5 Reasons Why 90% of E-Commerce Businesses Fail

Online shopping is one of the most popular activities all around the globe. There were $4,280 billion worth of retail e-commerce sales worldwide in 2020, and this is expected to rise to $6,388 billion in 2024.

Many e-commerce companies have sprung up across the globe as consumers have come to rely more and more on the Internet when looking for and purchasing goods and services. While some believe that now is a great moment to start an online business, data shows that this is not always the case. It is reported that 90% of e-commerce start-ups fail during the first four months of operation, which begs the question: Why?

Factors Contributing to the Failure of E-Commerce Businesses

There are countless factors that lead to the failure of online retailers. The most common ones, however, are as follows:

1. Oversaturated Market

Market oversaturation is the process through which market growth for a particular product stagnates, indicating that there is more supply than demand. This phenomenon is especially apparent in the e-commerce sector, where new businesses are launching on a daily basis. Because of this, a company may find that, even in a niche industry, there are already a significant number of vendors. Penetrating such a market is difficult, while those who already are in business may struggle to stay afloat.

2. Lack of Investment

People assume that internet businesses need less money than traditional brick-and-mortar ones. However, this is only partially true, as the starting expenses and the operating costs of an e-commerce company may still be very high. Professionally built websites, marketing, and advertising, stock purchases, and hiring staff are just a few of the many expenses that businesses must incur before they can generate any revenue.

For instance, in the first year, start-ups may spend up to 50% of total sales on initial marketing campaigns. The investment needed by smaller businesses may only be able to match the marketing expenditures of their closest competitors, yet the cost would be still significant. Consequently, plenty of new companies ends themselves with their backs against the wall and without the capital they need to expand and survive.

3. ‘Do On My Own’ Attitude

When starting out, most entrepreneurs hold a view that they can do everything by themselves – this way they can keep the operational costs to a minimum. However, this sort of approach can actually be detrimental, as attempting to accomplish everything on your own is inefficient and stressful. Experts exist for a purpose, and business owners should take advantage of them. Because no matter how excellent one might be at what he or she does, there will always be tasks where the utilization of different sets of skills will be required.

4. Website with Poor SEO

Simply launching a product and hoping it will sell isn’t enough, and it may throw a firm out of business very swiftly. Search engine optimization (SEO) may be the key to your success; yet, the majority of e-commerce sites aren’t designed with SEO in mind, and as a result, they have low or no rankings.

According to a recent study of 80 million keywords and billions of search engine results, the first organic result in Google Search has a solid click-through rate of 28.5%, while just 2.5% of internet users click on the 10th place. Being at the bottom of the search engine ranking may hurt an e-commerce retailer due to not being able to acquire new customers, but getting to the top also takes time and persistence, which many online merchants may not have.

5. Product Descriptions That Don’t Sell

When it comes to educating prospective consumers about the products or services you offer, digital content plays an important part. Many entrepreneurs, on the other hand, do not take e-commerce conversion rate optimization seriously enough and therefore risk losing out on sales. The chance is lost because some e-commerce websites lack product descriptions that sell, concentrate on the target customer, entice the advantages, and create a compelling narrative. 

Optimized product descriptions written for your target customers can increase your product’s or service’s appeal, subsequently boosting your sales, encouraging repeat purchases, and sustaining your company’s growth. As a result, online retailers that make little effort to create high-quality SEO product descriptions may find themselves out of business.

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