It is said that build and they will come. Unfortunately, it is often the case that after building, one needs to do a number of things to attract them.
Like any other business, E Commerce too is prone to failures. E Commerce projects are often brittle because they have a number of components that need to be glued together in perfect synchronization or they might fail to give the optimal result.
Here are a few reasons any E Commerce business may fail:
Competition:
E Commerce is usually a business that can be started in a few clicks. Unlike other businesses, which need a shop with physical and also licenses to run it, E Commerce businesses are virtual. You sign up, list the product and you are live. But if you can do it so cheaply and easily, so can anyone else. And if your product is generic, it is possible that people might not see your product over those already listed by others in highly competitive marketplaces.
The competition for E Commerce is global and if your product can be purchased cheaply from locations around the world, it will be.
Discoverability
It is hard to rank for keywords related to your product, if your product is generic or very commonly sold. However, even if your product is exclusive, it may take days before your links are recognized by a top search engine and given its due in their search pages. Often to get discovered, you will need to pay to search engines and social media giants.
Getting discovered organically is hard work and it needs sustained budget and work. A one-or-two-person team may suffer burnout just to market the product on web.
Customer feedback and issues
A big problem with E Commerce project is that it is hard to meet the expectations of customers that purchase online. In a clothing store, for example, the size or the colour of the clothing may not match the one that is shown on the website. So, the dissatisfied customer may expect a return or refund. In some cases, they might leave a bad review or file a legal complaint too.
Customers may fraudulently return used articles with damage done to them. This lowers the possibility of having a good margin and increases chances of failure of your E Commerce project.
Supply chain issues.
In a physical shop, a customer comes to you. In an online store, you ship the products to the customer. And that has its own set of issues. You need to negotiate shipping conditions with your shipping partners. The more customization you do, the more you need to pay. You also need to factor in the pickup costs in case of returns or damages. This makes the costing process go haywire.
Website problems
There could be plenty of problems with your website starting from poor response time to broken payments integrations, errors in software etc. The website software needs to be continuously updated and monitored for issues. And that costs money, time or both. You will need to connect with vendors to provide the necessary support. It may exceed your budget provisions.
Fees and charges
Hosting of website or listing your products on a large marketplace looks easy at the first glance but there are charges to keep things running. A large marketplace may charge you list your product, may take a cut from your sales and force you advertise of their website.
If you run your own website, you need to pay for domain and hosting provider. You may also need to pay for the tools related to complaint management, marketing and email automation. The costs can add quickly.
Insufficient budgets
This all leads to the most important reason an E Commerce project may fail. Insufficient provision. Even though, E Commerce is relatively easy to start but often the hidden costs add up quickly. If you don’t provision enough money, then your project runs the risk of failure. Always make sure to think of all the aspect of an E Commerce costing before you start an online store.
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