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Why Are Ecommerce Start-ups Failing?

Updated: Apr 7, 2020

We’re living in an age full of technical and digital innovations. The motivation to become an entrepreneur is greater than ever, looking at the recent success of many, especially in the UK.

Deciding to begin your own start-up can be very daunting, as you’re competing against dozens of other start-ups, so making yourself stand out from the competition can be a very tricky task. New research has revealed that an incredible 90% of UK Ecommerce start-ups usually fail within the first 120 days of operation.

A survey of 1,253 owners of failed start-ups in the UK, took part in a survey to reveal the most common reasons for why an Ecommerce start-up would fail at such an early stage. There are many reasons why a seemingly promising start-up could fail, such as a lack of recognition, poor marketing or financial difficulties.

Online Marketing is a key aspect to any Ecommerce business. Advertising your product to your target audience is the first step to securing new customers. The survey revealed that 37% said their failure could be attributed to an inability to compete or deliver online marketing. In addition to that, 35% say a lack of online visibility was the main factor. If your proposed target audience cannot see your product online, your business will struggle to pick up any pace. As we mentioned before, competing against other businesses who are already established, can be daunting.

Research found that 35% of respondents felt failure was down to them being too small to compete or there being no market for their products/ services.

Financial difficulties are also an unfortunate reality of many new start-ups, as the survey revealed that running out of money was also a key factor. Online retail giants such as Amazon and eBay have distanced themselves from similar competition in recent years as well as dominating a large share of the retail market, and owners of start-ups have stated that competing against the likes of Amazon has been too much of an uphill task, leading to a lack of faith towards their own product.

16% said their business collapsed due to their lack of customer service, whereas 14% of

respondents, felt it was due to the poor team they’d built around themselves. 23% of respondents felt being outcompeted led to the collapse of their business and 11% felt product mistiming was one of the factors.

This survey won’t make good news for those who have just started their own business or to those who wish to start their own Ecommerce business in the near future. Sometimes, starting and maintaining a business comes down to the work done in the background, just as much as the products consumers see as the output. Having the right team, financial stability as well as doing research beforehand is very important to knowing the exact tools needed to begin and see-through a successful start-up.

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