Why Ecommerce Businesses Fail + What To Avoid in 2021

Reasons why Ecommerce Businesses Fail and What to do
12 min read

Ecommerce is fun. Ecommerce brands are growing, right?  But let me show you today why eCommerce businesses fail.

It’s most people’s dream to find a way to work and make money online , selling their products and services to customers from all over the world.

There’s no better time than now to get started with your own online shop. Make your business stand out today.

Successful eCommerce sales have steadily increased from 2017 to 2024.

retail ecommerce sales from 2017 to 2024

Did you just see the Stats above? As of the end of 2020, eCommerce brands would have made sales worth $374.375bn!

But wait- before you dive into the eCommerce sphere, I want you to understand something first.

I'll be entirely truthful to you, my friend.

The fact that eCommerce is a promising way to make money online does not guarantee that you will be very successful if you go into it.

Research has shown that between 80 and 97 percent of eCommerce businesses fail.

Why?

The simple answer is what I mentioned above – The sheer amount of competition.

Although there are many reasons for eCommerce failure- which I will outline below, there is intense competition.

There are over one billion live websites, but even narrowing it down to eCommerce sites, there are still between 12 and 24 million currently operating.

Of those, only around 650,000 (or 2 to 5 percent) are selling at least $1,000 each year.

If you want your online store to be among the extremely small subset that not only stays open but thrives, we’re sharing the specific reasons why eCommerce businesses fail so you can anticipate challenges and avoid mistakes.

There's a powerful amount of Ecommerce Businesses struggling to thrive online. This is why you will need to put in more effort than usual in order to stand out.

What do you need to do? Do not worry for I will show you, step-by-step.ecommerce business growth

If you want your online store to be among the extremely small subset that not only stays open but makes good sales often, we’re sharing the specific reasons why small eCommerce businesses fail so you can anticipate challenges and avoid mistakes.

 

7 Reasons Why eCommerce Businesses Fail

Although each online store is unique, there are common contributors to eCommerce failures and I will share them with you below.

Understanding these possible pitfalls should help you to avoid them, beat the statistics, and have a successful eCommerce business.

If you are confused, you will make mistakes. So I am here to give you an understanding that will help your eCommerce platform to be successful.

Reason #1: Selling The Wrong Products

The mistake most people make is that they want to sell everything, or they sell what they like.

thumbs down

 

One of the main reasons eCommerce businesses fail is because the product is simply wrong.

There's no way to sugarcoat this stuff. If you're selling a product no one wants then you're in a tough position from the beginning.

This is the biggest decision you will have to make when starting an online store.

What should you sell?

If you do not prioritize the customer’s preferences, then they will purchase nothing from your website!

I was speaking to a young eCommerce business owner from Nigeria over a Whatsapp conversation some days back.

He said he wanted his online store to be the next Jumia or Amazon.

The answer I gave him was:

Except you have the marketing and development budget of Jumia or Amazon, competing against them would be a useless effort.

Selling the same mass-market products already found at an established retailer’s website means you won’t have the opportunity to stand out or attract traffic to your website.

Big-name retailers like Amazon, eBay, Jumia and so on also have the advantage of being able to offer lower prices and perks like free shipping and rebates that a start-up can’t compete with.

For example, a new eCommerce business selling mass-produced children’s toys will be competing against not only large specialty stores like Carter’s and The Children’s Place, but also Target, Walmart, and Kohl’s.

ecommerce business decision

Solution – Choose Your Niche

An eCommerce niche is a special segment within any given market and often an area that is overlooked by other businesses.

By narrowing down how you look at a market, you are able to find areas and sections that haven’t been tapped into.

When you find these niches, you can build an eCommerce business that has a good chance of succeeding.

You aren’t necessarily going to be going up against the big boys, and you can find and profit from the areas that others have neglected.

By choosing a specialty or a niche, you can target your ideal audience and sell unique products that won’t be found at a big-box retailer.

Do some serious research to see how you can create a globally or locally sought-after specialty, depending on what you want.

Everyone has to choose the e-commerce niche that’s right for them. If you don’t, you’ll likely fail.

For example, if you want to sell children’s clothes, you might want to go for a niche inside Children's Clothes.

Maybe something like vintage children’s clothes, unisex children's clothes, or anything else that allows you to stand out from the sea of children’s clothing retailers.

Don’t be afraid to narrow down your niche.

Neil Patel has an article where he explained what Niche means and what MicroNiches mean.

 

Reason #2: Bad and Ugly Website Design

Your eCommerce business website must be fast, secure, and flexible. It doesn't have to be extremely complex at all.good ecommerce website

 

You might not understand, especially if you haven't seen How to Pick the Best Website Development Agency.

Even the best business plan cannot always overcome a bad website.

It might not be your fault. You think it does not matter. It does!

We've all pulled up a website and as soon as it loaded hit the back arrow. Why? Because the website looked sketchy.

Like they'll steal your credit card number and you'll never get what you purchased.

Even though they may be a legitimate company, we all get worried when shopping online.

This is why you must invest in your website. It helps build trust.

Every successful eCommerce business has a good website. Bad website design is one of the reasons why many eCommerce businesses fail.

Solution: Work on Your UI /UX

When any customer comes to your site, then they will first notice your website design.

If it is comfortable and easier, then they will visit your site again, and purchase from it.

Now, can you see why you must take it seriously? You need a good website, my friend!

In today's world, around 60% of people are using a smartphone.

Indeed, most of the time, they do purchase through their mobile phone for saving their time.

This is why, in your system, you must have a mobile-friendly website design.

That helps to increase your sales and also helps to grow your business.

