January 31, 2023
min read
Written by: 
Nikolaus Hilgenfeldt
Ecommerce Basics

8 Reasons Why Ecommerce Businesses Fail & Ways to Avoid It

Did you know that the whooping 90% of ecommerce startups fail in the first 4 months of doing business?

Even though it's effortless to start an ecommerce web store these days, it can take a lot of work to keep it going, grow it, and keep up with the competition.

First, it's essential to understand the market before setting high expectations for your new business.

Most people, though, are more interested in what they can get from running their own business than figuring out the business requirements and necessities in their chosen field.

Today, we'll talk about the top 8 reasons why ecommerce businesses fail and what you can do to prevent that and ensure steady business growth.

But first, let's look at why people start ecommerce businesses and at some statistics that show how successful they can be if done right.

Let’s start!

Why Do People Start Ecommerce Businesses?

Did you know that it's estimated that by 2025, online purchases will reach a total of $7.4 trillion?

There are progressively more online ecommerce shops every year.

Just in 2021, it was projected that global ecommerce sales would total $4.91 trillion.

The growth rate of the expansion picked up, suggesting that the rate of growth of ecommerce sales is not going to decrease any time soon.

Part of the reason for this expansion is mutual comfort for both store owners and customers. 

The most common perk of doing business online is that you can do it while sitting on the couch. It can get much more basic than that.

Here are the leading 7 motivators for people to strike out on their own and launch an ecommerce website:

  • To market a unique good or service.
  • To become their own boss and do their own work.
  • To be able to work remotely and on a flexible schedule.
  • To broaden their market and reach a global audience.
  • To achieve financial independence and passive income.
  • To profit from a market opportunity or trend.
  • To be in charge of their own brand and clientele.

Based on this analysis, it's reasonable to assume that the ecommerce industry has lucrative opportunities for those who understand how to tap into it.

Now, let's look at which pitfalls to avoid with your startup to get your business off to a good start.

8 Reasons Why Ecommerce Businesses Fail

In this section, we looked at the top 8  reasons why ecommerce businesses fail, how they might hurt the business, and what could be done to avoid them.

1. Weak Product Demand

Weak product demand occurs when there is little interest in or demand for a product in a given market.

For instance, you can’t presume that a certain product will be successful on the dealer's subjective evaluation of its usefulness.

Impact on Business

A weak product demand can result in poor sales and income.


Conduct research into which products sell best by following marketing trends or analyzing your own sales history.

Here's an example of the top ecommerce product categories that generated the most revenue in 2022 in the US:


2. Poor Product Quality or Unreliable Vendors

Poor product quality describes goods that do not comply with the requirements or specifications and are likely to be flawed, underwhelming, or defective.

On the other hand, unreliable vendors are suppliers who are consistently unable to deliver goods or services in the required quantity and quality on time

Impact on Business

Both factors (poor quality and unreliable suppliers) can negatively impact a company's reputation and profitability.


There is no one-size-fits-all on how to get a step ahead of poor product quality and unreliable vendors. Thus, I will list several crystal steps to consider for future product purchases:

📌 Research the product and compare it with similar products from other vendors to get a good idea of the quality you can expect.

📌 Look for customer reviews and ratings online to understand how other people have experienced the product or vendor. 

📌 Look into the vendor's background, history, and reputation to see if they have a good track record of delivering high-quality products and good customer service.

📌  Ask for references from other customers and suppliers to get a sense of the vendor's reliability and quality.

📌 Request samples to evaluate the product quality and the vendor's reliability in delivering a consistent product.

📌 Verify certifications and accreditations that demonstrate their commitment to quality.

📌 Negotiate a contract with warranties and guarantees to protect your interests.

3. Ineffective Marketing and Sales Strategies

Ineffective marketing and sales strategies refer to plans and methods for selling a product or service that don't reach the right people and don't generate enough interest and sales.

Impact on Business

Ineffective marketing and sales strategy could result in low brand recognition, weak demand, and reduced company revenue.


Make a good marketing and sales plan that helps you reach your targeted audience.

First, make sure you know your target audience's pain points to build your sales strategy around them.

This includes putting up ads, newsletters, and social media posts about your products.

Also, you may need to keep an eye on your strategy and make changes to it often, but having a well-thought-out plan will give you a solid base to build on.

4. Insufficient Resources (Capital or Funding)

The term "insufficient resources" is used to describe a situation in which a business does not have enough of the necessary funds (e.g., cash, investment) to maintain its current level of activity or to pursue any planned increases in size or scope.

Impact on Business

A lack of funds can restrict a company's ability to expand into new markets, hire key employees, and pursue other strategic goals. 

Additionally, it may have an effect on the company's financial health and its ability to meet its obligations.


Whether your startup is successful from the get-go, generates a steady stream of revenue, or is saddled with early-on losses, you must maintain a steady cash flow to succeed.

While it's true that getting a traditional loan can be challenging for a startup engaged in ecommerce, the market now offers a wide variety of viable alternatives.

