As per the statistics, of all the businesses that started in 2014, only 56% made it to the fifth year. A lot more online businesses get shut along the way because of poor planning, lack of focus, and strategy.
Some of the important online business statistics that you should know:
- The top reasons that influence buying decisions online are: lowest product prices, easy delivery options, simple return policies, flexible payment methods, and easy access to product information/service.
- The top reasons why people avoid buying online are: long delivery times and not able to check the product before purchasing.
- As estimated by Nasdaq, 95% of purchases will be online by 2040.
- 82% people expect immediate response to their queries from online businesses.
What are the main reasons why online businesses fail?
No Market Need for the Product:
“It’s not about pop culture, and it’s not about fooling people, and it’s not about convincing people that they want something they don’t. We figure out what we want. And I think we’re pretty good at having the right discipline to think through whether a lot of other people are going to want it, too.”
Sometimes, a wrong product may seem like the most right thing to do and you would promote it over and over, until you realize that no one needs it. It’s a tough call to understand what products will sell and what won’t until you try it out. But, some businesses just rush to promoting their products without understanding the market need.
To do: Before you start your online business, distribute a few samples of your product and take a genuine review. Or take some online surveys before you design or manufacture your product. Test your concept and test it over and over before finalizing.
Not enough Finance to run the Business:
82% of businesses fail to continue because of cash flow problems. Starting an online business might require a few hundred dollars, but promoting the product, maintaining the service and delivery can bring in a range of expenses. Right from inventory management to product distribution, every step requires cash to keep the business running.
To do: Plan your finances well in advance. If your personal funds do not seem enough to start, think of other options like a bank loan, online lenders, funding methods like angel investors, or crowdfunding. Cut down on unnecessary expenses from the start to prevent yourself from any cash crunch later on.
Incompetent Team/ Business Model/ Website:
73% of customers want to do business with brands that can personalize the shopping experience for them online. Creating a website is an easier task but creating a fully functional website that can lead to conversions is different. Many online businesses fail because their support team is not handling the customers well or the social media team is not creating effective ads. They also fail when their website is not optimized for online shopping and give users poor experience.
To do: Try proven business models and incorporate them into your online business. Analyze your competitors’ websites and see what they are doing right. Hire trustworthy developers and team members to your company and do not rush.
Failure to Promote the Product:
14% of online businesses fail because of poor marketing. Marketing is the hardest job and many businesses lose focus when they are unable to market their products correctly. Using social media platforms ineffectively or losing cash too much too fast also results in bad marketing decisions.
To do: Use the right social media tools to grow your account. Hiring social media freelance marketers can help you in directing your social media efforts in the right direction.
To end with:
Being careful with the above common online business mistakes can help you create a successful business in the long-run. Learn more about digital marketing with our other articles on small business marketing and online marketing.