Why do online stores fail?

Why do we ask this question? We ask this question because it is extremely relevant. According to various sources, more than 90% of all online stores fail within the first 120 days since being launched.

Yes, you have read that correctly. A staggering 9 out of every 10 online stores fail.

We have created online stores for clients. Some of them were successful and some not. Seeing a client who has invested time and funds into a project fail is not a great experience. This has prompted us at WebScripto to do a bit of research to find out why so many ecommerce ventures fail so soon. This research allows us to have meaningful discussions with potential clients and to help them decide either how to proceed or not to proceed. We are aware that we have lost potential business by warning potential clients against pitfalls. The reward for having an open an honest relationship with our clients however outweighs the feeling of seeing a venture fail by a huge margin.

So, let’s have a look at the reasons why so many online stores fail. These reasons are extremely important, and they form part of our discussions with any potential client.

1. No investment:

Financial Investment in an online store

Financial Investment in an online store is essential

For some reason almost all people considering opening an ecommerce store, believe that it is a low-cost investment and that it is possible to open an online store for a few thousand Rand. Whilst it is technically possible to create an online store for a few thousand Rand, that is it. You will only have a website with ecommerce functionality.

An ecommerce business will however, like any other business, require several infusions of capital as well as a significant amount of time/labour.

We have seen on numerous occasions that people are willing to invest significant amounts of money into a physical store but will decline to spend much smaller amounts into an online equivalent.

The cause for this is probably the “get rich quick” idea that is being created by ruthless advertisers stating that you can create your own online store in minutes or that their software will do all the work for you.

Whatever the cause, thinking that we do not need to invest in an online store will be the quickest way to see our dream store fail spectacularly.

2. Competition:

Do you know your competition? Do you know what makes them successful? If you do not know the answer to this, you will also not know how to open and manage a successful online store yourself. This may sound harsh but is part of the reality of opening an online store.

If you know your competition and their products the next question will probably be: “How will I be able to offer a similar product or service and get my competition’s clients to rather purchase my products or services”. The truth is, that there are so many competing stores that we will have to have something extraordinary to take a share of the market.

Always remember, the people behind successful online stores have already done a massive amount of work and made significant investments to get where they are, and they are not likely to easily allow new competitors into their markets to take their clients.

In addition to competing with experienced and established competitors, it is a fact that some markets have an abundance of competitors. Some markets are saturated to the extent that there is simply no place for a newcomer. As far back as 2009 an article appeared on ZDnet discussing the intensity of the competition.

Niche markets have become the area where potential still exists for newcomers.

3. Quality of the website:

This reason should be quite obvious. There are unfortunately still people who believe that a beautiful website will do the trick. Yes, an aesthetically pleasing website will go some way to help. It is however the quality of the website that will assist in establishing a successful online store. The yardstick that is used to measure a quality website lies in a term UX. UX stands for user experience and is what will make or break a website. Even well-known brands will fail in its online ventures if a website does not leave the user with a great experience.

If a visitor loves the look of our website but finds it difficult to do or complete a transaction we will not see that person again.

4. Poor product images:

Unfortunately, we see poor website product images far too often. People are visual creatures and a quality product image goes a long way in assisting in a sale. We have had potential clients who did not have a single product image and requested us to copy images of the same products from other websites. Not only is this plain wrong, but a very severe symptom of not showing the necessary zest required to make any type of business a success. If you are selling products online you can simply contact your suppliers and request them to make images of their products available. They will certainly assist you as they know that it will assist them in selling their products.

5. Low or no website traffic:

Increase your online traffic

An online store needs plenty of traffic

When a new website is launched it is simply obvious that no people other than the owner and his family and friends will be aware of it. In order to get traffic we will have to let people know that your store is online and available. This can be done in two ways. The quicker way is advertising on Google and Facebook. This can however be expensive, and we have found many people not willing to spend money as mentioned in number 1 above.

The other approach, although slower, is to drive traffic with content. Content on your website that is searchable such as blog posts and content on social media. This approach is referred to as content marketing and over the long run it is a very powerful way to make people aware of your products.

We have seen many people that expect their websites to have a lot of traffic in a week or two. With the best will and intent in the world this will not happen. Once again this incorrect belief is brought about by companies advertising their promises to get a website on page one of search engines in no time at all.

 

6. Patience:

Although the lack of patience can be observed in some of the other points discussed above it needs to be mentioned under its own heading. Any ecommerce business will take time to grow. Making profits immediately simply does not exist in the online world unless you have developed the new Rubix cube and is the sole distributor thereof. Even then you will have to make the “world” aware of it and wait for the craze to kick in.

In all seriousness, please do not be surprised if it takes several months to start earning meagre profits.

7. Complicated checkout:

Although we have discussed the quality of websites above at number 3, we need to stand still at the checkout process of an ecommerce store. Although clients prefer to checkout as quickly as possible we also need to have measures in place that secure their confidential information. Ensuring the safety of clients’ information does not mean there should be a lengthy checkout process. Research shows that clients abandon their carts quite often when confronted with complex checkout and payment procedures. Amazon is a good example of a simplified and streamlined purchasing process

8. Hidden fees:

No person wants to make decisions according to affordability only to be surprised with shipping rates and VAT when they get to the payment phase. Clients are very likely to abandon their carts if they made up their minds with a price in mind and now see new costs added during checkout. It is important to provide clients with a shipping calculator based on the items they are purchasing and their location before they proceed to making payments. As this is extremely easy to achieve there can be no excuse.

When we talk to prospective clients we are amazed to see how few are aware of small technical issues such as this.

9. Lack of customer engagement:

Engage with your clients

Customer engagement is essential

There are two sins a salesperson can commit. (1) Bullying customers and (2) ignoring customers. When possible, prospective and current customers must be engaged. This can be done through Social Media where discussions can be had on your products and/or services. This is an awesome opportunity to show your knowledge and credibility by taking part in relevant discussions.

10. Lack of quality content:

We left this reason for last as this might just be the most important part of a website and which may be lacking on your website. To have beautiful images of your products and a great clean design is not enough. Your online store should have engaging content. By having quality written content in addition to other website content is an absolute necessity. Visitors will only convert to customers once they are satisfied that they have learned enough to feel comfortable shopping with you. Online stores should be content driven and should contain precise details on every product as well as buying guides and unique product detail pages.

There are many more reasons why online stores fail. We have just concentrated on the most common reasons. We do deem it important for every prospective online business to consider all the pitfalls they will or may be facing. By identifying these pitfalls and planning resolutions to steer clear of them you would have increased your chances of success tenfold.

You are more than welcome to share your experiences or add to the above list.

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Eitel is the owner and Lead Website Designer at WebScripto Pty Ltd. When not working on a website he loves to write blog articles covering various aspects of Website Design and Maintenance. Please feel free to contact me if you have any comments, questions or suggestions.

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