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Failed startups are more common than you think. In the e-commerce sector, 90% of them don't exist after 120 days. At least that's what 1,253 owners of failed e-commerce startups that were surveyed in the UK had to say. According to a new study by Marketingsignals.com, these startup owners feel the failure to survive, and thrive, is because these companies had poor online marketing performance and a lack of search engine visibility.

Crashed Startups
© Gearstd / Shutterstock.com

Nobody said founding a startup was easy. Internetretailing.net reports that, in the new study, which was backed up by publications like Forbes and Huff Post, a whopping 37% said that their failure could be attributed to an inability to compete or deliver online marketing, with 35% saying a lack of online visibility was the main factor for e-commerce startups going belly-up.

35% of those surveyed also said that failure was also down to them being too small to compete or that there is no market for their products and services. 32% said that they simply ran out of cash. Price and cost issues complete the top 5 reasons why these startups failed, with 29% of the failed startup owners saying that was why they closed their doors.

Further Reasons Why

When questioned further about the reasons for business failure, 23% said that it was due to the competition being too tough, with 19% blaming retail megaliths like Amazon for dominating such a massive share of the consumer online retail market. 16% said their business collapsed because of a lack of customer service, whilst 14% felt their failure came down to the poor team they had put together. The last reason in the top 10 reasons, coming in at 11%, found startup owners claiming their business failed because of product mistiming. They felt their products were great, but offered at the wrong time.

The Book Of Hoyle

Gareth Hoyle, the managing director of Marketingsignals.com had this to say: 

“It’s clear to see that having an online presence and being visible on search engines is a key area e-commerce startups need to focus on to ensure they succeed. As nine in ten online startups fail within their first 120 days of business, it’s incredibly important that business owners put provisions firmly in place well before launching – this must include a bulletproof search visibility and online marketing strategy, as well as ensuring there is a market for their product offering. A targeted, strategic approach to digital marketing is vital to the success of any online business in this day and age, only more so for small businesses who are just starting out. Many tools can be used to increase their brand awareness and search visibility in their first few days and weeks, where consumer trust and loyalty hasn’t yet been established.”

The Short List

Here are the top 10 reasons why e-commerce startups don't make it:

  1. Poor online marketing - 37%
  2. Lack of online search visibility - 35%
  3. Little to no market for their products or services - 35%
  4. Running out of cash - 32%
  5. Price and costing issues - 29%
  6. Got outcompeted - 23%
  7. Retail giants dominating a large share of the market - 19%
  8. Lack customer service - 16%
  9. Poor team around them - 14%
  10. Product mistiming - 11%