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Starting an e-commerce business is relatively easy and not very expensive, and many new entrepreneurs take the plunge each year. Unfortunately, many underestimate the difficulties of making their new enterprise sustainable, and about 80% of new e-commerce businesses fail within 18 months.
While no two businesses are the same, there are some common factors that contribute to their demise. If you understand these factors and learn how to avoid making the same mistakes, you give yourself a much better chance to succeed and beat the odds.
Insufficient financial resources
While you can start an e-commerce business for less than £500, you will need more than that to make your business succeed. You’ll need to invest more to cover ongoing costs for inventory, marketing, website hosting and other operating expenses. When you first start operating your e-commerce business, cash flow will most likely not cover operating expenses. Usually, it takes several months of operation before a new e-commerce site sees even a meagre profit since it takes time to build a customer base. Customers do not instantly appear when your website goes live. It takes time for your website to attract organic traffic and for your marketing efforts to produce visitors in significant numbers. Be sure you have the financial wherewithal to see you through the first few crucial months.
Indistinct unique selling proposition (USP)
The internet does provide opportunities for both small and large businesses, but you need to give your potential customers a reason to buy from you rather than from your competitors. You need to know who you want to attract as customers and tailor your product offerings and USP to those customers.
Be realistic. You’re not going to compete effectively against Amazon on price for mass-market merchandise, so you need to focus your marketing efforts on your target customers and find the hook to make them your loyal customers. Your business plan should identify your ideal customers, and you need to learn all you can about their buying habits. Define your niche – don’t try to satisfy everyone when you are in the early stages of your e-commerce business.
Poor website design
You may have a superb business plan, but that will not be enough to ensure success if you have a poorly designed website. In today’s competitive economy, your website must be secure and easy to navigate. Also, your site must be mobile-friendly and load quickly. Your potential customers will turn to your competitors if your site does not satisfy these basic functions.
Your website also must look attractive, with crisp text and complementary colours. High-quality product images are essentials since your customers cannot physically examine your merchandise. If your images are not clear and focused, you will lose sales, so replace any that are not up to standard.
Poor customer communication
You need to develop a relationship with your customers to keep them coming back. Order and confirmations are essential, but you also want to market to your customers after a sale by sending an email with suggestions for other purchases based on what they’ve already bought. However, don’t overdo it – sending two emails a day is a sure way to get a customer to unsubscribe from your email list.
Remember, it takes time to build an e-commerce business, so don’t expect overnight success – be patient!
StatusCake Team
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