Why do some online stores succeed while others failSolutionT

Why do some online stores succeed while others fail?

Solution

There can be a lot of reasons for the success or failure of online stores based on the geography and the customer base that they cater to. However, there are some common causes of success or failure of these businesses such as:

1. Investment/Returns failure - Some online business fail to attract investments, for example, Series A funding is the initial funding which is usually utilized on the inital setup stages while Series B funding is used for expansion and market share capitalisation. In certain cases, the business may not provide the returns which are expected by the investors and the funding may eventually dry up. So, the investment is dependent on the potential return which can be generated by the online business and the success or failure of the business may depend on the perception of the investors of its future returns and worth.

2. Inventory Issues - Being an online store, there will always be inventory issues such as storage and turnover, The sales are unpredictable and it becomes difficult to take a decision regarding the level of inventory which is required to be stored. The businesses with better data analytics are more prepared to handle the variation in inventory levels.

3. Product/Service saturation - For an existing product or service, too much competition leads to product or service saturation. This may be poison for a business in the initial stages while a long time player may seek to eliminate any growing competition by capturing as much as the market share possible. The success and failure of the business in such a situation depends on its capability to adapt to the needs of the customer.

4. Poor social media presence - In a world where most adveritising is done on social media, an online business cannot afford to lag in terms of the content or presence on social media. The media becomes its important point of contact between the customers and the business which determines the level of involvement of the business in dealing with customer complaints or improving their level of satisfaction.

5. Poor website design - A poor UX / UI design of the website may fail to attract customer attention. Therefore, it becomes very important that the online business has a unique design which highlights the ethos of its entire presence.

6. Advertising - It is important for the website to reach maximum potential customers to increase website traffic. A well reviewed product by a customer creates a sense of genuiness of the website and its users. Inaccurate reviews or no reviews may hurt the chances of a customer considering the product from the site.