Ecommerce is thriving, with nearly 15 percent of all retail sales taking place online in 2018 according to the U.S. Commerce Department, and the ecommerce market share is only expected to rise in future years. This may make you feel optimistic about your own ecommerce business, whether it’s already up and running or you’re still in your planning (or dreaming!) stage.

why ecommerce businesses fail

It’s important to know that just because online sales are skyrocketing, it’s still hard for startup businesses to succeed. In fact, research estimates that between 80 and 97 percent of ecommerce businesses fail. Even if we use the low estimates, that’s still four out of five small businesses going under.

So, why do online stores fail at such a high rate? The simple answer is the sheer amount of 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.

Inability or Unwillingness to Invest in Their Online Store

Starting an ecommerce business seems like the affordable way to launch a small business or expand an existing brick-and-mortar store. Business owners turn to DIY websites and start with minimal inventory, allowing them to launch for just a few hundred dollars. But with no additional investment in resources to keep the business going – marketing, website improvements, software to maintain and improve operations, expanding inventory – there is no way the business can operate, much less grow or thrive.

Solution – Plan Your Capital

When you’re planning to launch an online business, plan out the money you’ll need up front to not only launch a professional ecommerce website, but to also pay for the resources necessary to establish your business.

 Too Much Competition from Established Ecommerce Businesses

Online stores who are trying to make their way into an already  saturated market most likely won’t survive. 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 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 clothes will be competing against not only large specialty stores like Carter’s and The Children’s Place, but also Target, Walmart, and Kohl’s.

Solution – Determine Your Niche

By having 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 a bit of research to see how you can create a sought-after specialty.

For example, if you want to sell children’s clothes, consider a niche like vintage children’s clothes, clothes made from organic materials, gender neutral, or something else that allows you to stand out from the sea of children’s clothing retailers.

Poor Ecommerce Website Design

Just like customers visiting a brick and mortar store want to shop in a clean, well-organized environment, online shopping is not much different. Today’s online shopper wants an enjoyable, convenient shopping experience on a modern, attractive website. This includes pages that load quickly, an intuitive layout that makes it easy to find what they’re looking for, and the security functions that allow shoppers to pay with confidence.

In the first reason why ecommerce businesses fail, we mentioned DIY websites as ways to save money. However, in true “you get what you pay for” fashion, the resulting website often looks like it was a DIY project, meaning it is not user friendly, functional, or convenient to shop. This leads to a low conversion rate, few sales, and a business that quickly folds.

Solution – Partnering with an Ecommerce Website Development Company

By investing in your website and working with a company who specializes in ecommerce website development, you can avoid failing due to a poor website. An experienced design team can work with you to create a great looking website that reflects your brand and looks professional while making sure it’s organized, secure, and quick to load. Visitors to your website will convert to customers, allowing your business to thrive.

Complicated Checkout Process

Online stores with complicated checkout processes that include multiple steps or require lengthy registration experience high abandon cart rates, in which a customer is about to make a purchase, but leaves before paying. Customers see difficult checkouts as a waste of time, especially compared to Amazon’s One-Click Purchase button, and once that cart is abandoned, they are lost forever.

Solution: Streamline the Payment Process

Make sure your ecommerce web design includes a quick, simple checkout with popular payment gateways, like PayPal. Avoid having multiple payment screens, include the option to register with social media log ins to save time, and build trust with a secure checkout.

Poor Photography and Product Descriptions

Online stores are at a disadvantage to brick and mortar stores because the customer can’t see the merchandise in person. One of the reasons why ecommerce businesses fail is because of poor quality product listings and bad product images. Not only do grainy photographs and minimal product copy seem unprofessional or even suspicious, they don’t give the customer a reasonable substitution for in-person shopping. When an online shopper is not confident in the quality of the product, they will move on to another retailer.

Solution – Adding Value to Your Brand with Quality Content

Adding multiple high-quality images of your products will make a great first impression. However, you also need to pair it with an in-depth, easy-to-scan product description that gives clear information and specifications while also connecting with the needs of your ideal customer.

Ecommerce Business Fails to Show Up in Search Engine Results

Research from PowerReviews is showing that 35 percent of shoppers begin their purchasing journey on a search engine. This is second only to Amazon for where the buying journey begins. For specialty and niche retailers, even more of their traffic comes from Google, Bing, and other search engines.

It’s impossible for an online store to stay open, much less experience success, if new traffic isn’t coming to their website. That’s why one of the biggest reasons an ecommerce business fails is because it’s not showing up on the first page of search engine results.

Solution: Ecommerce Search Engine Optimization

Ecommerce search engine optimization simply means leveraging key ranking factors to make a website more visible in search engine results. Using specific keywords in your product descriptions and throughout your website, along with doing things to improve the user experience will boost your search engine rankings and drive more traffic to your website.

Lack of Digital Marketing Strategy

A common misconception in ecommerce is that once the website is running and the inventory is ready for purchase, shoppers will start visiting the site. However, these business owners are missing a crucial step: getting the word out about the business and attracting customers to their new online store.

Even if a business utilizes ecommerce SEO best practices, it takes time to rise to a highly visible spot in search engine results. In the meantime, there’s no site traffic and the business is losing money.

Solution: Creating an Ecommerce Digital Marketing Strategy

There are multiple ways to build your online presence for your ecommerce business. Pay-per-click advertising for ecommerce businesses allows you to place ads on social media sites, search engines, and other sites, putting your business in front of a targeted audience.

Developing a strong social media presence where you’re providing valuable, relevant content to your ideal shoppers will also attract customers to your site. Consider posting blogs and spending time on social media sites where your target audience is most likely to be to build your brand.

Let TheeCommerce Help Your Ecommerce Business Thrive!

If you’re planning an online store or are struggling to gain traction in a crowded marketplace, TheeCommerce 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 919-336-1790 or fill out our contact form to get started!