6 Lessons We Can Learn From Common eCommerce Failures
Denis Waitley, motivational speaker and best-selling author of the acclaimed audio series “The Psychology of Winning” once observed:
“Failure should be our teacher, not our undertaker. Failure is delay, not defeat. It is a temporary detour, not a dead end. Failure is something we can avoid only by saying nothing, doing nothing, and being nothing.”
Waitley makes a good point. Failure is a useful tool in the hands of a person willing to learn from it. According to Business2Community.com, even though the e-commerce market is growing at about 13% annually, the failure rate for online stores within the first two years of going live stands at about 80%.
Looking at that from a positive standpoint, there are many available opportunities to learn from failure. On an even more positive note, luckily you can learn from the mistakes of others, and save yourself at least some of the pain that comes with e-commerce missteps.
So, where are some of those valuable lessons you can glean from looking at what happens to other e-commerce businesses? Here are a few:
Lesson 1. Avoid the pitfall of lack of investment
An obvious draw for those embarking on an e-commerce venture is that e-commerce sites typically require less of an initial investment than brick-and-mortar stores. That does not mean, however, that you can skimp on the initial investment entirely.
Success in e-commerce often comes only after a significant infusion of capital and effort on your part. There is an old saying that you should not be “penny wise and pound foolish.” When beginning your e-commerce business, expect to spend money to make money.
Lesson 2. Know your competition
If you sell on big marketplaces like Amazon or Wish, you’re going to find a lot of competition from sellers selling similar (or identical) products. Choose your battles wisely; know who your competition is and whether or not you stand a chance against them. Invest in repricing software that will help you stay on top of your game with similar competitors, and diversify your marketplaces to ensure a larger market share. Explore smaller, localized marketplaces where you can more likely dominate your niche.
Lesson 3. Looks matter
PracticalEcommerce.com makes this astute observation: “Even the best business plan cannot always overcome a bad website.”
Face it. Online shoppers want to see something pretty when they shop. They fully expect your website to be aesthetically pleasing no matter which device they happen to be using at the time. They also expect the site to be secure, easily searchable, and fast as lightning to load. If your site fails in any of these areas, you will be highly unlikely to thrive in e-commerce.
On the subject of looks, there is one more very important consideration. Online shoppers are extraordinarily visually-oriented. Because they cannot touch your products in person, they expect and demand a high-quality image of the product on your site. If possible, present your product from multiple angles and views. Clear, high-quality photos will result in more sales.
Lesson 4. Keep that cash flow in mind
Cash flow problems can put a stranglehold on your ability to succeed as an eSeller. To maintain a healthy cash flow, it is important to balance your inventory needs with your marketing budget. After all, if you spend too much on inventory, you will have limited resources to allocate to marketing. The result? A warehouse full of inventory and no way to sell it.
Conversely, if you spend too much money on marketing without the inventory on hand to fulfill orders, you lose credibility with your customers quickly. Therefore, you must find an acceptable balance between inventory and marketing budget. Here is a pro tip. Plan your budget around actual sales revenue instead of relying on projected sales.
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Lesson 5. Concentrate on customer service
A key differentiator between a successful e-commerce business and one that fails miserably is the level of attention the business pays to excellent customer service initiatives. eSellers that think of customer service as an afterthought set themselves up for disappointment.
When planning your e-commerce strategy, give careful thought to how and when you will provide customer service. Invest in customer service solutions to help your e-commerce site rise to the top of the heap. Become the go-to source for customers looking for help with your products.
Lesson 6. Narrow your product focus
It is true that you want to provide a good selection of merchandise to your customers. However, if you diversify too much, customers may react badly. After all, if a customer is looking for an e-commerce superstore, he or she will likely be looking at huge online retailers with whom you simply cannot compete effectively.
By narrowing your focus to a few select items, preferably ones that adhere to a certain theme or appeal to the same customer base, you will be more likely to win a top spot in the marketplace for your items.
When failures happen
Admittedly, your e-commerce site will, at one time or another, fail in one of these areas. E-commerce is a fast moving industry, and it is hard to keep everything running at 100% all the time. Competition is fierce, regulations change, and logistical challenges happen.
However, small failures can yield big successes when you learn from them. It is as Henry Ford, inventor and consummate businessman, once said:
“Failure is simply the opportunity to begin again, this time more intelligently.”