6 Reasons So Many E-Commerce Business Fail

Introduction – Why does an E-Commerce Business Fail?

Eight out of ten online stores fail within two years of launch. The reason for this sobering statistic comes down to long term planning and focus. Too many e-commerce entrepreneurs can’t see the forest for the trees, and end up so stuck in the day-to-day that they forget or ignore their overall strategy for success. In order to help fledgling e-commerce business owners stay the course and avoid the major pitfalls, here is a list of the top six reasons e-commerce business fail.

Why E-Commerce Business Fail

Reason 1: Misdirected or Poor Planned Product Focus

One of the worst things you can do when planning your online store launch is to create a wide ranging variety of product types for sale. More products do not equal more sales, and it more often than not leaves customers with a general distrust of a business if they see that every product from cell phone accessories to sneakers is available. Lack of product focus prevents your store from establishing its own identity that your customers can form a connection with, and trying to offer something for everyone does not allow you to establish your business as a niche expert. Don’t dilute your brand: decide what kind of store you are going to run and stick with it.

Reason 2: Inadequate or Poor Customer Service

You won’t get anywhere with your e-commerce business by rushing everything to grow and expand. Patient long term planning with strategies in place for each stage of growth is essential. Take the time to lay out a permanent long term business plan, marketing plan, and how you will respond to market and sales fluctuations to shift your inventory accordingly. Focus on plan that allow you to maintain the highest level of customer service that remains the same even as you grow without over reaching or straining your customer care resources. It doesn’t matter how much you sell if you don’t have the customer service in place to make sure that your satisfied customers stay satisfied. Maintain that high standard of service, and your will never want for good customers.

Reason 3: Failing to Monitor Your Competition

The likelihood that you are the only store of your kind on the internet is extremely remote. Chances are there are one or more other businesses working in the same niche. However, competition is often more helpful than it is inconvenient, provided that you keep an eye on how your competitors are running their marketing and business, as well as what products they offer. The key is to target your product line so you are not in direct competition with major name stores or big online retailers, because they have deeper pockets and an established reputation. Don’t try to go toe-to-toe with them, but instead focus on offering your niche market what the major players can’t. Careful observation of the competition is key to maintaining healthy growth, so don’t neglect to monitor your competitors on a regular basis.

Reason 4: Poor Budgeting

Regardless of how limited or limitless your budget may be, it is not the size of your budget that matters so much as how you manage your spending and investment. Buying too much stock and scrimping on marketing can leave you with a storage space full of goods with no one on the line to buy them. How do you best combat this problem? Post launch, make all budget plans based on actual sales revenue instead of projected sales. You will protect your cash flow and make sure you don’t put your business at risk over a simple matter of planning.

Reason 5: Unattractive Website Design

I’ll be blunt: if your website looks awful, is hard to navigate, and even more difficult to buy items from, forget making any sales. If you can’t build a strong, reliable, and attractive website that your customers can smoothly navigate and use to purchase your products, you are not going to make it past your first few months, let alone the first two years. With the plethora of web design and online store design tools and services out there, your business is literally without excuse for providing a subpar web shopping experience. Get your site sorted out pre-launch if you want to stay in business.

Reason 6: Insufficient Traffic

Your affordably priced quality products and gorgeous website with its smooth-as-silk checkout experience isn’t worth jack unless you have people actually visiting your site. This is the number one reason that e-commerce businesses fail: the inability to drive traffic. Your marketing needs to be targeted towards driving customers from search results to your site, and if you are not spending your marketing money on effective traffic driving platforms, your business is already in serious trouble. Make traffic your first priority for marketing, and make sure you get the right people and services boosting your traffic all day every day.


Altogether, you must take decisive action to prevent these six potential disasters from occurring. Good advice is only as valuable as how you apply it, so if you work in e-commerce and you aren’t seeing success, it’s time to start taking a hard look at the business and see if you are guilty of making any of these common beginner mistakes. Once you know, you are already in a prime position to get yourself and your business back on the right track before it’s too late. Get started on that self-evaluation process ASAP, and start ensuring a successful e-commerce business future today.

6 Reasons So Many E-Commerce Business Fail
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6 Reasons So Many E-Commerce Business Fail
For fledgling e-commerce business owners to stay the course and avoid the major pitfalls, here is a list of the top six reasons e-commerce business fail.
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TSB Web Consulting
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