Why eCommerce Businesses Fail & How Can You Prepare for Them?

Running an eCommerce business is not an easy affair. ECommerce businesses have a failure rate of 80% to 97%, which tells us how slim your chances of survival are while running an online store. However, as it is with any type of business, with proper knowledge you can certainly increase your chances of survival. There are several reasons why eCommerce businesses fail, and in this article, we’re going to talk about the top 14 of them so you can avoid falling prey to them. Let’s get started:

1. Non-existing or hyper-competitive market

Point 1A key reason why any eCommerce business fails is because of the market size. If your eCommerce business is going to sell just a few niche products, you must ensure that the market for those products is large enough to keep the momentum of sales. If you go for a market that is too small (or almost non-existing), there’s a very good chance that your eCommerce business may fail even before it takes off. There should also not be too many players in the market that you choose, otherwise, it will put a strain on your prices and number of customers that you can get. The ideal market is one that already has one or two thriving players (no more than that), so you can run a thriving business.

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2. No clear return policy (or difficult return policy)

Point 2Online shopping requires trust. People buy things online because they know that if something is wrong with them, they’ll be able to return the product. But if your website doesn’t have a clear return policy, that trust goes out of the picture. And as a result, very few people decide to buy from you. That’s why your website should have a clear return policy from the very beginning. If you sell multiple products, that policy should outline clearly everything related to each of those products. People should know the time period within which they can request a return, the process they need to follow for it and what can they expect after the return (i.e. a refund or a replacement). Also, your policy shouldn’t be too onerous for them. People will also refrain from your eCommerce site if it’s difficult for them to request a return.

product parcel package shipment ecommerce business

3. No contact information

Point 3There will also be instances when people would want to contact someone from your company to inquire about their order. If you run any business, it’s your responsibility to provide your customers every information about their purchase. Therefore, your eCommerce site should also mention contact information that customers can use to inquire about their orders. Not having contact information or having it in such a manner that it’s hard to find, may lead to people losing trust in your business. And when trust is lost, all is lost.

4. Poorly designed website

Point 4Websites that are difficult to navigate also end up being opened very less by people. Therefore, you should ensure that your website has a neat and non-cluttered design, proper search and filter options, and clearly organized categories. Product pages should also have enough information about every product with images, descriptions, and specifications. If you’re building an eCommerce site for the first time, it’ll be better if you get it developed from a professional web designer and developer.

5. Absence of critical web security elements

Point 5Security is another factor that affects the trust in any website. Especially if you’re running an eCommerce site, it’s important that your customers feel secure on your site. The way to ensure that is by implementing all necessary measures related to cybersecurity. You should install a cheap SSL certificate that puts all your domains as well as subdomains over HTTPS, comply with Payment Cards Industry Data Security Standards (PCI DSS). You should also display the security seals of various leading brands on the checkout page or wherever the trust needed (i.e. Norton Secured, VeriSign Secured, GeoTrust Secure Shopping, etc.) because those seals also increase the trust of customers in your business.


6. Lack of funds and unreasonable expectations

Point 6An eCommerce business takes time to grow. And keeping your operations alive for that duration requires an adequate amount of funding. If you’re not funded properly, or if you’ve unreasonable expectations about profit, you’ll have to shut your shop much earlier than you think. It’s imperative that you understand both opportunities as well as the challenges of your market before putting the first step in it, which will help you plan your investment in the business more prudently.

7. Improper inventory management

Point 7Inventory management can also make or break your eCommerce business. If you buy too much inventory and you may run into cash flow problems. If you Buy too little inventory and you may disappoint your customers with delayed deliveries. Dealing with suppliers is also a tricky affair, because many times an issue on their side may delay the delivery of goods to your warehouse. All these things need to be factored in for proper management of inventory, which is why it’s an art. You should spend some time to master it before starting your eCommerce venture.

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8. Late deliveries

Point 8Finally, late deliveries can also work as a killer for your eCommerce business. People hate waiting, and if you can’t offer them speedy deliveries then they’ll buy from someone else. You should ensure that you partner with logistics service providers who can deliver the products to your customers as quickly as possible with the help of their wide network. You should also refrain from making promises that are hard to fulfill. On your website, you should tell the expected delivery time that is reasonable.

9. Checkout page design

Point 9The checkout page is the most important part where customers will pay the price for selected products/services. Once it is hit, the sale is confirmed so, the checkout page should have minimal information that direct users to complete the purchase. Many enterprises do not focus on this page and accidentally ask much information from customers. As a result, customers get irritated and abandon the website. So, you should streamline this page and input visual image to make customers understand in a simple way. Even, trusted logos can work efficiently on a check out page that boosts the confidence of customers and lead to the completion of the order process.


10. Hidden Fees

Point 10Customers do not want any hidden charges or fees that you levy on them during checkout. Transparency is required in online business. If customers find extra charges, then they will leave the site immediately and it will be one of the reasons for eCommerce business failure. If you are going to impose a shipping charge, then specify the price range of products that come in such a scenario.

11. Mobile Optimization:

Point 11Mobile revolution can not be ignored in online business as many users especially Gen Z prefer to browse the site on their smartphones. If your website is not optimized, then there are chances a user will abandon the site. In simple terms, it will not give a good experience to users as the design will not fit as per mobile screen and users must browse and search each part of the site to move forward.

12. High Price:

Point 12Comparison is an essential part where you see different competitors and it is a tendency to go with cheap price. The same rules apply in eCommerce business where customers check online prices and compare them and select the provider. In case, if your prices are far away from the imagination then, you may lose the business in a short time.


13. No Promotion:

Point 13Discount!! It is a sweet word that every shopper love. Many businesses announce an offer on festival season with a huge discount to attract customers. If you are not upgrading with the changing environment in online shopping, then your competitors will have a better chance of getting customers than you. So, it is better to give promotional discounts and offers to customers to increase customers’ retention ratio on your site. If you frequently post discount offers on your site, your site will earn a word of mouth publicity in a short time and will be benefited to the company in the long run.

14. Customer Engagement:

Point 14Customer engagement is an essential part of your business and you should reach your customers via social media platforms. Many eCommerce businesses fail to do so. Update News about the company and its products. Post about discount offers or the launch of a new product. Answer their queries on Quora, Facebook, twitter. Also, bring some exciting offers for renewal clients or returning customers. Provide customer support with live chat, email, or discussion forums. Once you have a high ratio of renewals, means you have won their heart.

You may also like: 5 Effortless Strategies to Raise Your Instagram eCommerce Store.


Reasons Why eCommerce Businesses Fail - How to Prepare - conclusion

So, these are the top 14 reasons why eCommerce businesses fail. If you keep yourself prepared for them, there’s a good chance that your eCommerce business will thrive. Count them in while planning your eCommerce site, and if you’ve any other reasons in mind then share them in the comments below.

This article is written by Riya Sander from ClickSSL.

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Published By: Souvik Banerjee

Souvik BanerjeeWeb Developer & SEO Specialist with 15+ years of experience in Open Source Web Development specialized in Joomla & WordPress development. He is also the moderator of this blog "RS Web Solutions".