Top 10 Reasons New eCommerce Businesses Fail

Around 80-90% of new online businesses fail within their first year.  If you’re going to be among the 10-20% that survive and hopefully among the smaller percentage that are making a good income, you’ll want to consider where others have failed in the past.  This list was compiled from several eCommerce consultants who have been working with hundreds of clients for many years.

10. Lack of Technical Ability- If you’re starting an online business and think this couldn’t possibly be you, think again.  While new tools have made creating a website easier than ever, there are still things that you need to know how to do that the majority of people aren’t capable of doing with their current skill set.  A healthy amount of determination, and willingness to learn can cure this problem, and that’s why it’s at the bottom of the list.

9. Insufficient Startup Capital- Starting an online business can nickel and dime a business person to death.  Even if you do all the work yourself, there are domain fees, domain privacy, email, SSL Certificates, Entity Creation Fees, etc, etc, etc.  If you don’t do the work yourself, the fees pile up with healthy administration fees, profit margins, etc.  No matter how inexpensively you construct your online business, depleting your funds before the profits start rolling in means game over.

8. Insufficient Time- All online businesses can be operated in just minutes a day.  Many, many minutes. Creating a website takes some time.  Setting up product supply takes some time.  Marketing effectively takes some time.  If you are working full time, taking care of your family, and being a social butterfly, expect to outsource some of these tasks or fail.  While the get rich quick with a few minutes of work is a popular dream, it is far from a reality; especially at first.  You’re probably starting an online business because you want something you haven’t had before.  Expect to work like you never have before to get it. (As an online entrepreneur, I’m writing this article on a Sunday night after my child went to bed.)

7. Bad Website and/or Platform- There is no perfect solution for every type of online business.  I personally recommend about 7 different online platforms depending on what the specific needs of the client are. Shop around.  Look at several different platforms and do their free trials.  Some are easier to use than others.  Some have tools and plugins that others don’t.  If in doubt, ask for advice from others who have been successful and or

6. Lack of Support- I really felt like putting this as #1 on the list but didn’t because technically, a business can survive without it IF the person creating the business already has a deep and wide knowledge of business, web development, marketing, accounting, SEO, social media, etc.  Odds are, you have gaps in your knowledge even if you’re really great at a few of these things.  Your competitors are not winning by taking on the market with one person’s mind, one person’s skills, and one person’s time.  Join online forums, get a mentor, talk to friends and family, and join eCommerce Advice Club .  When you run into a roadblock where your skills come up short and you don’t know what to do, you will want someone to give you advice, resources, and training.  What I typically see happen is that people hit a roadblock, sit in a trance not knowing what to do until a salesperson calls them to pitch their brilliant solution that costs several thousand dollars and doesn’t actually address the real problem.

5. Niche Selection- Give the people what they want.  It’s great when you can mix your passions with your work.  If you are passionate about 1.)Something that nobody wants to buy or 2.) Something that a million other people are already selling for near zero profit, pick something else.  Even if you do everything else with excellence, you will struggle an uphill battle if your product offering falls into one of the two above categories.  Do some research.  Find out where there is an opportunity that others aren’t exploiting yet.

4. Poor Planning- Admittedly, this reason is pretty obvious.  I’ll explain the details though in case you don’t already see where I’m going with this.  Before you start your business, you need to plan.  I’ll be doing an entire post on this specific topic soon so look out for that but here are the basics.

  • What are you going to do different/ better than anyone else to create a place for yourself in the market?
  • What tools, knowledge, abilities will you need?
  • What costs will you incur?  When do you expect to make a profit?  How much? What do you do if it takes longer than expected?
  • Where do you expect to get the traffic needed to make your sales?
  • Where will you source your products?
  • Where will I turn if I hit a roadblock?

Do these things (and many more) BEFORE jumping in.

3. Bad Advice- “It isn’t what we don’t know that gives us trouble, it’s what we know that ain’t so.” -Will Rogers  As you begin your business and discuss it with others, they will inevitably have advice for you.  Sometimes it’s a well intended family member who tells you that you should send your product to Oprah so she can make it her favorite thing. (That actually happened to me.) Sometimes it’s a friend who read an article on Reddit about SEO and now they are Matt Cutts advising you on your website.  More often than not, it’s a Salesman.  Not all salesman are bad and some can be real saviors if they have the product you need.  They all wear shining armor and all have more experience in the specific thing they are selling than you.  Make a plan, stick to it, and only deviate if you can validate what Mr. Slick is spitting.  This goes back to having professional support but I digress…

2. Product Sourcing- Whether you are producing your own product, wholesaling, drop-shipping, or selling an intellectual product, you must get the right products at the right price to stand a chance at competing.  If you’re drop shipping as so many people are these days,  research the products.  I’ve seen many middlemen who call themselves drop-shippers who wholesale for prices higher than retail.  The better deal you can get buying your products, the more profit you can make on each order or lower price you can offer.  It’s a simple piece but so critical to success that it ranked #2 on this countdown.

1. Website Traffic- You can have the best products of all time on a website so beautiful that it makes developers shed a tear, with unbeatable prices with free shipping and gift wrapping but if you don’t get people to your website, it might as well not exist.  Web traffic builds over time so don’t expect to be an overnight success.  A healthy business will have multiple streams driving traffic to their site to maximize their efforts.  Some examples include social media pages/profiles, blogs, affiliate sites, word of mouth, search engine results and even physical signage (in some circumstances.)  The mix and message of each will depend on your specific business.



4 Comments Add yours

  1. Pau says:

    Item 9 “Capitol”?


    1. Good catch Pau. It’s been corrected now.


  2. onestopsolutiononlineshopping says:

    The perfect time to start never comes


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