Why e-commerce startup fails within 120 days and how you can save yourself from it ?
In this Blog below topics are covered
- Four stages for an e-Commerce start-up to follow
- Downsides eCommerce face
- Their relevant solutions
Many of our clients ask us, “Why our e-commerce business is not working? Even though we have the best products and the price we offer is also lower. But have you ever researched the different aspects of your products? Have you ever thought why a customer would buy your product?
There are many variables you need to look on while you think of starting a new business or an e-Commerce Start-ups. As per the statistics by some researchers, almost 75 percent of start-ups fail within 2-3 years.
Let us see why this happens:
Every eCommerce startup should follow the four stages:
- Strategic Planning
- Product development stage
- Execution stage
- Marketing, Monitoring and exit stage
The downsides eCommerce startup usually faces and the best solution to avoid it:
PLANNING STAGE :
This is a very crucial stage where you need to focus on aspects like:
- Know your customer: To convince a customer to buy your product you first need to understand what your customer really wants. If you start selling the product without understanding the current market needs, you would end up in bigger losses. Start-ups should be able to fulfill the customer needs at the same time provide them with unique and valued products. You can check out Facebook, Google, various analytics software and customers browsing data to understand customer needs and behavior.
- Building wrong product: Every product is imperfect in some or the other way in the eyes of a customer. But you have to make your product worthy. There is always a thin line between what customers feel is worth and what eCommerce start-ups would like to change for their customers. At the end of the day, the product should be profitable for both the parties, the businesses should achieve their profit target and customers should get product satisfaction.
- Business Model Failure: A start-up that does not have a proper monetization plan may not be able to survive even for 1 year. Some of the companies do follow a monetization plan but is insufficient and which fail to attract targeted profit. Even if you make good money you should do constant research to reinvent your business strategies with new products. Because even a big company like Nokia failed due to lack of invention and failed to keep up the pace with current business trends.
PRODUCT DEVELOPMENT STAGE
- UX/UI Issues: Bad UI/UX design may hurt your eCommerce business by increasing the bounce rate and shopping cart abandonment. The common mistakes done by the startups are:
- Creating a very complex Navigation interface
- Uploading poor quality product images and description
- Not focusing on minute product details
- Contact Information missing
- Not including Q&A section
- Confusing content
- Complicated checkout process
- Lack of information on shipping and return policy
- Hidden fees
- Mistakes while executing the online marketing plan: Online marketing can be done with the help of various tools and methodologies. These tools and methodologies help to promote your product and services on different online channels. Even though you are using the tools to do online marketing, the below mistakes will hinder your product selling if:
- You are targeting the wrong audience
- You are not engaging the customers
- Your pricing is not proper
EXECUTION STAGE :
Execution stage comprises of your team and internal processes. Let’s have a look on how it contributes to the failure of e-Commerce start-up:
- Poor Management team:
- You should help your team focus on the minute details of the e-Commerce selling. Being the entrepreneur, you should streamline, and allot the work to your employees. You should focus on all departments and closely see the working otherwise your employees and company will end up:
- Lacking focus
- Getting confused and lacking accountability
- Not clearing the necessary debts and payments
- Not showing much interest during the hiring process
- Finding excuses and pushing the work for some other day
Running Out of Cash:
Cash is the lifeblood of any business. If the fuel is over, how will the engine continue to run? Same is the case with business. Many venture-backed businesses are unable to return funds to their investors as they run out of cash. The businesses should keep a close watch on cash-flow management to pay investors on-time and keep your business running. Cash-flow depends on various factors that include accounts receivable, accounts payable, inventory, debt service and capital expenditure.
Poor Inventory Management:
If you are not aware of the product available in your warehouse, it may lead to product shortages and overstocking. A lot of time is wasted and resources are engaged to keep the inventory management in place. The best and most affordable option for inventory management is to have inventory management software and allot one resource to maintain it. You have different websites like KartzHub that provide you with automated inventory management options.
Being a start-up, the chances of your venture getting out-competed by other companies in the market is higher. Not taking the competition seriously will end your eCommerce business. Your expertise, strategic planning, cash flow maintenance will help you to have a successful business.
- Product Problems: People want products that provide the ultimate solution and serve their needs. The product should also be appealing and come at a low cost. If your product doesn’t have all these factors then it would not be able to attract traffic and generate business.
There are new threats and issues that a start-up has to face always. It can be an issue from another company or some individual who may stand against your company or product. The market problems always pop-up in any forms. You cannot control these things but can be prepared to face such situations and try hard to eliminate them as soon as possible.
MARKETING, MONITORING AND EXIT STAGE :
- Poor Marketing: If you don’t follow any marketing plan you won’t attract even a single audience to your product or website. A start-up can be successful if it follows a well-researched marketing plan. The marketing plan starts with competitive analysis and market feedback. Once you know the audience you need to target, then you can design the marketing campaign accordingly.
Disharmony among the team members and investors:Many times, start-ups fail due to the disharmony between the investors and the team members. Conflicts and tension often arise, but it’s your call to resolve it as soon as possible, as it may lead to slower decision making, frustration, reduced performance and commitment, and shifting of direction and priorities.
- Customer Ignorance: As the start-ups get stabilized in the market and start earning a good amount, they get caught up in stock market valuations and technology. In this process, the start-ups start ignoring the customers and their needs. Here, customer end-up buying products from your competitor.
You might think that your product or service is good. But have you done the right market research and taken reviews from the customers to know what they want and does your product serve their purpose? If you have not? Then research every minute details that have been listed above. Also, follow the processes even if you have become a well-established business. Because you never know when other new start-up or business may offer a better product and take your place.