The idea of starting and running an online business is the go-to formula for most hardworking people looking to attain financial freedom. However, many proponents of online business and entrepreneurship significantly discount the difficulties, downsides, and risks that are part of any online business.
Data from the USA shows that about one-in-five online businesses fail within the first two years of becoming operational, and around two-thirds fail within ten years of business. These are daunting figures, and people should be aware of why these new online businesses fail so that they can avoid these costly mistakes.
What is an Online Business?
An online business is any business that has its presence on the internet. It provides people access to products, services or information via the internet and does not necessarily have a physical premises apart from its digital presence. There are a many different reasons why an online business can fail, and here we will look at some of the main culprits. Below are listed the most common reasons for failure, but be aware that there are many different online business models that may encounter some specific types of mistakes. (For example, not all businesses sell products.)
11 Reasons Why Most New Online Businesses Fail:
1. Not Being Different
If you are planning to launch an online business, one of the first things you need to do is find your competitors. Once that is done, you need to find a way to be different from your competitors – you need to have a unique selling proposition. You need to make your company different; it can be done through product features, marketing, pricing, or anything else. For example, you may offer a free website for your accounting clients. Many online businesses fail to distinguish themselves, which is why their customers tend to ignore their offerings and move towards another competitor.
2. Inconsistent Product Photos
When you are running an online business, you need to use the best photos. The customer only has the photos to judge the quality and design of the product. If the photos are not up to the mark, they can easily irritate the customer, which will drive them to abandon your website. Photography is an essential part of any online business, and that is the reason why it is necessary that each business should try to spend a good chunk of their budget on decent photographers. Additionally your products may require video presentation or 360° interactive viewing.
3. Too Few Promotions
As someone running an online business, it is your job to drive as much web traffic towards it as possible. One way to do that is to constantly put new promotions on your website; this way, your customers will know that you care about them and are active on the website. A lot of websites ignore promotions, and hence they lose out in the long run. There are some websites that always have 15% sales on their website, and they set their prices 15% higher – what it is a cheeky way to dupe customers and a recipe for disaster.
4. High Shipping Costs
Even if your products are priced reasonably, an added shipping cost will put a lot of customers off. As a business, you should try to keep the shipping cost as low as possible, and if you have the means, you should try to make shipping free. With free shipping, you will attract a lot more attention, and more people will want to buy products from your website.
5. Lack of Quality Content
Running an online business is not only about selling more products; instead, it is also about building a good relationship with your customers. For this reason, it is imperative that your website should have a good amount of quality content that will allow your customers to learn more about you. As a result, your customers will be a lot comfortable shopping with you. Not to mention good content will also help with your search engine ranking and social media optimization and interaction.
6. Very Few Calls to Action
If you want potential customers to turn into actual customers, you need to ensure that they are adding products to their cart. The best way to do this is to make the call-to-action button big and visible. In this way, the customers will want to go to the next step and, as a result, make a purchase in the end. The interface of the website should also be inviting so that the customers have a good time shopping on the website.
7. Bad Website Design
One of the most important things that any online business owner needs to focus on is the design and look of the website. The website should look like it has been built with a vision and purpose in mind. If the website looks sketchy, then there is a big chance that the user will press the back button. So, make sure that you spend a good part of your time and money on web design. You should also focus on the loading times of the website so that the customers become fully immersed.
8. Proper SEO
If you want to drive traffic to your website, you will need to have a workable marketing plan. This includes social media and search engine optimization. Customers generally tend to search for websites directly through Google. So, if your website is not ranked among the top contenders, it will send a very adverse message to the user. If you have a decent ranking on Google, it will be much easier for your website to attract traffic.
9. Lack of a Proper Marketing Plan
Another reason why online businesses fail is that they don’t have a proper marketing plan. Designing a marketing plan is something that you need to do in the early stages of the business because that will drive your business forward. You need to map everything out and then execute things according to the plan. You should be ready to spend some money on marketing as it will give you a good return on your investment.
10. Unreasonable Pricing
There are some online businesses out there that think that if they make their products expensive, people will just buy them without giving thought, and in turn, they will make a lot of money. That is a wrong way of looking at things because if customers feel that the pricing on the website is way off, they will just ignore the website and try to find someplace where they can buy the same thing at a much cheaper rate. Therefore, it is necessary that you set the prices appropriately and don’t try to sell anything higher than the recommended price.
11. Wrong Products
Lastly, many online businesses don’t know what their product is meant to do and what is the target market. If the product is not solving any problem and people are not lining up to buy the product, there is a big chance that you are trying to sell the wrong product and maybe to the wrong demographic. Before you start working on a product and build a business around it, you need to do proper research to ensure that there is a market for it.
Conclusion
These were some of the biggest reasons why a lot of new online businesses tend to fail. If you are thinking about starting a new business or are already running one, you need to avoid making the same mistakes as mentioned above but you probably want to know what is the biggest mistake you can make. If you are able to find your target market and drive traffic to your website, there is nothing stopping you from making tons of money. Just keep innovating and try new things so that you are able to make the most of a situation at a given time. Anyhow, don’t be afraid of failure especially if you invest small amount of money in your first online venture. Mistakes and failures will make you stronger and more prepared on your next online business.
