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10 Reasons Why E-Commerce Start-Ups Fail

In 2015, India saw 14 startups shut down. 2016 was a similar case, with 18 shutdowns in the first 5 months. Analysing their journey can give some insight for your business. It can show what approaches they tried and why they didn’t work.

Here’s What You Shouldn’t Do

  1. Co-founder Clashes

Having more than one founder opens up chances for differences of opinion. A start-up begins with only a few people, and every person counts. If everyone isn’t on the same page and don’t work together, then it’s highly unlikely that they’ll succeed. A lack of open communication and conflict of interest can be crippling to a startup.

  1. Crazy For Capital

With venture capitalists ready to pour money into startups like never before, it’s easy for founders to be tempted to raise that capital. Although this might sound like a good thing, it can actually be detrimental. Having too much capital can mess up your finances and can force you to attempt scaling your company too fast. That again creates a lot of problems on the financial front.

  1. Lack Of Expertise

The founders must know their craft. There is absolutely no way a company can beat its competitors without knowing their product or service completely. They should also understand what the customer really wants from them.

  1. Underestimating Competition

There are 1,10,000 e-commerce websites that are currently online. That’s not easy competition in any definition. When startups launch their business, it’s highly probable that there’s a more established competitor in that segment already. Without a solid idea of how to tackle that competition, and underestimating them, the startup will more than likely fail.

  1. Lack Of Originality

Startups often lack creative and out-of-the-box ideas. If the business model isn’t unique, it’s likely that customers will ignore it. Even if the idea is brilliant, there’s a very good chance that there’s other people who are also working on the same thing. This makes it pretty difficult for a company to be completely unique. In fact, even with automated online tools like website builders, website hosting, shop name generators, and logo makers, it takes a lot of creativity and hacking to come up with original content.

  1. Lack Of Passion

Getting funded, putting together a team, sourcing materials, and building a website is a lot more easy than it used to be. But there’s never going to be substitute or automation for pure passion. Without the drive to succeed in the field of your choice, you’re not going to get very far in running your business.

  1. Poor Marketing

There are a lot of examples of great businesses that failed due to poor marketing. However great your business model, product, team, and idea may be, if it isn’t marketed well, there’s no way the startup will succeed. Underestimating the importance of marketing is one of the oldest reasons that startups fail. You need to set a proper budget and allocate resources to marketing, regardless of what industry you’re working in.


  1. Over Scaling

Scaling more than necessary happens when estimates are wrong or there’s too much funding. In this case, they end up scaling more than they actually need. This leads to money leaking. Eventually, there’s no real progress happening. That’s a classic example of how not to use a resource.

  1. Avoiding Risk

Business and risk taking are two sides of the same coin. A person who is afraid of risk can’t do business. A startup that doesn’t take risks and leaps of faith will eventually fade away.

  1. Not Keeping Up

One of the biggest reasons that startups fail is because they fail to stay up to date with trends. Any business that fails to do this doesn’t survive on the market for long. It’s necessary to keep track of what the target audience is interested in. When you do that, you should position the brand and marketing campaigns according to those interests. This doesn’t include just the strategies, but you’ll also have to update the products if you’re going to adapt to a rapidly evolving market.

One Response to “10 Reasons Why E-Commerce Start-Ups Fail”
  1. Mike Lee June 4, 2017

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