We look at the most common reasons why e-commerce projects fail.
We talk about how to approach setting up an online store, how to break the glass ceiling and leave yourself room for development based on McKinsey material and case studies from the business world.
How is e-commerce doing in the world?
According to research by IBM analysts, the pandemic has accelerated the transition from offline to online by about five years. Today, if your store is not online qatar telephone number data for a very large number of potential customers it is not online at all. Statista data indicates that at the end of 2020, there were over 2.05 billion engaged online shoppers in the world. According to experts, this number will increase by another 10 million this year.
In 2020, every fifth purchase was made online . According to Nasdaq, this trend will continue to grow – and by 2040, 95% of purchases will be made online, regardless of whether the purchase is for food, clothes or a car.
According to McKinsey, large companies began investing in the development of online sales at the beginning of the pandemic . Online sales of Nike products increased by 36% in the first quarter of 2021, and the brand does not intend to stop there – Nike plans to increase the share of direct-to-consumer transactions from the current 30% to 50% in the near future.
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Investing in e-commerce can be expensive, but companies that get their online journey right are sure to see a good return on their investment . A McKinsey study of 800 executives found that their companies saw greater revenue growth by launching online businesses than through traditional methods, such as creating new products and services.
The main challenge is implementing an online strategy: one third of consumers who have had a negative experience with a brand never return. Three or more negative experiences prevent a customer from returning in 70% of cases.
In an era where brand loyalty remains fragile and 75% of online shoppers are not tied to a specific marketplace , it’s important to consider from day one whether moving quickly at the start will be a barrier to scaling later.
Companies that try to launch e-commerce too quickly often make short-term decisions that limit their future growth. Only 24% of new online stores launched in the last 10 years became profitable and were able to expand.
5 traps that hinder your online business development
#1. Focusing only on the technological component of the project
Very often digital advertising for the food service sector companies focus on creating a technologically perfect product, omitting operational, logistics and B2B issues.
Why isn’t it worth doing?
The $2 billion consumer goods company launched an online platform to sell its goods in a DTC (direct-to-consumer) model. Managers devoted the most attention to the website, investing in design and development to meet the deadline – this was the main KPI of IT managers and the DTC department.
The site launched on time, but the company was still short on inventory: the most popular items, which accounted for more than 15% of revenue, were available at 40% of the required quantity. This problem arose because the sales and operations departments had completely different goals than the IT and DTC departments.
The development of the online product was going according to plan, but the company could not fully exploit its potential, which resulted in customers building a negative experience.
How to avoid this?
All processes and elements of the business should be designed in parallel. When choosing e-commerce as a priority, link the KPI of the online store to the KPIs of all departments that touch it and affect the final result.
#2. Creating an MVP without considering strategic goals
Often, companies want to launch a phone database product as quickly as possible and make quick decisions without thinking about the consequences. This approach can cause problems with scaling – for example, when it turns out that a new feature on the website will be needed – translation in another language or payment in a different currency – it turns out that it is technically impossible or very expensive to implement.
Why isn’t it worth doing?
A European retailer with over 500 retail stores decided to work with a partner offering a “boxed” e-commerce store solution to get sales off the ground quickly. It worked – but only in the short term.
When it came time to scale the business, the company faced the following challenges: