There is no area of industry that is as romanticised as eCommerce is right now. The low barrier of entry and the random success stories are what fool people into thinking that it’s an easy field to succeed in. They then end up sinking thousands and thousands of pounds into failed attempts and become disillusioned with the whole model.
The truth is that eCommerce is just as difficult as any other line of business, and unless you are ready for the challenges that come with it, you’ll have trouble succeeding. You also have to deal with increasing competition not only from other aspiring entrepreneurs like you, but from big players too. Let’s take a look at some of the most common reasons why eCommerce entrepreneurs fail.
No Understanding of Business
You cannot expect to run a successful eCommerce business without having at least a basic understanding of business. So many people get into eCommerce without knowing a thing about accounting, for instance. They then get surprised when they find out how little they made or didn’t make after all their sales.
Someone with a background in business will always have a leg up in this field and the last person someone without a business education wants to go against in eCommerce is someone with a business degree.
Someone with a solid business foundation will always be able to outperform someone without one when it comes to execution. They will also be able to strategize and brand better. They will offer a better user experience to their customers and better customer service. They will know how to use tools like CRMs and agile project management methodologies while others won’t even know what these things are.
This is why you should strongly consider getting some sort of business formation before you get started. And, if you own an eCommerce business, it’s never too late to start. You could always get an online MBA from a school like Aston University and get it in as little as two years even if you don’t have an undergraduate degree depending on your professional situation. This is something we strongly suggest you look into as it will give you a foundation that will almost make you bulletproof in this industry.
They’re Selling the Wrong Things
One of the toughest things in eCommerce is recognising a good niche or product. A product might seem like a winner at first glance, but it could come with all sorts of caveats, and these caveats are not always obvious. A lot of people want to get into the clothing business, for instance, without realising how much of a logistical nightmare an online clothing business can be. Customers can be extremely picky in this field and the margins are usually not that high. You might end up getting flooded with customer complaints and returns, which could ruin your margins. You might also underestimate how much time and resources you need to invest in customer support.
Others try to sell generic products with lots of demand like random kitchen items, for instance, then realise how easy it is for competitors to swipe their ideas and sell the same product for less.
So, before you start your business, you have to know what makes for a profitable niche and product first. The product should have high demand with moderate and low supply and be as unique as possible. It should also have proper margins and low-maintenance customers.
One of the great ways to identify winning products is to spot hobbyist trends instead of product trends. When a product is trending, it’s usually a sign that the marketplace is already somewhat saturated or it’s about to be. But, if you zero in on an emerging hobby, then you can start looking for all sorts of different products targeted to that niche.
You could also try to solve a real pain point for your customers, though this demands a bit more research. If you have a personal passion or field of expertise, then you could try to identify some of the problems people like you or those in your field are experiencing and find a solution. Or you could read customer reviews on products, see some of the complaints people have, and design a better product. You could then market your product on the back of these improvements.
They Use the Wrong Model
Another reason why a lot of eCommerce entrepreneurs fail is because they use the wrong business model. A lot of people start with an Amazon FBA business, for example, or with dropshipping, thinking that it’s the absolute best way to earn money with eCommerce when it’s not.
While it’s possible to start a business on pennies with these two models, they are not the most profitable, at least not in the way most people execute them. They assume that they can put up a few random items on Amazon FBA and make the same sales as people who have been using the platform for years and have access to much cheaper merchandise.
When it comes to dropshipping, too many people who get into this line of business try to apply the least effort possible. They want their supplier to handle everything for them and don’t understand why returns and delays become such a headache. All of this could be solved if they learned how to use fulfilment centres and at least consider handling some of the distribution process themselves.
More people could also benefit from learning about on-demand manufacturing and private labelling. Having proprietary products is one of the keys to success with Amazon FBA and any type of eCommerce business. So, instead of taking the easy way out, try to look at ways where you could be more involved and keep more of the profits while allowing your brand to stand out.
Starting an eCommerce business is very easy but being successful in eCommerce over the long term certainly is not. Study the field in detail before you spend a single penny on any venture and consider learning business in general if you want to increase your chances of success.
