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Why Ecommerce Businesses Fail

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.

Your online ecommerce store is your business investment. Do it good and reap the benefits.

Here are the eight reasons why ecommerce business usually fail

  1. No Real Investment
    • It is possible to open an online store for just a few hundred dollars. But that in no way means that a few hundred dollars is all that you will need to invest.
  2. No Cash Flow
    • At the most basic level, cash flow is the movement of money into and out of a business. New ecommerce companies can get into trouble when they don’t have enough cash to keep operating. An example of this is when an entrepreneur invests all his cash in inventory and there is no money for marketing — so sales don’t rise and the business is stagnant.
  3. Poor Inventory Management
    • Depending on the business model, inventory management can be one of the most significant problems new ecommerce operations will face. Buy too much inventory, and, as mentioned above, you could cripple cash flow. Buy too little inventory and you might be missing out on sales or even disappointing customers.
  4. Too Much Competition
    • The Internet is a land of opportunity for even the smallest of businesses. But almost no online startup can survive in the face of significant, established competition.
  5. A Bad Website
    • Even the best business plan cannot always overcome a bad website.
  6. Poor Product Photography
    • Online shoppers cannot physically inspect the products you sell, so they will need a strong visual representation of those products to help them understand it, want it, and buy it. Thus, poor product photography is one of the cardinal sins in online retailing.
  7. No Website Traffic
    • Few things will kill a retail, or even a wholesale, business as quickly as having no shoppers. In the ecommerce context, website traffic is the flow of shoppers into and out of your store. If you want to make sales, you need traffic.
  8. No Patience
    • An ecommerce business takes time to grow. Too often new business owners imagine that they will earn profits immediately. But that is not typically the case. Don’t be surprised if it takes several months to earn even meager profits.

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