10 Reasons Why E-Commerce Fails

This whitepaper covers ten common reasons why e-Commerce fails and provides readers
with advice on how to avoid these pitfalls.

1. Lack of Strategic Direction
When strategy is not properly accounted for, the “spray and pray” approach is often taken. In
other words, a website is created that tries to be everything to everyone. What you end up
with is a website that fails to adequately engage your target customers or meet their
expectations.

An e-Commerce strategy is like any business strategy – it requires research, planning and
the right execution to deliver for your business objectives and the needs of customers.
Businesses must take a strategic approach just as they would offline. For example, your
product or service is designed to satisfy the particular needs of your target segments, and
your website is no different. A website (and its marketing and advertising) should reflect the
targeting you have established in your offline business through the content, functionality and
design of your online assets.

2. Failure to Manage Customers 
A common problem for many organisations is that they only consider their own perspective
rather than that of the customers. This occurs in all types of online assets, including
marketing material, web copy, social media, newsletters and online retail websites. To avoid
falling into this trap, organisations must learn from customer experiences, preferences and
their behaviour.
For example, business can:

•  use analytical tools like Google Analytics or Omniture to track where visitors are referred from, what interests them on the site or where they are leaving the site

• survey or poll visitors 

• develop communities around their product or service through social networking sites and forums

To make the most of this opportunity, organisations must also tap into this customer data on
a regular basis. This data can then be used to refine strategy.

Online, organisations should provide the opportunity for visitors to sign up for newsletters,
subscribe to blogs, participate on social media (and then leverage this activity to direct users
to your website), and undertake personalized direct marketing campaigns via email to keep
customers informed with useful information based on what you know about their
interests/activities. With multiple opportunities to communicate with customers and hear from
them, your organisation can improve its eCommerce activities in a way that benefits for your
business and its customers.

For example, use customer data to differentiate the product/service offering for various
target segments on your website, such as a different landing page with a customized
message for each customer group.

3. No Personalisation
One size does not fit all. Your website should provide a variety of products, prices and styles
for different customer segments to increase probability of purchase - just as you would if you
were operating offline. Provide differentiated pricing and promotions for the various
entry/point of sale sections of your website (as you would promoting your product/service
offline) and tailor the online experience as much as possible by allowing your visitors to tell
you in detail what interests them. You can also use their past behaviour to create
personalised communications that reflect their interests - there are many options depending
on the outcomes you wish you achieve. Personalisation is a powerful tool that can be very
rewarding when done correctly.

4. No Incentives
It’s no secret that promotions boost sales and customers often go online because they are
looking for a bargain. If your website lacks incentives, or they’re difficult to find, you may be
losing business to competitors. Follow the same principles you would offline and offer
seasonal promotions, sales and loyalty programs which provide added perks. Online tools
like social media and email can then provide the perfect platforms to share these incentives,
depending on your customer base.
Incentives don’t always have to include discounts. Free shipping and free returns and/or instore
returns are an excellent way to add value to the customer’s online retail experience

5. Poor User Experience
Offline, customers are able to view products and services in great detail and can approach a
customer service representative with any question. Online, information should be just as
readily available. Your website and product pages should provide all of the information your
customers need to purchase, as well as a “help” section with frequently asked questions and
clearly displayed contact details should they wish to speak to a customer service
representative.
Likewise, a user interface that is confusing or hard to navigate will deter customers and
prospects and reduce repeat purchases. Targeted search, simple menu structures and
clearly labelled products are some of the basic ways you can encourage visitors to
purchase.
And as mentioned in our first point, don’t try to cater to every potential audience available.
The user experience must reflect the needs of your target customers. Taking too broad an
approach is a road to failure.

6. Payment Gateway Issues
To continue from the previous point, the checkout process is a common reason for
eCommerce failure. For example, a limited number of payment options, a convoluted checkout
process, or poor post-transaction communications can prevent customers and prospects
from purchasing or coming back again.
Offline customers are provided with cash or card alternatives and a receipt for record of
purchase. Similarly, online businesses should provide a wide range of payment options to
reference/credit card receipt details to provide assurance that the transaction has been
recorded and documentation is available for personal records. It sounds simple but the
complete eCommerce customer experience, from search and entering the site through to
post-purchase experience, allows for many missed opportunities along the way!

7. Poor Technology
Just as a shabby, unkempt retail outlet screams poor quality, outdated technology also
indicates a product/service that is behind the times. From the user’s perspective, customerdriven
changes in eCommerce technology occur constantly and online retailers are expected
to keep up. Your customers will turn to your competitors for products and services if they are
more accessible, or provide additional benefits (e.g. product comparison capabilities, product
reviews, 1-click shopping cart, social media activity).
From the business perspective, website technology which streamlines distribution, simplifies
stock control and increases overall organisational effectiveness through integration with
CRM databases and accounting systems can increase operational efficiency and reduce
costs, providing players with a competitive advantage over those who lack such technology.
And while it may not be glamorous, the technical requirements of your website are
absolutely essential. If you don’t understand the tech-side of eCommerce, find a provider
that does. User volume, database volume, security requirements, page loading times, and
other technical aspects may make your eyes glaze over, but don’t neglect your technology.

8. Chasing Trends
There are certain trends and tools on the web that can be tempting to dive into because you
want to appear to be on the cutting edge and up on the latest technology. And it’s important
to stay on top of the latest trends if they can enhance your customer’s experience in a way
that supports your business objectives. For example, the mobile web is more than a passing
trend, but it still requires some careful consideration before jumping on the bandwagon. The
rise of smartphones means customers can interact with your eCommerce website at anytime
and anywhere – but that doesn’t mean you need a mobile app!
A web/eCommerce strategy acts as your foundation and prevents you from investing time
and resources in an area that may not deliver your business objectives. Spread your
resources too thin and you will take away from other areas that will help your business
succeed online. And while a strategy should be flexible enough to allow for new tools and
platforms, it must also provide the foundation for why a new tool or platform is the right one
for you.

9. Lack of Trust
Trust and credibility with your customers is important both online and offline. Security issues
on the web in particular can deter customers and prospects from buying. The online
environment differs from the offline environment in that customers are required to provide full
credit card details in order to purchase. As such, businesses must provide security against
misuse of this information. Use of SSL (which enables the encryption of sensitive information
during online transactions), known and trusted payment gateways and clearly displayed
privacy policies will increase trust and credibility in the organisation. Make it simple for
customers to see that others have purchased and have had a positive experience with your
company through use of a “clients” or “testimonials” page where possible.
As is common practice offline, businesses can also increase trust and credibility by providing
tracking capability, delivery guarantees and returns policies, which provide customers with
the peace of mind that the product will arrive within the specified time period, in good
condition, and can be returned if it’s not quite right. Privacy policies should also be visibly
displayed and delivery guarantees and returns policies clearly stated.

10. Expecting Customers to Find You
“Build it and they will come” is not a strategy for e-Commerce success.
After considering all the aspects of the customer’s experience on the site, don’t forget the
earliest steps that a consumer must take – finding your website. You wouldn’t expect a new
store to bring in business without advertising and promotion, so why would you build a
website, add a shopping cart and expect it to boost business if nobody knows it exists? Ecommerce
must be supported with marketing and advertising if you want to make it part of
your business as a true channel. Activities like Search Engine Marketing and Optimisation
are essential here. Also important is a consistent brand message across targeting
communications, including both online and offline channels, in your promotional materials,
marketing campaigns, and online and offline store locations.

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