Learn about your choices so you can pick a working capital loan that best fits your needs.

The asset-based loan, for example, is a great way to get a financial boost and set up fast cash for many different business opportunities.

5. Weak Business Model

When a company's plan for making money doesn't work or isn't sustainable, we say that its "business model" is weak. This may occur because of a small target market, high costs, lack of pricing power, or an ineffective pricing strategy.

Impact on Business

A company's growth, profits, and exposure to risk can all suffer from a flawed business model.


Although a weak business model can be a major obstacle for a company, there are several ways to strengthen it:

Reconsider your value proposition and find new ways to serve your target market.

📌 Focus on customer service, product improvement, and a positive customer experience.

📌 Diversify revenue streams to reduce business risks and increase stability.

📌 Use automation, waste reduction, and efficiency to streamline your operations.

📌 Invest in R&D (research and development) to find new opportunities and beat the competition.

📌 Consider partnerships or collaborations to open new markets, resources, and business models.

These solutions can strengthen your business model, boost revenue and stability, and position your company for long-term success. It's crucial to regularly assess and update your business model to stay relevant and practical.

6. Poor Website Design and User Experience

In this context, "poor website design and user experience" means a website that is not user-friendly because of its poor layout, visual design, or overall usability.

Impact on Business

Poor website design and user experience can lead to a low conversion rate, decreased traffic, and decreased revenue.


It's important that your website accurately represents your company.

To build trust and credibility in the eyes of your target audience and potential clients, you need to put time and money into developing a professional website design and providing a satisfying user experience.

Excellent customer service and a well-thought-out design are the two pillars of a successful business.

7. Inadequate Order Processing and Delivery Procedures

Poor order processing and delivery methods are those that are either insufficient or inefficient when it comes to taking in, processing, and delivering orders placed by customers.

This includes errors, delays, or lost orders.

Impact on Business

Customers are less likely to reorder if they are unhappy with the ordering and shipping processes.

In addition, poor order and delivery processing can damage the public's perception of the company and its products.


Investing in software that can aid in inventory management and shipping can help ensure that other areas of your business are not negatively impacted by your inability to handle these tasks effectively.

For example, if you're having trouble with the order-to-delivery process, you can count on Fleetroot's excellent delivery solutions.

8. Mismanagement or Lack of Business Experience

Mismanagement or lack of business experience is when a company's operations, finances, and resources are handled inefficiently or by people who don't know how to run a business.

Impact on Business

Mismanagement or lack of business experience can lead to bad decisions, bad use of resources, and less efficiency in running the business

It can also make it hard for a company to carry out its strategy and reach its goals, which can hurt its growth and profits.


Hiring a professional consultant or mentor with experience is the best way to deal with management mistakes or a lack of business knowledge. 

A consultant or mentor can help steer a company in the right direction by giving advice and offering support. 

They can aid in the detection of trouble spots and the formulation of corrective measures

What’s more, they can also provide training and tools to help you develop your management chops to take your company to the next level.

Ecommerce Startup’s One-Way Ticket to Success: Maintain a Consistent Flow of Funds

This list of the 8 most common reasons why ecommerce businesses fail should help you avoid potential snares in your business plans.

However, you can only meet these objectives by establishing a reliable and stable cash flow.

Having a steady cash flow will not only help you avoid the problems mentioned above, but it will also give you room to grow.

You can only build a formidable brand with a trustworthy and dependable growth partner. Myos is one of these corporations.

What Can Myos Offer To You?

Myos is a growth partner for business owners and merchants who want to boost their financing in a safe way and don't want to deal with complicated procedures or guidelines.

Business types that are eligible to apply are those that:

✔️ Are signed up in either the UK or the EU.

✔️ Are working for at least 6 months.

✔️Are selling online for at least 50 days (e.g., on Amazon, eBay, online shop, etc.).

✔️Own goods that can be used for at least a year.

✔️Provide a list of the items with the lowest price per item of 5 EUR (EU) or 5 GBP (UK).

✔️Already have goods that are available now.

✔️Don’t include COVID-19 products, brand-name watches, ammunition, or weapons in their project.

If your company qualifies for a loan, Myos ensures you can take advantage of the following benefits:

👍 We use only goods as collateral.

👍 Repay the loan whenever you want (no annuities are included).

👍 Don’t have to bother with paperwork (AI will analyze your products).

👍 You can choose from 2 different types of funding: purchase or stock.

👍 Get a loan between £10,000-£2,500,000.

👍 Applying only takes 3 easy steps.

👍 Quickly get a quote (24-72h).

Why Trust Us?

The collateral you put up will be sold if you don't repay the loan. 

Thus, you have one less thing to worry about.

Plus, we will never reveal any of your company's private details to the supplier.

Get a non-binding, free offer today to measure and compare business growth costs.

Keep Learning

The Only Ecommerce Business Loan Guide You Need in 2023

6 Steps To Create An Ecommerce Business Plan

7 Best Asset-Based Finance Companies To Consider in 2023

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