What Causes an Online Store to Fail and How to Avoid It?July 13, 2022
Running a successful online store isn’t as easy as it may seem. Thanks to the eCommerce industry’s rapid popularity, an ever-increasing number of businesses have decided to take their product online. Unfortunately, at the same time, about 80% of these businesses fail to make it through the first five years.
A lot of failures stem from the fact that setting up an eCommerce store has become an easy and smooth process. Unfortunately, this causes businesses to not take it as seriously as needed or assume that running it will be just as simple.
There are several reasons why an online store fails, and understanding them is essential before starting your own eCommerce website. This will allow you to learn what needs to be avoided while setting up your store.
Reasons for an Online Store to Fail:
Here are some of the most common reasons for an eCommerce business to fail:
- Inadequate Research
Market research is an essential step for making any business decision. By conducting proper research, you can know whether your product has a demand online or not. If it doesn’t have demand, you can further research ways to generate that demand. However, skipping out on this step can spell doom for your business.
- Little Control Over the Investment
An online store isn’t as tangible as a physical store causes business owners to underestimate the required investments. While it is not as expensive as a physical store, an online store has other requirements that must be catered towards. For example, unless you already own a physical store, you would most likely require space for warehousing.
- Ineffective Inventory Management
Speaking of warehousing, inventory management is one of the most significant problems a new online store must figure out. Storing too much inventory can cause your cash flow to go haywire. On the other hand, if your most in-demand products remain sold out on your website, your customers will lose interest.
- Lack of Cash Flow
Cash Flow is an important part of running any business. It is the movement of money in terms of expenses and earnings or assets and liabilities. A lack of cash flow can occur when the business owner directs all the cash flow towards one aspect of the business, and little is left for others.
- Poor Website Design
Since your business runs from a website, it is important to ensure that the website design is attractive and intuitive. Your website should also load quickly on slower connections and remain appealing even on mobile devices. Paying attention to the user interface is what will help drive more users to your website.
- Unattractive Product Photography
Since customers can’t physically view your products, your product photographs serve as the first impression of your products. If the pictures are unappealing or bland, it is likely that customers will not purchase the product. A great example of great product photography is how many large corporations sell their goods online.
- Poor Marketing Strategy
With an online business, your competition isn’t just limited to your local area. Moreover, even if you have an excellent website and amazing products, customers wouldn’t buy them if they didn’t even know about them. Therefore, marketing is one of the most important tools for driving customers toward your website.
- Dissatisfied Customers
Your customers can be dissatisfied with either your products or after-sales service. Both of these aspects must be carefully considered when starting your online business. For example, you need to plan out a generous returns policy while at the same time providing them with phone and chat support. Having a thorough testing process for all your products before sending them out is also something worth considering.
- Excessive Capital Spending
One of the biggest reasons why an online business fails is overspending capital amount. It stems from the problem of cash flow but specifically occurs when all the business capital is spent on setting up the business. This leaves little to no capital for marketing, customer service, labour, etc.
How Should a Business Owner Overcome these Challenges?
One of the best ways to overcome these challenges without overspending your budget is to rely on an eCommerce software. Doing so will help you get an excellent website up and running for a very low price. You will therefore be free to focus on other challenges and draw out a successful business plan.
Here are some of the benefits you get from using an eCommerce platform:
- An Excellent Website
With an eCommerce platform taking care of your website design, you can be assured of checking all the boxes. They often have teams of trained developers who are experienced in good site design and UI. This will ensure that you get the perfect site.
- Marketing Tools
Marketing doesn’t always have to be complicated. In fact, your website can serve as a marketing tool with functionalities such as push notifications, coupons, etc. Your eCommerce platform can take care of this as well.
- Payment Gateways
Setting up payment gateways via a team of outsourced or in-house developers can be an expensive procedure. Instead, working with an eCommerce platform will let you set up multiple local payment gateways at a lower cost.
- Advanced Analytics
Ecommerce platforms often have advanced analytics tools that deliver real-time information on the performance of your website and products. This will help you adjust your business and marketing strategies accordingly to maximize your profits.
While running a successful eCommerce business may not be as easy as it seems to be, you can boost your odds of success with an eCommerce platform. Quick eSelling is one such ecommerce platform that provides exceptional services to get you started in the online market.