For every successful eCommerce business, there are hundreds that lay behind it failing to break even. Staying in business requires having a holistic understanding of where your business stands today and where you want it to go, but also being able to monitor patterns and trends that could cause lethal drops in traffic and revenue in your business.
Along with lack of experience, neglect, fraud, and disaster, there are a handful of other reasons an eCommerce business can fail. These 10 eCommerce pitfalls have caused thousands of businesses to lose substantial amounts of revenue and have to shut down.
1. Failure to Retain Customers
The stats behind customer retention are astounding:
- A new customer costs around 5x more than retaining an existing one.
- A 5% jump in customer retention rates increases profits by 25-95%.
- You are between 40% to 65% more likely to sell to an existing customer than a new prospect.
Failure to keep your customers interested and coming back to your business is essentially letting your hard work on the front-end go to waste.
Customer acquisition is extremely important; without it, your site would just be collecting cyberdust. However, if you do not make an effort to retain customers through an email list, customer accounts, or other retention strategies, you will be limited to only using your more expensive customer acquisition strategy to keep your business alive.
2. Failure to Find Converting Traffic
The Build it, and they will come method of creation is far from good advice for eCommerce merchants. Whether you choose to use Shopify, BigCommerce, Magento, or any eCommerce platform, you’ve only just started on the basics of building a functioning business.
Failure to connect to traffic is similar to buying an extremely useful appliance, but you don’t have an electrical outlet to give it power. Entire multi-million-dollar digital marketing businesses are built every year by finding the right kind of traffic. Whether your strategy focuses on leading visitors to your site from search engine optimization, email marketing, or social media promotion, you have to constantly monitor and observe the type of traffic to make sure it is converting into revenue.
3. Failure to Close
You may have heard that your website is supposed to be your best salesman that works 24 hours a day, 7 days a week. If you haven’t designed your website and business model to close, your website is hardly going to get a golden sticker for sales performance. Ultimately, the responsibility to monitor your conversion rates falls on you.
4. Failure to Find Product/Market Fit
Product/market fit is a term used in the startup world to designate a startup which is creating a value proposition that meets or creates a market demand for it. Instead of focusing on a single or handful of product lines and services, eCommerce businesses have the luxury of being able to test the waters for a wide variety of different products.
5. Failure to Showcase Your Products Effectively
Presentation of your products plays an enormous role in establishing trust with your customers and allowing them to make informed purchasing decisions. No matter how differentiated your product is, the average visitor can find a handful of viable substitutes by using less than 60 seconds of their time and the power of Google.
Having a strong visual representation of your products is becoming the standard to be successful in eCommerce, but it doesn’t stop there. Viewers are between 64-85% more likely to buy a product after watching a product video, so be sure to incorporate a visual strategy that works best for your brand.
6. Failure to Be Patient
Most strong strategies to get traffic and make sales can take a much longer period of time than most eCommerce merchants expect. SEO, for example, can take anywhere between 6 to 12 months to start seeing results, but, once it starts working, it can have a substantial impact on your daily traffic.
Merchants that pivot from strategy to strategy every few weeks end up exhausting way too much energy only to find that they are in a similar position to when they started. There is understandably something about having back-to-back revenue-less months that is unnerving to most any business owner, but eCommerce takes a certain type of patience to make it in the long run.
7. Failure to Monitor Analytics
The wealth of information available about the traffic your site is getting, down to the type of phone the majority of visitors are using, is something that brick-and-mortar stores would have paid millions for in the past. Luckily, the power of Google and Facebook is on your site. Understanding and actively monitoring Google Analytics, or whatever analytics software you are using, isn’t a recommendation; it is a requirement to being in business for the long haul.
8. Failure to Recognize Patterns
Successful eCommerce merchants not only monitor their internal analytics but, also, keep their finger on the pulse of industry and eCommerce trends. From customer preferences to search engine algorithm updates, the number of observable patterns can be overwhelming, at first. Merchants with large enough amounts of traffic and scrupulous analytics monitoring habits are even able to detect patterns before they become news and can prepare to adjust course to not only survive but to thrive.
9. Failure to Pivot When Necessary
On the other side of patience is the ability to redirect course only when you can tangibly prove that a strategy isn’t working, and likely will not in the future. There is no such thing as autopilot, in the eCommerce world, and even the moments of tranquility should revolve around A/B testing about how to increase your business’s performance.
10. Failure to Diversify Marketing Strategies
Does being a situation in which 100% of your traffic comes from a single source make you uneasy? Diversify the different methods you use to get site traffic to avoid being at the whim of an algorithm. Marketing diversity also allows you to target traffic from different angles. 80% of consumers online search for products on multiple different platforms.
For example, if a sudden Facebook algorithm update decreases the amount of traffic you get substantially, you will be able to allocate Facebook ad money to a channel that brings you a higher return (Instagram, PPC, SEO, etc.). Establishing a foundation of power and security is a great way to ensure you stay in business.