Custom eCommerce websites can cost anything in the region from $20,000 to $200,000 to develop, and can have running costs from at least $1,000 per month. The last thing you want is for this investment to fail.
Although we are witnessing a boom in eCommerce, the norms when it comes to making an investment decision still apply. Especially if this is your main source of income, or you are taking a leap into eCommerce as an established retailer.
Which means you need to understand why custom eCommerce websites fail, to ensure you avoid the same mistakes?
7 reasons why businesses fail
#1: Low quality products
What you are going to sell is the most important decision when it comes to opening an online store. If you’re selling products you’ve been selling for a while, then this is an easy decision. However, if you’re new to eCommerce and trying to pick a niche, then this is a harder decision.
Whatever you do pick, the products you sell make a huge difference. As a general rule, higher-quality products perform better. Do as much research as you can into your customers, looking at gaps in the market, ways you can meet their needs better than competitors. Also look closely at branding, web traffic data (keywords and advertising) and the social media presence of competitors.
Aim to perform better than them in every way, to attract and win customers. Which means ensuring the quality of the products on sale is high. Low quality products contribute to the downfall of eCommerce websites.
#2: Poor/no customer services
So does poor or non-existent customer services. Shopping online means trusting people you can’t see or speak to with your money. You are trusting that the products are as good as they look, that goods will be shipped within the right timescales, and that you can get a refund if you aren't happy.
Consequently, providing excellent customer service is essential for eCommerce websites. You need to respond to customers quickly if they have questions. Use automated bots to answer some basic questions, and provide customers with FAQs and any other information they need, but reply quickly and be helpful every time a message comes through. If you have customers in other timezones, make sure they either know when to expect a response, or have a team around the world to provide customer support 24/7.
If too many customers receive a bad service, that will soon be reflected in negative reviews online. This is another way to sink an eCommerce store.
#3: Bad pricing choices
Pricing is so important. Price too high, and customers could go elsewhere.
Pricing too low, and you won’t make as much profit, and you’ve got no way of putting sales on if the margins don't exist. Low prices do attract customers, but a trade-off needs to be made. It’s often a delicate balancing act between offering quality products at the right price, which must also align with cost margins and what competitors sell similar products for.
#4: Cashflow problems
Pricing also has an impact on cashflow, of course. How much you’ve got coming in will impact what needs to go out, and what you can take out as profit. A key part of this, is ensuring you've got enough in a payments account to issue refunds if customers return profits.
This is one way eCommerce brands can get in trouble; is not having enough set-aside for refunds. Therefore, to avoid cashflow problems, always keep some money aside during your returns window (usually 30 days). Also, keep a close eye on returns to make sure they are staying within acceptable limits, and not happening too frequently.
#5: Poor user experience (especially on mobile devices)
How often have you clicked on a website, whether on a laptop or mobile device, only to click away and never return? Chances are, you’ve done this either because it was difficult to navigate, or too slow, or both.
Slow speeds and poor user experiences, especially on mobile devices, put so many web visitors off. They go, and don't come back. Make sure this is as good as you can possibly get it, and test over and over to ensure your website works on mobile devices, from first click to checkout.
#6: Not enough traffic (SEO, advertising, etc.)
Once you've got a website set-up, how are you going to get customers?
Have you thought about how to generate web traffic?
Most eCommerce websites use a combination of advertising, social media, and organic content to generate traffic. You need to plan this. A marketing plan, with a budget, and someone or a team of people to implement is what’s needed. Without traffic, you won’t have enough potential customers, which means you definitely won’t have enough actual customers to make it sustainable and profitable.
#7: Scaling problems
What happens when you want to scale? This could mean adding hundreds of new products, new website features, or expanding into new countries and regions (and therefore adding various language options to the website).
If a custom eCommerce website was built with scaling in-mind at the start, then this shouldn't be a problem. If not, you run the risk of needing to almost rebuild from scratch, which can prove prohibitively expensive. Scaling, especially into other countries, means you need to be able to handle a wider range of currencies and the website should load just as fast in every country or region you are selling in.
#8: Poor automation
One final problem that can cause customers to go elsewhere is poor automation. Customers need to know what’s happening when they've placed an order. Otherwise they can worry a retailer has taken money and won’t deliver what they ordered. So save you, and your customers a lot of trouble, by implementing automation that works from day one.
Here are some of the main challenges that can cause serious problems for custom eCommerce stores:
- Low quality products
- Poor/no customer services
- Bad pricing choices
- Cashflow problems
- Poor user experience (especially on mobile devices)
- Not enough traffic (SEO, advertising, etc.)
- Scaling problems
- Poor automation