In this article we analyze the reasons why some e-commerce businesses that had everything going for them have not succeeded and have been forced to “close their doors.”
Continuing with my PhD research, I am now analysing the failure of some e-commerce businesses that did not manage to survive. To do this, I have analysed about 15 businesses that I know for a fact have failed and I have been creating a model that explains why they failed.
By classifying all the causes of the businesses that I have analyzed, I have ended up organizing them into 6 groups: related to the selected technology, to the person who manages the electronic commerce, to the product, to the market/environment, to the financial management of the electronic commerce, and to the promotion of the business itself.
In total, 27 variables have influenced the death of these e-commerce businesses. Here is the ranking…
Technology-related causes:
- The chosen platform does not integrate with the company's management tools and therefore requires a lot of dedication to product management (stock control, introduction of new products, etc.)
- The chosen platform is too complex and very difficult to manage.
- The platform creates a website with poor usability.
- The platform is not designed to be indexed naturally in Google or to rank well.
Causes related to the person who manages e-commerce:
- The person is not dedicated to 100% the management and promotion of electronic commerce.
- The person is not qualified to properly manage and promote e-commerce (lacks training).
- The person does not have the personal skills necessary to manage and promote e-commerce (tenacity, empathy with customers, service vocation, etc.)
- The person is not motivated and does not handle it with the necessary enthusiasm.
Causes related to the way of displaying the product we want to sell
- The product descriptions we publish on the website are the same as those in accounting or stock management software, that is, they have no soul and do not provide additional information about the product.
- Our product images are amateurish and do not have the same quality as those of our competitors (or even worse, we took the photos ourselves with our mobile phone).
- The product does not have the quality required by users.
Market/Environment Related Causes
- The price of our products is out of market price (it is too high).
- There is no market for our product or it is not yet connected to the internet.
- We are not specialized.
- Our target audience does not clearly understand our value proposition.
- The competition is fierce and we are no different.
- At the moment our clients do not have money and our product is not a basic necessity.
Causes related to the financial management of electronic commerce
- We have not correctly forecast expenses and income.
- Expenditure and income have been out of balance for too long and there is no more capital left to support salaries.
- Instead of replenishing the products sold, we have spent money paying salaries or promoting e-commerce.
- The salary of the responsible person is not an entrepreneur's salary and does not have a variable part.
- We pay too much for the maintenance of the technology platform.
Causes related to the promotion of electronic commerce
- Our website does not inspire confidence (the “who we are” is “cutrillo”, the website is also “cutrilla”, we do not have user opinions, we are not part of any association…).
- We don't know how Google or SEO in general works.
- We do not use other forms of promotion and rely solely on word of mouth.
- We do not use social media to interact with our customers, offer them additional information, tips to better enjoy our products, etc.
- We do not have a newsletter.
- We do not run promotions (in fact, we don't even know the difference between “promotion” and “advertising”).
This research is still ongoing and before I start working on how to combat the causes, I would like to expand on them a little more, so if you know of any e-commerce business that has failed, I would appreciate it if you could help me improve this article by answering the following survey: Survey on the causes that lead to the failure of an e-commerce. (It's super simple and won't take more than 2 minutes of your time).
Thanks a lot.
When I have it ready, I will post the results here.
Note: If you have not yet responded to the survey on the characteristics of executives of companies that implement e-commerce, please, I would also appreciate it if you would respond to this other survey: https://www.surveymonkey.com/s/57WC9JC
