Did You know that 90% of eCommerce businesses fail within the first 120 days? (Small Biz Trends)
Starting an eCommerce business can be convenient and lucrative. Still, the majority of eCommerce businesses fail because they don't follow standard business principles.
Here are the ten reasons that eCommerce businesses fail.
Buying From Ali-Express Exclusively
Many eCommerce business owners use Ali-Express to receive profits for their business quickly.
Ali Express can be a simple way to make money online by fulfilling orders on a Shopify storefront by buying Ali Express products.
However, eCommerce business owners who use Ali-Express exclusively suffer from an oversaturated marketplace.
In other words, enough people are trying to make easy money doing eCommerce through the Ali-Express route.
While it can be attractive to purchase cheap products and sell them for a higher price without bringing any value, it isn't good for business.
Ali-Express can have expensive shipping, long wait time, and inferior quality products.
Your products will likely have bad reviews if people even buy them at all.
However, not all dropshipping is an inherently lousy business. There are plenty of ways to use dropshipping effectively in your industry.
Related: What Exactly Is Drop Shipping?
Lacking Clear, Unique Value
Any business needs to deliver an exact value to its target audience.
Your eCommerce business is no exception.
A fatal mistake that eCommerce business owners often make is forgetting to stand out from the crowd with unique value.
Unique value can be as simple as a money-back guarantee or free shipping (although these are becoming expected on most eCommerce platforms).
As an eCommerce business owner, it is best practice to continually brainstorm and implement new ways to make your brand more valuable than your competitors.
Trying to Win the Price War
One wrong way that eCommerce business owners try to make themselves valuable is by cutting their products' prices.
You should always price your product fairly.
However, lower prices could mean cheapening your product and cutting your profit margin.
Many eCommerce businesses fall victim to the pricing heuristic.
Heuristics are mental shortcuts that customers take when deciding to buy a product.
The pricing heuristic means that customers tend to think of higher-priced items as inherently more valuable.
The pricing heuristic does not mean that you should raise your prices without good reason. Still, businesses that compete by lowering their costs often find themselves struggling to make a profit.
Make sure that your business has a variety of different effective payment methods when implementing pricing strategies.
Generating Tons of Revenue But Little Profit
Speaking of profit margins, you should be wary that revenue does not equal profit.
Your business can make millions in sales and still fail to break even,
Many eCommerce business owners forget to do careful calculations on their products to make sure that they profit after paying expenses.
How much of a sale does your business keep?
Keeping sales can depend on several factors, including:
- Marketing and advertising expenses
- Shipping costs
- Cost of producing goods
As a smart eCommerce business owner, you should closely monitor your profit margins.
Ensure they are wide enough to allow your business to thrive but small enough to make a reasonable price on items.
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Forgetting to Define a Target Audience
Have you ever seen an online store that sells random, useless items?
There are plenty of eCommerce business owners that produce or drop ship product that no one wants.
They fail because they forget to define and serve their target audience.
Every product that is in your store should have meaning to your target customer.
It would be best not to sell dog toys to cat owners or car parts to motorcycle riders.
It may sound like common sense for your business, but it is not always common practice in the eCommerce industry.
Start every aspect of product design and sales with your target customer in mind.
Not Optimizing Product Copywriting
Copywriting is an often-overlooked skill in the eCommerce industry.
Even though product images are likely an essential aspect of an online eCommerce website, copywriting also plays a huge role.
Copywriting on an eCommerce website includes:
- Product descriptions
- Names of products
- Branding of the product
- Features and Benefits
Copywriting is often ignored by eCommerce business owners, which causes them to lose out on a large number of potential customers.
Lacking Responsive UX Design
It's an unspoken rule that eCommerce websites need to be responsive.
If there are buttons on your store homepage that can't be clicked or areas of your site that glitch, you're going to lose sales.
Your UX (User experience) design should be clean, clear, and aligned with your brand.
Many eCommerce business owners forget that the way a potential customer engages with your website can make or break the sale.
Customers tend to be impatient, so a few misclicks and broken links can lead to lost sales.
To avoid losing these sales, make sure that you have yourself or a team member continually monitoring your website for any potential issues.
Making a Complicated Shopping Cart Structure
You may overlook the importance of a simple and effective cart structure in your eCommerce business.
Plenty of customers abandon their cart because there are far too many choices to make after placing their product in the cart.
Simultaneously, there are eCommerce business owners who assume they've made the sale once their audience has put items in their cart.
Optimizing your cart structure and payment layout to make purchasing extremely easy (particularly on mobile) will significantly differ in the number of customers you retain.
Incomplete Customer Service Follow Up
Good customer service is such an overlooked part of the eCommerce business.
If a current customer wants to make a return on your website, is it crystal clear how they can do that?
If they'd like to contact your team with an issue on a product's functionality, is there somewhere they can call or message?
Little additions in the realm of customer service are the perfect way to boost sales and increase your success rate.
Good customer service goes a long way. Lousy customer service can end your eCommerce business altogether.
Not Having Constant Credible Reviews
Last but not least, credible reviews make or break an eCommerce website.
Would you buy products from a website that didn't have any reviews?
Your customer won't want to purchase unless they have seen social proof that your product works.
Many eCommerce businesses post fake reviews to boost their social dynamics.
Not only is this unethical, but it is also often ineffective.
Here are a few ways to spot an eCommerce website using fake reviews:
- Every review is 5-stars and says good things about the product
- The business owner never responds to the reviewers
- There are too many reviews posted on the same date
Don't fake reviews on your eCommerce website. It's the perfect way to get flagged or lead your business to failure.
Instead, ask for and rely on quality reviews that will bring in more customers.
Running an eCommerce business isn't easy, but avoiding these ten crucial mistakes will give you a leg up on running your business efficiently.
Are you looking to avoid common mistakes and run your eCommerce business properly? Contact Us to learn how your specific business can run more effectively.