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10 reasons why ecommerce startups fail

It’s a well-known ‘statistic’ that 90 percent of startups fail within the first 120 days. But what could be the reason for an ecommerce company that just started to be unsuccessful so soon? Let’s have a look at the top 10 reasons why ecommerce startups fail.

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First of all, it may be a well-known claim that 90 percent of startups fail within the first 120 days of existence, but there’s no real evidence that backs this up. As a matter of fact, statistics from the European Commission show that within the European Union, about 81 percent of enterprises survive the first year.

Why do ecommerce companies fail?

All things aside, there are still many ecommerce companies that won’t survive the first year of existence. But why is this? Digital marketing agency Marketingsignals carried out a survey among 1,253 owners of failed startups in the UK and analyzed the results so they could come up with the top 10 reasons why ecommerce startups fail.

The most important reason seems to be poor online marketing. A lack of search engine visibility is also another factor. Of the companies surveyed, 37 percent said their failure could be attributed to an inability to compete with, or delivery, online marketing. And for 35 percent, the fact their company wasn’t visible enough online have led to the failure of their business.

Running out of cash is a problem for many ecommerce startups

A similar amount of respondents said their ecommerce business failed because there was little to no market for the products or services they tried to sell online. And for 32 percent running out of cash was a very important reason why their company didn’t survive.

‘Make sure there’s a market for your product offering’

According to Gareth Hoyle, managing director of Marketingsignals, having an online presence and being visible on search engines such as Google, is a key area ecommerce startups need to focus on if they want to succeed. “It’s incredibly important that business owners put provisions firmly in place well before launching – this must include a bulletproof search visibility and online marketing strategy, as well as ensuring there is a market for their product offering.”

Here’s the complete top 10 of reasons why ecommerce startups fail:

1 Poor online marketing 37%
2 Lack of online search visibility 35%
3 Little to no market for their products or services 35%
4 Running out of cash 32%
5 Price and costing issues 29%
6 Got outcompeted 23%
7 Retail giants dominating a large share of the market 19%
8 Lack customer service 16%
9 Poor team around them 14%
10 Product mistiming 11%

 

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