6 Reasons why E-commerce businesses struggle or eventually fail.
If you own a business currently or plan to start one soon, this is an important article to ensure you have the right knowledge that will distinguish your business from others. Indeed, no one who ventures into a business wants to fail but eventually as time goes on, some end up struggling or even shutting down.
The E-commerce industry has it's own challenges and a research project completed by Forbes, Huffington Post, and Marketing Signals, found 90% of all eCommerce (online only) businesses fail within the first 120 days of launch but FEAR NOT because with the right knowledge, you can stand out and grow like the popular Ecommerce companies such as Amazon, eBay, Shopify, Jumia etc.
Today, I'll be sharing 6 Reasons why many E-Commerce businesses struggle or eventually close up. Let's begin shall we?
Strong Reasons Why E-commerce Businesses Struggle or Eventually fail
1. Poor Cash Flow Management
This is an obvious reason that needs no further introduction—poor financing. There would always be operational costs for business expansion such as website development, website maintenance, logistics planning, unforeseen economic inflation affecting the price of new goods etc.
You need the right amount of cash flow to fund your business else you'll cease to exist. It's easy to burn cash on expenses if the online marketing has low conversions, leading to poor traffic and eventually resulting in little or no sales.
Solution:
Avoid overspending at any phase of your e-commerce business, whether marketing or inventory etc. Also, maintain a cash reserve for unexpected expenses as “history always repeat itself”
As regards inventory, don't order too much at once else you won't sell them. It's better to test with a smaller amount of inventory first to understand the level of your products demand and adjust accordingly.
2. Poor Marketing Plan
Marketing is key to every business survival as it draws in the potential customers and a marketing plan that yields poor conversion rate is only going to waste resources eventually.
A poor marketing plan won't understand the target audience. This would lead to a lack of attraction between your products and the actual demands of these potential customers. This is why not all great products sell even when they are unique.
Solution:
Spend quality time conducting thorough market research to understand your ideal customers, their needs and their location.
Conduct a competitor analysis to understand their marketing strategies, value proposition angles and unique selling points. Take this to your added advantage.
3. Not Implementing Customer's Feedback
Your customers have a voice and many times want to be heard through surveys/feedback systems. Therefore ignoring their feedbacks and concerns could result in the decline of sales.
You don't know it all and you can't see it all and so it's costly when you run a business without understanding the public’s view and their opinion about it as their satisfaction is your priority.
Solution:
Actively pay interest to your customers' voice by providing multiple channels for feedback such as emails, social media, surveys or trusted third-party platforms.
Implement these reviews immediately to improve your products, services and overall customer experience. This could be in the areas of adding new features, improving website usability etc. Let your customers know their voices are heard.
4. Ignoring Emerging Trends
Every Industry will have new trends and e-commerce is not left out. Avoiding the recent updates and mode of operation is like choosing to stay stuck in the past and history has proven that to be a bad business strategy.
Your business will risk struggling, if you refuse to stay up-to-date with the latest trends in the ecommerce industry. Slowly, you'll begin to lose customers who are not pleased.
Solution:
Embrace new technologies and innovations to meet your customers evolving needs. Trends such as sophisticated website designs, seamless UX, web accessibility integration, AI algorithm product recommendations and personalized marketing campaigns can help your business stay relevant.
To really ensure your business is following the industry’s latest trends and best practices, you must ultimately commit to lifelong learning and stay informed about your competitors strategies.
5. Lack of Customer Service
Your FAQ’s are not enough and as a result it becomes frustrating when a potential customer visits your website and can not get a prompt response to their questions. If you can not provide a dedicated customer service that can, they will move on to your competitors instantly.
Some businesses think that this is not an aspect worth investing in as it only incurs unnecessary cost. This ideology is wrong as it should be thought of as part of the sales and loyalty function instead.
Solution:
Establish a dedicated team for customer support and spend the required amount to maintain it. This would improve the online experiences of your customers.
Record and take advantage of the conversations between the customers and support team to leverage on their questions, doubts and observations for the improvement of your business.
6. Bad Website UI/UX Design and Poor SEO
If your Website’s User Interface/User Experience (UI/UX) has a poor overall feel, look and design, the experience of your visitors would be bad and their trust score for your business automatically drops even though you may be running a legitimate business. Don't discourage visitors and promote a bad brand image because of an averagely built site.
Also, people would likely visit the top ranking sites they find on Google search and most times won't have the patience to scroll downwards to eventually see your website. You can't afford to delay SEO optimization on your website because it plays a vital role.
Solution:
Optimize SEO on your website by establishing your most important keywords in your page title tags. For the advanced aspects of SEO, a professional company like Intellic Solutions would help put your business on the spotlight to rank higher on Google searches.
Additionally, with the growing number of mobile website users, Invest in professional web design services that prioritize mobile responsiveness and functional checkout processes. An agency such as Intellic Solutions will build a professional website for your business at an affordable rate in no time.
To know more about the pricing, we offer 3 competitive packages depending on your budget size ranging from basic e-commerce to advanced ecommerce. You can visit these pages to know more.