid ads, but this could severely damage profit margins. Instead, work with a team of experts to boost your SEO and traffic.
Lack of Digital Marketing Strategy
A common misconception in ecommerce is that once the website is running and the inventory is ready for purchase, shoppers will start visiting the site. However, these business owners are missing a crucial step: getting the word out about the business and attracting customers to their new online store.
Even if a business utilizes ecommerce SEO best practices, it takes time to rise to a highly visible spot in search engine results. In the meantime, there’s no site traffic and the business is losing money.
Solution: Creating an Ecommerce Digital Marketing Strategy
There are multiple ways to build your online presence for your ecommerce business. Pay-per-click advertising for ecommerce businesses allows you to place ads on social media sites, search engines, and other sites, putting your business in front of a targeted audience.
Developing a strong social media presence where you’re providing valuable, relevant content to your ideal shoppers will also attract customers to your site. Consider posting blogs and spending time on social media sites where your target audience is most likely to be to build your brand.
Let TheeCommerce Help Your Ecommerce Business Thrive!
If you’re planning an online store or are struggling to gain traction in a crowded marketplace, TheeCommerce can help you stand out! We specialize in digital marketing strategies that increase visibility and attract your ideal customers and web design that provides an amazing shopping experience and converts your visitors into raving fans!
We can run a free website audit for your ecommerce business to help you create ways to attract more visitors and boost your sales. Reach out to us today at 919-342-8230 or fill out our contact form to get started!Please wait while you are redirected...or Click Here if you do not want to wait.