Why e-commerce businesses fail

Before learning about “why e-commerce businesses fail” we must look into history. You must have noticed that there was a culture of start-up started in 2016 to 17 and there were significant number of start-up companies related to e-commerce and dropshipping model emerged. Because, huge wave was started out as everyone wanted to be “entrepreneur” demand remained constant but supply rapidly raised, which did make people to shut down their stores. if we look at the statistics of 2016-17, 20% of companies end up closing their business in first year, and next 10% would in third year.

So, the question is apart from this duration of 2016-17 ecommerce start-ups are failing but why, reason is clearly the same as why other type of businesses are dropping. Let’s discuss all of them in detail.

Let’s discuss the reason why most of the businesses fail:-

  1. Cash Flow:  Entrepreneurs slips on the fact that e-commerce and dropshipping business specially, have low starting cost but, cost increases by time as every business demand constant cash inflow. This is where most of the businessmen fails.
  2. Logistics:  Bad logistic strategies and practices make the business suffer a lot and adds up complexities. High shipping cost affect business adversely.
  3. Poor customer service: Negative relation building is another problem, when customer is not happy with your customer dealing behavior then one cannot expect new business from them.
  4. Old marketing strategies: If you are still hanging with the old marketing ways then you will not add traction to the business at all, instead you would lose the competition.
  5. Web security: Lot of businesses especially start-ups miss the importance of web security or reliability of payment gateways. Sometimes the payment gates leak the important information on the internet which discourages the customer to pay online again.
  6. Poor UX:  User experience is something very important when the customer is on the page. He must be able to find things in a matter of seconds otherwise he might get confused and leave the website.
  7. Call to action: Call to action is a button do to certain things on the webpage, these certain things must be taking the customers to the sale of the product.
  8. Zero product promotion: Some people reduce or even do not promote the product on internet or even physically which lead the graph of sale decline.
  9. Inefficient market research: Market research requires a huge capital insertion which most of the non-tech start-ups avoid. This leads the business to decline as business person do not have idea what market demand at the time.
  10. Scaling too early:  Because of the greed of more profits people try to scale their business in their early stage of business. Early business scale-up insights core problems which include lack of statistics and accounting instability.

Running a business no doubt a difficult task, running a business successfully is whole another devil task, but it is the better knowledge and common sense which lead you to take fruitful decision. If you are interested in knowing about ai and e-commerce then [click here]

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