Some Reasons Why E-commerce Businesses Fail


E-commerce is a gigantic sector and statistics reveal that worldwide e-commerce sales will grow from US$ 1.3 trillion in 2014 to US$ 4.5 trillion in 2021.

Despite this almost threefold growth in e-commerce sales within a span of seven years, about 80% of online stores have failed within 24 months after opening shop.

There are many reasons why e-commerce businesses fail. We will point out here the three most common causes of failure.


1.Lack of product focus


This is a common mistake among many new e-commerce businesses. One of the elements of the marketing mix is product development. A business must determine first what product lines it will offer to its target market. In choosing product lines, an e-commerce business must consider its expertise, capability, and resources in developing and marketing these products.

An e-commerce business cannot simply fill its online store with many products which it sees as selling well online. It has to focus its resources and effort on developing and promoting products that are within its expertise. If it is good in toys, it should focus on toys and not carry kitchen gadgets.

This way, it can establish product authority and help its online customers evaluate the best products. Customers will eventually trust the site and buy again or recommend new customers.


2.Inadequate website traffic


Whatever you do with your e-commerce site like offering nice products and competitive prices, or create a beautiful website design, nothing happens if you do not generate traffic from your target customers.

Traffic eventually leads to sales.

Generate traffic through publishing useful and relevant content on your website, blogs, social media marketing, email marketing, outreach marketing, and other channels. Practice good SEO. You may also consider paid traffic from online advertising.


3.Poor competitive evaluation


Offering popular products that are also sold by both online and offline stores is detrimental to an e-commerce business particularly those who are starting. It cannot compete with big and well-established merchants.

Stay clear from highly competitive markets. This is where the importance of a good market study is realized. Evaluate competition carefully particularly in product selection, pricing, promotion, and other competitive factors.

As mentioned in #1 above, e-commerce business should offer products in which it has the expertise that cannot be found in others. It must create this niche which even big competitors cannot effectively enter into. To reinforce this niche, it has to offer specialized customer service and publish authoritative content.

There are other mistakes that e-commerce businesses commit but it should seriously avoid those mentioned above.

Avoid e-commerce business failures by talking to experts. If you have concerns, send us a message.



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