By Nicolas Fincher
Thousands of online stores emerge on the Internet every month. The latest market research reveals the average lifespan of various ecommerce projects, regardless of their size and business niche, is a little more than two years, and about 90 percent of ecommerce start-ups eventually close. The following is a look at several problems ecommerce start-ups encounter, along with solutions to help you make your online business a success.
Problem: Excessive confidence. Today, the ecommerce market features a rather low entry barrier. The overall start-up budget including expenses for a shopping cart software solution, storefront design, web hosting service, domain name and basic store setup may start at only $500 to $1000. Coupled with widely known samples of highly profitable local and global ecommerce leaders, this creates a dangerous illusion that it is quite simple to launch and grow an online store. The overall market experience shows that online start ups tend to overestimate their abilities and capacities by nearly three to four times when forecasting sales volume growth and prospective return rates.
Solution: It is essential to make real forecasts of prospective traffic volume, conversion rates and sale transactions. Take your time to thoroughly analyze every aspect of your online venture and figure out your actual average monthly income. This will help you devise the right strategies to further business growth. You should not try to break even by raising prices. Raising your prices by more than 15 to 20 percent will just turn your prospects away, irrespective of the quality of your products and convenience of your services.
Problem: Outrageous expenses. Often ecommerce start-ups with sufficient investment opportunities tend to waste large sums of money on the arrangement of their physical offices. Trendy office design, expensive furniture and luxury vehicles are thought to significantly improve a company image. In fact, you will hardly ever have visitors come to your physical office, and all these expenses will be nothing more than a waste of money.
Solution. There are a lot of other options worth investing in when your online venture is in its initial stages. Examples include an exclusive, eye-catching online storefront design, SEO, effective advertising and promotional campaigns, comprehensive customer support and online protection.
Problem: Large first inventory. The fictitious simplicity of launching an online store typically makes entrepreneurs order the first consignment of goods in too large volumes. If you are crazy about the latest model of some smartphone or prefer some specific types of tea or coffee, it does not necessarily mean that your preferences match your customers’ needs.
Solution. While you are taking your first steps in the ecommerce market, you should get goods in small volumes. This should be done until you are clear about your product inventory and sale rates. You can then gradually increase the volume of your orders or purchases. One of the greatest advantages of running an online retail business is that you can add as many products to your online storefront as you need without actually having them in stock.
Problem: Poor shipping services. Any online store is doomed to fail if it does not have a smoothly running shipping system. According to experts from various established distribution companies, very often start-up online ventures take into consideration only average figures while estimating and planning available resources. With the first peak load, the whole shipping system may fail.
Solution. Do not rely completely on your contracting parties, and be prepared for any spikes in your sales. To handle peak loads successfully, it is important to ensure your customers’ ultimate satisfaction by delivering all their goods in a timely manner. Have a special team control and manage any critical shipping cases responsively.
Opening an ecommerce business can be challenging, and problems may pop up. By starting your business on solid footing, and avoiding common problems at the onset, you will be better equipped to handle whatever comes your way.