The E-commerce industry is booming, all thanks to innovations in digital technology! But this comes with an immensely competitive market, so much that newly launched eCommerce businesses have a failure rate of more than 80 percent, as per reports by Failory.com. So if you’re looking forward to expanding your traditional business online or starting a new eCommerce business, you must be aware of the possible reasons behind the high failure rate. In this article, we intend to discuss the three major factors contributing to the failure of an eCommerce business and the importance of a business plan in the growth of your ecommerce business. To start with let us take a look at the three main reasons mentioned below:
- Low Barrier To Enter Into The E-commerce Industry Space
Setting up an e-commerce business is a few clicks away in this technology-driven era. There are websites like Shopify and WIX where you can easily set up your e-commerce retail store in a few hours without any coding. This has resulted in hundreds of thousands of people launching their own e-commerce businesses while sitting in their comfortable zone, eventually making it an overcrowded market with high rates of failure. To inform you, there are an estimated 24 million websites today in the world. Well, you see the competition and it is really hard to survive.
- High Competition and Low Margins
The very nature of the e-commerce industry that attracts is its scalability. However, this gives the big bulls or large cap companies a competitive advantage over others through the economics of their scale. They produce or manufacture in bulk, purchase in bulk, and sell at higher margins of profit to the world. Specifically, when it comes to product businesses, eCommerce can be scarily competitive for small-scale businesses as they get very low margins comparatively and looses when it comes to pricing strategy. The market is open to everybody today and it is a fact that big businesses will find it easier to acquire more customers easily. So it is very important to have a practical as well as implementable plan when it comes to launching your eCommerce business.
- Difficulty in Getting Traffic
Generating organic traffic on a consistent basis to your website is really a tough thing to achieve for about 90 percent of the business owners. You need to get organic traffic as well as paid traffic in order to thrive or survive in this eCommerce marketplace. You need a well-crafted business plan and It is important to write from the perspective of the audience when writing it. Next, decide what the project is to accomplish and target the right audience.
Importance of Business Plan
- Its not just numbers, but also strategy:
As the name implies, a business plan describes how a business-usually a startup-defines its goals and how it intends to reach them. From a marketing, financial, and operational standpoint, a business plan sets out a roadmap for the company. It answers the three W- why, where & what. Why do you wish to sell a particular product, what are the perks and threats, where and to whom you wish to sell the product.
- It acts like an early warning signal to avoid failures:
Almost any successful ecommerce startup will tell you that their success is due to a well-crafted eCommerce business plan, and the same goes with the reason for failure. The eCommerce industry events are reaching a new high every year, making it more crucial to know what opportunities are available for crafting a new business plan so that your startup or business expansion does not fail. So before you head on your Ecommerce journey a proper business plan is essential for you to scale your business and defeat all the possibilities of failure.
- Smart plannig of your expenses and investments:
For instance, you plan to sell a particular product. You need to keep in mind that things like website development, SaaS softwares required, product photoshoot, uploading enhanced images on website, digital marketing, social media marketing, SEO (Search Engine Optimization), content writing, competitive pricing are some of the key aspects to be taken care of while planning. It is a hard task to be done but still achievable if managed properly. But why do the hard task when you can easily oursource it and you could just focus on your core strengths. Yes, the key to survive in this competitive world is to outsource services as it will cost you less and provide more. Services such as photography, social media strategy, warehousing, logistics, digital marketing, purchase, etc. can be easily outsourced through third parties. It will help you move forward swiftly through the market hurdles and achieve your goals.
Why choose YRC
Your Retail Coach, YRC is an ecommerce consultancy firm focused towards providing strategy for growth, consistency and sustainability to your ecommerce business. We have years of experience in dealing with hundreds of retail & ecommerce businesses across the globe, helping them evolve as a leader in their respective sectors. Be it SOPs, finance, Business Process Automation, business planning or anything related to retail & ecommerce, we fulfill our responsibility as a progressive firm. For more information reach out us today itself.
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