Starting an eCommerce business can be fast, relatively easy, and not very expensive. But with something like an 80-percent failure rate, creating a successful online business is more challenging than some entrepreneurs imagine.
Although each new business is unique, there are common contributors to eCommerce failures. Understanding these possible pitfalls should help you to avoid them, beat the statistics, and have a successful ecommerce business.
No Prior Knowledge Of Retail
The promise of ‘getting rich quick’ via eCommerce has led to many people who have no prior knowledge of retail or internet technology setting up businesses online. It’s possible to pay for other people’s expertise in these areas, but if you’re unable to apply the skills you’ve gathered throughout your career, you must seriously question if eCommerce is right for you.
Lack of Trust
Trust and credibility with your customers is important both online and offline. Security issues on the web in particular can deter customers and prospects from buying. The online environment differs from the offline environment in that customers are required to provide full credit card details in order to purchase. As such, businesses must provide security against misuse of this information.
Use of SSL (which enables the encryption of sensitive information during online transactions), known and trusted payment gateways and clearly displayed privacy policies will increase trust and credibility in the organisation.
You Refused To Lower Prices
This is linked to the point above but can be a specific reason why eCommerce businesses fail. Whilst it can be agonising to lower prices when you’ve projected profit but end up making a loss, if it means you’re offering the cheapest (but still the best) products in a competitive market you’ll end up the winner.
Visibility on the Web
Location is still everything, just not physical location. In the physical world retail store location is everything. Studies show that the same is true on the web; it is just that the best locations are on the first page of Google’s search results page, (users click on one of the top 10 results without ever moving to another page.) Not just any first page but Google’s first page, which represent 80% of all search traffic. Winning front-page placement on Google requires a through understanding of how search engines operate, web honed marketing skills, time and technical expertise in search engine optimization.
The Flat Nature of the Web
The fact that anyone can setup a website and become a competitor with very little investment means the competition from small online stores is significant and can even be dominate in some verticals. Brick and mortar advantages due to economies of scale become less significant, online merchants do not need buildings, inventory, (drop-shipping is a significant force on the web) or a sales staff.
The quantity physically available, and product display attractiveness and merchandizing give way to content and the ability of the online store to display enough information for the customer to make purchase decisions.
It’s no secret that promotions boost sales and customers often go online because they are looking for a bargain. If your website lacks incentives, or they’re difficult to find, you may be losing business to competitors. Follow the same principles you would offline and offer seasonal promotions, sales and loyalty programs which provide added perks. Online tools like social media and email can then provide the perfect platforms to share these incentives, depending on your customer base.