Why 90% of Online Retailers Fail In Their First Year • Esa ProductManager

The online retailers who are most likely to succeed in their ecommerce businesses are the ones who not only plan, budget, and smartly invest, but they also take the time to get to know everything they can about how their operations work.

Yep, it’s as simple—and as difficult—as that.

The high percentage of ecommerce failure, by comparison, seems to come down to two main reasons: a lack of business planning and a lack of market understanding. That said here are some related factors to consider.

No Business Knowledge

Truth is you’ll be at a real disadvantage if you don’t understand basic business terminology or how businesses “speak.” But that won’t even matter if you’re unable to properly track expenses and profit margins.

Online retailers can stay ahead of the curve by also being aware of outside factors that could affect their ecommerce store. Likewise, taking a business course either online or at a local community college can be well be worth the time and money spent.

Little or No Cash Flow

Cash flow is the movement of money in and out of a business. But, seller, beware, because your new business can easily run out of money if you don’t have a solid operating plan in place.

In any event, you might try spreading out your expenses so that everything is not due at the same time. Similarly, avoid over investing in advertising “gurus,” and be sensible about spending, basing it on actual revenue rather than projected sales.

Too Much Competition

Do you feel like it’s hard to differentiate yourself from the crowd? Are there a slew of other businesses selling the same items as you or who have similar business models?

I know this can be pretty frustrating for new online retailers. But you can take action.

First off, study the competition. The quicker you can identify your competitors’ weaknesses, the quicker you can take advantage of them. And, secondly, try to stay away from selling mass-market products. Consider niche or unique products instead.

There are, no doubt, a slew of other reasons why so many online retailers quickly fail. But, for the limited scope of this post, suffice it to say that with some good business sense and strategic planning, you can position yourself to be part of the 10% who succeed!