The 18 reasons which can cause an e-commerce business to fail. It lists the front-end and back-end costs of an e-commerce business. It discusses product listings, photographs, and videos that you must upload to describe your product and the factors that you must include while pricing your product. It apprises you of the importance of a clear-cut Returns Policy in an e-commerce business. It talks about the importance of Mobile User Experience for your customer.

In the final frontiers of this course on e-commerce, you will learn how to safeguard your e-commerce business from failure. It is a known fact that almost 95% of all start-ups fail, including e-commerce ventures.

Golden statement:

Accept the reality of failures.

Take measures to correct them once you are aware of your shortcomings.

The 18 Reasons for the Failure of an E-Commerce Business include the following:

  1. Selling the wrong product: Professor Nishant Manchanda of Bada Business has done an excellent video on choosing the right product for selling through e-commerce. If you make the wrong selection of products, then you have taken the wrong step in the first instance, itself.
  2. No understanding of the cost: In an earlier video, you received a calculator in an excel sheet. This rare calculator is not available publicly, but it is available to you so that you can figure out the various hidden costs involved in an e-commerce business.

You might buy a product for Rs.2 and sell it for Rs.20 online thinking you have made 10 times the profit. That is because you’ve not taken into consideration the various hidden costs such as:

Shipping cost
Return cost
Marketing cost
Team cost
Technology Vendor’s cost
Consultant cost
Hosting cost
Website cost

  1. Devaluing your brand with poor content: If you have written poor quality content for your product without keeping the customer in mind, then don’t complain that your product is not selling. Whether you are selling one or a thousand products, each product should be listed with:


  1. Bad product pictures: Pictures and videos help a customer to visualise your product. In an earlier video, you saw the example of a mop. How long was its steel rod? How does it work? Only when a customer can visualise the product, then only they will buy it.
  2. Losing customer trust and wasting their time: Your internet customer is a busy person and time is valuable to him or her. He might be on Twitter and Facebook and other social media, but remember that the customer values his own time and you must give him a perfect buying experience that is frictionless.

Your customer is there to buy your product so give him all the material he needs. Don’t ask him to fill unnecessary forms. If you ask for unnecessary information from the customer, he will get irritated and you will soon lose him. Remember, the customer doesn’t have time to waste.

  1. Not aligning your pricing and ads: Sometimes, a customer clicks on an advertisement which promises him 50% discount but when he reaches the website, he realises that the discount is only on old stock. By making his false promises, you will lose his trust and you will have lost a customer.
  2. Not having a clear return policy: A return policy makes it clear to the customer how easily he can return a product. You must understand that big business like Amazon has an excellent return policy, the reason why customers come to them repeatedly.

“You just have to state a reason for the return and you will have your money refunded immediately” – this is the one reason why the customer shops repeatedly on Amazon. A return policy does not just mean returning the product but also that the customer must have his money back immediately. This way, you win the trust of the customer.

  1. Poor investing and money management: Many business people think that websites can be made in a few thousand and they put in all their money – Rs. 50,000 to 1 lakh on a marketing campaign. You think you are right, but in this case, you are wrong. You must spend in the following order:

Your product should be world-class. Technology such as the platform you use or the website or the CRM should be excellent. To provide customer service you can outsource to another company who will pick up the phone and answer emails for customers. Will the customer get a service on WhatsApp?

The last point is marketing. When you do this your business will certainly succeed.

  1. Ignoring the importance of mobile UX (User Experience): You may have a great website but you cannot ignore mobile users. According to a Cisco report, smartphone users in India have doubled and 60% of the population will be internet-enabled by 2022. Mobile is the first screen for customers.

It is very important to be mobile friendly because that’s what where most people see their internet. To do this, you can:

Use the mobile-ready website
Launch your own app
Buy a mobile UX-ready website

  1. Having a poor marketing strategy: Have a clear marketing strategy before launching your website or selling your products.

For example:

Do you have market reach?
Have you partnered with someone: If you are selling a food brand, will you be selling through Swiggy?
Will you be advertising on Facebook or LinkedIn or will you be using YouTube videos?
Will you be using newspaper ads?
Whatever strategy you use, it should be ready at least six months before the launch of your e-commerce portal.

You can subscribe to Bada Business’s marketing videos and do the zero-dollar marketing course.

  1. Not optimising for SEO: In an earlier video, you have understood the importance of SEO. When a customer searches for a product and if you are not there then what is the point?
  2. Not focusing at all on the backend: So far we have been concentrating on customer-facing processes on the front-end. However, backend operations are equally critical. Backend e-commerce operations could include warehouse or inventory or other operations.

For Example:

You could be having a package ready to be picked up in your small office which could even be operating from your drawing-room. Now, you could either write the address of the customer by hand or stick it by cello tape or by a printer which will cost Rs 3,000 to Rs 4,000 and do it more professionally.

You can even include a thank you note to the customer. The customer will be delighted with this experience and he will buy more and more things from you in the future.

  1. Done and lost in one trial: Many people have said that e-commerce business is useless. Others claim that you can make profits instantly, however, this is not the case. You have to give an e-commerce business at least six months to start becoming profitable.

It takes time to establish your products as a brand and perhaps you may receive no more than 30 to 40 orders in the first month. However, you could be getting 80 to 100 orders in the second month and in the third month you could even be getting up to 1,000 orders. You will grow gradually but never get disheartened if orders are slow in the beginning.

  1. Poor site navigation: You might have designed your website yourself or got it designed professionally. However, if the customer finds it difficult to navigate through the links on your website or finds it difficult to read through product descriptions, and it takes a customer 15 to 20 clicks to make just one purchase, it means your website design is poor.

From searching for a product to buying it, a customer should not have to do more than five clicks. After clicking, the customer should be able to pay and the payment should reflect in your bank account immediately. This way, both you and the customer, is happy.

  1. Annoying pop-ups in your UI: Some websites like that of the Economic Times and India Times have annoying pop-ups which appear as soon as you visit their website to read the news. Instead of reading the news, you have to see some really annoying ads. People might leave the website immediately.

You might think that seeing a pop-up will make your customer click on it. However, have you noticed any pop-up on successful websites like Amazon and Flipkart? Even if your vendor suggests this, don’t ever do it.

  1. Require registration: Many websites require that you register as soon as you enter the website which should not be done. Why is a customer coming to your website in the first place? It is to buy a product; he has not come to your website to register his family history. He would rather visit a website that does not ask him for unnecessary information. There is intense competition in the internet e-commerce business these days.

If your customer does not have a good user experience, he will stop visiting your website and would rather go to another one.

  1. No investment in customer service: To run a successful business, you should outsource customer service to another company. You cannot do everything in your business yourself.
  2. Shipping cost is too high: Sometimes at the end of the purchase, you find a small button which says Rs.50 extra for shipping. This is a spoiler for many customers. They think that here we are purchasing a product worth so many thousands, and yet we are supposed to pay for shipping? The way around this is to add the shipping cost to your product cost itself. Always show free shipping to your customers. Most successful sites like Jabong do this.