For every Facebook, there are 10 more "fail-books". But how do we know this? How do we know that there are many more e-commerce failures than successes? First, it is really easy to set up an e-commerce site. Every e-commerce course that charges hundreds of dollars to learn how to easily set up a simple e-commerce site would tell you this. Judging by the number of people who signed up for such courses back during the dotcom bubble, there should be millions of them.
Instead try to name the reputable ones that people keep going back to. Off the bat, i could only come up with 12. There might be only hundreds of successful e-commerce operations in the worlds. Note that this prediction does not include companies who are already "brick and mortar" operations and whose e-commerce sites are merely a supplement and an extension to their regular offline operations. So what happened to those that were not successful? We never hear from them again. The news and other official sources keep harping on those who were successful, seldom do you hear about the failures, and this leads to the perception that e-commerce will lead to big bucks.
So how do they fail so epically? Here are 5 reasons
1) Lack of a profit plan
You want to attract people to buy from you. The easiest enticement is customer benefits. Free shipping, lower price, extra goodies, you name it. These are surefire ways to entice a customer and cause him or her to choose you over your competitors. But some people go too far. A sad example would be "pets.com" which dealt in pet accessories and supplies. In order to attract customers, they sold their products at insanely low prices and free shipping for bulk purchases. This got a point where they were generating a loss and had to shut down.
Dumb.
2) Bad site design
Online equals speed. But what if it takes longer to find a product you want in an online store than in a brick and mortar store? Badly designed search functions and lengthy list turn people away. People who visit online stores want speed and efficiency. They want categories that accurately describe the product. Just putting a bunch of links of a page is not good enough. Last but not least, is the aesthetics. A plain white page is just boring, but having everything in bright gaudy pink is clearly overdoing it. A simple but sincere design is all that is needed. Look at the successful ones like amazon.com and you will see that the colors are very basic, the site is not decked out in bells and whistles and it is easy to navigate.
3) Not building clientele or community
Customers are one of the best forms of publicity. If they liked the site, they will tell others about it. Having a system where customers can share reviews or feedback about products and services can help to improve the e-commerce operation. Many e-commerce sites that fail do not have this function. The first implied message is a lack of openness and customers hate that. It implies that the e-commerce site might have something to hide, like maybe it is scared that customers will complain about bad service or products. Having a feedback system and an open forum to build community shows confidence in both the business and the customers. That confidence will be returned in kind.
4) They waited too long
Market saturation was something that caused many online e-commerce sites to go bust. Most of those that were left were the "first movers" . Customers adore innovation, they love sites that offer something new that no other competitors offer. One bad mistake that sites make is that they do not get their innovation out into the market fast enough. Sure one has to do research and fine tune everything, ensure all is in good working order. E-commerce is not without risks and it would be foolish to "jump in" impulsively. However, it is also foolish to wait too long. Someone else might have already come out with a similar innovation before you thus effectively making him the "first mover" instead of you. He gets the recognition and you are stuck with the unfair label of "copycat".
5) They did not wait long enough
Research, research, research. Market research is very important. Any good e-commerce operation has to know what the consumer wants and whether there is a substantial market size for the products or services that the site is going to sell. You do not, for example, set up a business to ship chicken from China during a bird flu outbreak. There has to be a demand, and may e-commerce operations die out because they offer products and services that hardly anyone had an urgent need for. A good example is "photopoint.com" which dealt in physical camera film negatives. Too bad they jumped into the fray right when digital cameras were becoming popular. No one had a need for physical film.
And here are what i feel are the top 10 e-commerce failures
# 1 Webvan.com (1999-2001)
# 2 Pets.com (2000)
# 3 Kozmo.com (1998-2001)
# 4 Flooz.com (1998-2001)
# 5 eToys.com (1997-2001) # 6 Boo.com (1998-2000)
# 7 MVP.com (1999-2000)
# 8 Go.com (1998-2001)
# 9 Kibu.com (1999-2000)
# 10 GovWorks.com (1999-2000)
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