5 important reasons for an e-commerce businesses disaster
Ask any of the 90 percents of business owners who fail in the first three years of their business, will answer
that, everything they were doing was according to a plan. While they had the passion and motivation, or
“good intentions,” they lacked the necessary knowledge and tools to get out of the disaster. Even though
they are so passionate about their goal to become successful, there should be some important checklists to
make your pathways.
You might be surprised at how many entrepreneurs fail to put a budget on paper. They figure that they have
everything in their head and since a budget is a projection anyway, why bother? But you should never start
an e-commerce business if you refuse to create an initial budget and sales/ expense projections.
Here I would like to pin few points to take care which are the main reasons for the failure of an e-commerce
1. Lack of product profitability and margins
Most of the entrepreneurs mainly focus on the volume of sales or revenue in the initial phase of their
business. They may give too much emphasis on sales and not enough on profitability. The enthusiasm in
the initial months will get subsided due to the erosion of capital and the absence of substantial margins to
take care of the overheads. There should be an intense research on product profitability and margins in the
early days itself.
2. Lack of specialization
The excitement and enthusiasm of the new business owner will always lead to the mindset to the jack of all
trades. He will try to make this site a platform to buy everything that he likes or he thinks that people like. In
the process of trying to appeal too broad an audience, the business will lose focus and hence the
conversions. It always better to focus on some special niche products or markets, especially in the initial
years. This can be expanded to other categories later when it crosses the initial barriers.
3. Poor website design
The design of the website is one of the most important factors in the success of an e-commerce business.
The importance of design is equivalent to the concept of interior design and product display of a brick and
mortar business. The layout that results in bad user experience will lead to poor conversion rates and failure
of the business.
4. Lack of compelling and unique content
The absence of the original and compelling content will be a weak unique selling proposition. This will make
it a me-too website which won’t make any impact on the customer mind. This has to be taken care of
higher priority because an online visitor is so precious that we should do everything to convert him into a
customer. Nothing will be so disappointing than having website with pathetic that a website with lot of
5. Poor customer service
Every entrepreneur knows the dreadful importance of setting right of their customer care department. But
normally it is the department most of the startup owners overlook. The purpose of this department will never
be fulfilled with just emails and SMS. Every company is expected to have good customer service. But in
today’s competitive marketplace, great customer service with a dedicated professional team can be a
differentiation, especially when you are selling commodity goods which everyone else can sell.
This can be a long list but a selected 5 points had been mentioned here. If you feel more points which got
more or less importance, please provide them or get your opinion in the comment section.
March 17, 2018
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