Setting up an e-commerce business? What you need to know

If you are considering launching an e-commerce business, it may be quite sobering to consider that 90% of online businesses fail within just 120 days.

According to research*, the main reasons these businesses give for their failure include:

  • Poor online marketing (37%)
    • Lack of search visibility eg because there were bigger players outspending them in the market (35%)
    • There was little to no market for their products (35%)
    • They ran out of cash (32%).

    What each of these reasons tells us, is that these online businesses failed because the owners failed to build an effective strategy for their online business before launching.

    If you are going to move into the online space, whether you already have a bricks and mortar presence or not, it should go without saying that you need to develop a viable strategy first. That’s a strategy that includes:

    • Research on your market and market needs – what problem are you trying to solve and is the market for solving this problem already saturated or are there niches that you can fill?
    • A clear plan on how your product or service solves the problem you’ve identified. 
    • A well articulated unique value proposition – why would someone buy from you and how is your offering differentiated from your online competition? This is as important for an e-commerce business as it is for any other business.

    For example, we have a client who sells the most beautiful sympathy hampers and gifts. The online hamper market is heavily saturated but our client has a clear niche in the condolence gift sector. The problem they are solving is how to send your heartfelt condolences in a meaningful way when it’s hard to find the right words and you don’t want to just send flowers. Within this niche, they are able to cost-effectively gain visibility. (Check this wonderful company out at

    • A detailed understanding of your online competition. You need to know who your competitors are, what they are doing and how they are positioned against you. You can learn a lot from your competition, particularly if they are successful online, and you should be using all the data you are able to access.

    You will be competing against these companies for exposure in search engines and in marketplaces so you need to work out how you are going to get visibility and deliver a better, more aligned customer experience.

    You also need to have a clear assessment of your Cost of Goods Sold. You need to accurately
    understand what ROAS you will need to achieve in your digital advertising to deliver your
    desired level of profit. Google and Meta advisors, in our experience, will often underestimate
    the ROAS you require so ensure you have a handle on the full cost associated with your online

    Customer-centric, cost-effective logistics are also vital, particularly post-COVID where customer demands are high. You will need to be meeting customer expectations on:

    • Fulfilment – are you going to fulfil orders yourself, use an external fulfilment service or drop ship from warehouses, remembering that today’s customers demand speed, want items to be in stock and are increasingly wanting express shipping times.
    • Shipping costs – customers are now demanding ‘no’ or ‘low’ cost shipping. The definitely don’t want shipping costs to be around the same price as the product they are buying and will get very frustrated if they have to enter all their details into the cart before being advised of an unacceptably high shipping rate.
    • Returns policy – customers want to be able to return anything they order without question and without cost to them. 67% of buyers check the return policy before buying but 92% will buy again from the same site after a good returns experience. Other than for elite, rare or high value items, these terms are becoming non-negotiable.

    Your choice of platform for your e-commerce site is also a critical consideration and the platform you choose should be influenced by your goals and what success will look like for you. There are many platforms available such as Shopify, Woocommerce and Square as well as more customisable options. Whatever platform you choose, it should be:

    • Scalable – you don’t want to be rebuilding in a few years if your online business succeeds.
    • Fast – research says that 40% of website visitors will wait no longer than 3 seconds for a page to load and ideally, you should aim for less than this.
    • Flexible – personalised search, flexible payment options and an engaging user experience are all vital.
    • SEO friendly – not all templated websites have great SEO so beware of platforms that will be difficult to optimise in the search engines.

    Once you have all these factors in order, you then need to start looking at analysing your customers and automating your marketing. Read our other story in this newsletter on customer personas and omnichannel marketing for further suggestions on marketing your business online.

    If you’d like an obligation free chat about your ecommerce business, please contact us on 02 4322 7559.

     *Research project by Forbes, Huffington Post, and Marketing Signals