Do you need an amazing website? Send Acanbi a mail today or Talk to us so that we will help you!

 

Reason #3: Bad Pricing

As an online business, finding the right formula for pricing is one of the most important questions to solve for.

Bad Pricing- Why eCommerce Businesses Fail

If you overprice your goods, you will lose many customers to competitors.

If you underprice your goods, you will be relatively poor.

So how do we fix this problem?

Before we dive too deep, let’s take a step back and allow me to explain what a pricing strategy is.

Essentially, a pricing strategy is a set of rules or methods that businesses can use to price their products and services.

Now, let's take a deep dive, shall we?

Value-Based Pricing System

Building a successful brand requires trust, and one of the first steps towards building trust with your buyers is offering your products at a fair price point.

The best Pricing System is what many people call Value-Based Pricing System.

What does a Value-Based Pricing System mean?

You will charge customers according to the value the customers receive from a product.

A successful value-based pricing system aligns with what the customer is willing to pay for a product that delivers the solution they need.

I will give you an example. Everlane is a good example.

Everlane is an eCommerce clothing company that developed an excellent pricing strategy.

This example demonstrates how effective value-based pricing can be in growing a brand, winning customer trust, and bolstering profitability. Everlane describes its pricing as “radically transparent.”

Here's what we can find on Everlane's About Page:Value-Based Pricing System

Customers feel good about their purchases, and they’re happy to pay Everlane’s prices for the value they receive.

In case you want to understand it better, Here is How to Use Value-based Pricing System For Your Ecommerce Business.

You know your business best, so be fair with your pricing, and make sure that you gather learnings from every time you change the price of your products.

Your shoppers are smart, so make smart decisions with your pricing strategies.

 

Reason #4: Expensive Shipping

Who wants to buy a $35 item that costs $20 to ship?

Even if $35 is a great price, it seems like you're paying another $20 for nothing!

Try your best to lower shipping prices and offer free shipping as much as possible.

Let me stress that again, FREE shipping. You'll sell WAY more!

Why Free Shipping Works – Most of the Time

The reasoning behind offering free shipping is clear.

free shipping ecommerce

Not only do consumers like to get something for nothing, but shipping costs – and options – are often where shoppers abandon their carts, resulting in additional costs and/or delays.

 

So who Will Handle Shipping Payment?

Someone has to pay for the cost of delivering goods to consumers.

  • Factor shipping into pricing: understand shipping costs from the moment you receive products and include it in financial models.
  • Market free shipping: Customers love free shipping, so they need to be told if you are offering free shipping. Make sure to mention free shipping on product pages.
  • Focus on up-sells and cross-sells: Shipping gets more efficient as items are added. When merchants incur the cost, it makes up-sells and cross-sells a margin-mover.

Online businesses can also reduce financial burdens by having relationships with logistics companies.

Free shipping is also a long-term play: taking a short-term loss can be a smart sacrifice with a big-time payoff down the road.

 

Reason #5: Bad Product Photos

Online shoppers cannot physically inspect the products you sell, so they will need a strong visual representation of those products to help them understand it, want it, and buy it. Thus, poor product photography is one of the unpardonable sins in eCommerce.bad roduct photos- why ecommerce businesses fail

A good practice is to replace the background of your product images. I advise eCommerce Business owners to use free online tools like remove.bg.

It is better to pay a professional photographer to help you, or to take good photos by yourself.

Why are product photos important?

A picture is worth a thousand words

Customers want to know exactly what they will be receiving when they purchase your product. An inaccurate product image will mislead prospective customers and lead to item returns or worse: bad reviews.

Solution: Use Great Product Photos

To ensure that your photos are accurate with respect to color, lightness, etc., we recommend:

  1. Shooting in manual mode (M) with autofocus,
  2. Correctly setting your white balance according to your light source,
  3. Convert your images to SRGB, and
  4. Changing photos background to white.

Reason #6: Impatience and Inconsistency

Too often new eCommerce business owners imagine that they will earn profits immediately they start. But that is not typically the case.

Rome was not built in a day. Except you have no competition, it takes time for eCommerce businesses to grow.

Also, you can not earn profit instantly from any eCommerce startups. Therefore, if you fail, try again.

You will eventually succeed.

 

Reason #7: No Quality Content and No Promotions

I had to join the two together- they are equally important.

A good amount of content will allow users to learn more about your brand and feel more comfortable shopping with you.

You need to regularly put quality content around your products by developing buying guides and unique product detail pages.

Content also includes videos and images. It's important to not only sell your visitors but inform your visitors. This will also help with your search engine rankings.

As an eCommerce brand owner, you will need to run promotions. And, I am not talking about uploading products on your Whatsapp status!

Give someone a reason to buy today.

I know many websites that always have a 15% off sale. That's because they set their price 15% higher and now always make their items seem like they are on sale.

Make real promotions and rn ads from time to time.

Solution: Have a Blog + Regular Promotions

blogs are important for ecommerce businesses

I obviously use blogging myself. In fact, you’re reading an example of it right now.

It drives the bulk of my traffic.

Building a blog isn’t easy. It takes a lot of time to get it done right.

You'll need to understand Seo Techniques and keep building great content.

 

Conclusion: Let Acanbi Help Your Ecommerce Business Thrive!

If you’re planning an online store or are struggling to gain traction in a crowded marketplace, Acanbi can help you stand out!

We specialize in digital marketing strategies that increase visibility and attract your ideal customers and Web design that provides an amazing shopping experience and converts your visitors into raving fans!

We can run a free website audit for your eCommerce business to help you create ways to attract more visitors and boost your sales. Reach out to us today at 234-906-182-2012 or fill out our contact form to get started!

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