Forbes did a study on business ventures and found a rather intriguing trend.
Well,no surprises there! The Internet and its abundant availability has made it easy for anyone to start a business, especially in the eCommerce domain. But, sadly, not everyone has it in them to emerge as victors. They make mistakes that cost them money and force them to settle down as victims.
So why do some eCommerce stores fail while some others continue to capture the market? What is the secret sauce of the winners? What common mistakes do the failures make?
Let’s focus on the lessons from the failures. because learning from failures is far more worthy than following the success route of your competitor.
So, here they are. Some proven reasons why some eCommerce businesses fail to hit the mark. Learn from the mistakes so that you can turn your eCommerce store into a success story.
Lack of a long-term commitment
Most businesses begin operations and burn through the initial investment without an eye for the future. If the founders lack a long-term commitment to the business, it is not going to survive through competition and other hardships. The founders and everybody involved in the business must get down with all that they have got to turn the venture profitable and self-sustainable.
If the focus is on earning money at the cost of poor customer service, then the business is sure to wrap up in short span of time.
In the words of Tony Hsieh, Zappos CEO – “Chase the vision, not the money, the money will end up following you.”
An uninspiring website design
According to Ironpaper, “48% of people cited a website’s design as the number one factor in deciding the credibility of a business.”
For an eCommerce business, the user experience and the ease of navigation is what brings in conversions. In addition to a neat and clutter free desktop version, the store must have also a mobile responsive design. More than 80% of customers search for products online from their mobile devices before making a buy using a desktop or tablet device. If budget permits, a dedicated mobile app complete with payment integrations can also be launched.
Missing to incorporate a fetching design for the website is a sure recipe for failure.
Sky-high cart abandonment rate
High abandonment rates are common in eCommerce. However, there are some specific reasons why abandonment rates happen. Store owners must pay attention to weed out this issue so that they can optimize their store for maximum conversion.
Some popular reasons for cart abandonment include:
- Website time out
- Complex checkout process
- Unexpected shipping costs
- High product pricing
- Lack of a guest checkout option
- Security concerns
Some of these factors like security need immediate attention to fix high cart abandonment rates. Customers are now more informed than ever before and know how to identify an insecure website from a well secured one. They know what HTTPS encryption is and what trust seals in the payment page really mean.
If your eCommerce store does not have HTTPS encryption yet, it is high time to invest in a EV SSL certificate that will remove all security concerns from customer minds. SSL certificates inspire confidence in the minds of customers and assure them that their personal information and payment credentials will be encrypted and safeguarded from hackers and phishing attacks.
Poor Inventory management
Too much inventory blocks the working capital. Too less inventory reduces order fulfillment rate. If that got you confused, let me break it down.
Your eCommerce business needs to have an optimum level of inventory at all times to meet orders. The inventory levels should be maintained at moderate levels enough to meet current orders and also safety stock to tackle unexpected spikes in order levels or supplies.
Healthy inventory management ensures that the business is able to switch its product portfolios quickly and easily according to changing customer preferences. Your store will not be stuck with large volumes of products that customers have no interest in buying. Thus, good inventory management ensures that your eCommerce store is able to remain profitable. Those eCommerce stores which fail to keep that in mind are bound to end up as loss making ventures.
Lack of Conversion Rate Optimization
Conversion rate defines the number of customers who bought your product or took an action as indicated in your website. A classic example of conversion rate is the number of website visitors to actual sales in a given day or period.
Now, conversion rate for an eCommerce store can be optimized in several ways. There are tools and techniques that need to be deployed to fine tune misgivings in conversions. Your customers may be skipping a buy or an action due to some inherent reason that needs to be rectified. Conversion Rate Optimization takes care of that part.
Here are some hacks you can use to fix your conversion rate:
- Use strategic call to action buttons with the right colors
- Use only essential number of form fields
- A/B test your CTAs with Click through rates
- Have a headline optimized for keyword friendliness
- Insert real customer testimonials
Not optimizing your conversion rates periodically will ultimately hit your store’s profitability. A major mistake which failed eCommerce ventures do. Make sure you don’t do that.
In a Nutshell
Running an eCommerce business is like planning for war. Make no mistake if you don’t want to bleed (in terms of money and reputation). Mistakes are bound to happen, as in any other business, but, the trick is to fix them as soon as possible so that they don’t mess with your bottom line and pull down to closure.
The above mentioned mistakes have been the reason for the failure of many eCommerce business. Don’t let them fail yours too. Learn from them, fix them and steer your eCommerce business to success and profitability
