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Why eCommerce Businesses Fail?

By: JosiahDec 08, 2023Ecommerce
Why eCommerce Businesses Fail?

So you wanna try your luck at an ecommerce business huh?

We can’t blame ya.

There are some people that have really killed it with eCom and are still making money to this day!

It’s no wonder why you’d want to see if you could get a little slice of the action.

But just because you start an eCommerce business doesn’t mean that it’s all lambos and mansions after that.

In fact, running an ecommerce business is a lot tougher than most people realize, and we’re sure there’s a little doubt in your mind about it too…

Otherwise you wouldn’t be here.

Unfortunately, there is a lot more to ecommerce than meets the eye. Paid ads, competition, capital, etc…

The list goes on.

But today we’ll just focus on the TOP 5 REASONS ECOMMERCE BUSINESSES FAIL.

And after that, we’ll talk about an online business model that crushes ecommerce when it comes profitability!

However, without further ado, let’s hop into it!

Here are the top 5 reasons why most ecommerce businesses fail.


This Top 5 Reasons eCommerce Businesses Fail review has been thoroughly researched with information and testimonials that are available to anyone in the public. Any conclusions drawn by myself are opinions.

Why Listen To Us

My name is Josiah, and this is my Dad, Joel.why listen us

Together, we make up the team here at Scamrisk.

If you’ll let me bother you for two minutes, I’d like to quickly explain why I’m even here writing this review.

In early 2020, I had just graduated from college & had no real career prospects.

I knew I was destined for something more, but I had no clue how I was going to make it happen.

I had this sinking feeling in my gut all the time… like the “big man upstairs” had accidentally given me the version of life where I’d be mediocre forever, instead of the one where I was, ya know – happy & fulfilled.


I had fiddled around with some different online businesses in college:

Some random MLMs, a bit of affiliate marketing, a (failed) dropshipping store or two, all the usual suspects.

Even my dad had been involved in MLMs back in the day… selling knives & other random nonsense people (probably) didn’t need.

All I really wanted was to find something that was going to actually work for me.

Maybe those things had worked for others, but for me it all turned up a fat “0” in the bank account department.

So I searched! And searched… and searched… and searched…

And eventually, I somehow stumbled upon a program that promised to help me build an income online (read about it here if you’re curious).

I didn’t really want to be “rich”.

The thought of making a reliable $5K per month & not having to worry about clocking in to a 9-to-5 ever again was all I needed.

Sure, there were people in the program doing high-6 and low-7 figures per year… but that wasn’t what I was out for.

I just wanted to provide freedom for myself, and if I was lucky, take my family along for the ride.

Fast forward a few days and a few phone calls & I was enrolled!

Here’s the first “money making website” I put up:

why listen us gif

I built that site in 2020, and it still makes me $1,500 per month. It’s a basic 5 page website I built based on a template the program provides.

The best part to me? My dad and I get to do it all together!

So between the:

  1. Ease of reaching $5-$10K per month in income online

  2. Straightforward-ness of the system to do it

  3. Fact that I get to do it w/ my family

Is why I recommend local lead generation as my #1 business model for making money online.

Sure, it takes some work and dedication – but anyone that tells you that there’s a business out there that requires no work is selling you a lemon.

I’m not saying you need to sign up for the same program I did, but I would definitely recommend giving the business model a peek!

Poor Marketing

top 5 reasons why most ecommerce businesses fail

Look, you could have a killer product, you could even have the best price online, but unless anybody sees it…you’re not going to get any sales and eventually you’ll shut down.

This is where many different people fail.

Unless you know how to do SEO all by yourself or have time to learn it all while also simultaneously running your business…you’re not gonna get anywhere.

You can see how that’s a big issue right?

I mean, when was the last time you purchased something from a site that was on page 3 or 4 of Google?


Now you might be saying SEO is for the long game, I can run PPC in the meantime.

Although that’s true, PPC is a lot harder to run than you’d imagine.

The prices are constantly changing and if you’re not careful you could quickly wind up in the red for targeting the wrong types of keywords.

There’s a huge difference between buyer intensive keywords and window shopping keywords.

And if that wasn’t bad enough…

It is now pretty common for shady competition to go in and waste all your clicks and blow your budget!

So let’s recap, most people who start ecommerce stores don’t have time for SEO and need to use PPC in the short term.

PPC is a lot tougher and get quite expensive quite quick.

And competition will waste your hard earned advertising money!

It’s probably not the bright outlook you had at first huh?

Too Much Competition

top 5 reason why most ecommerce businesses fail

Yep, there is just so much competition in ecommerce it isn’t even funny.

Have you heard of that one platform called Shopify?

Of course you have!

It has over 500,000 active stores hosted on it now.

We could make you even feel more gut wrenched and talk about how many other ecommerce stores there are that aren’t on Shopify…

But we have a feeling you get the point.

Let’s just do some quick math…

We’ve already established that there are only 10 spots on the first page of google, and that nobody really buys stuff that isn’t on page one.

So what are your odds for any given niche?

Well considering that most stores all offer the same products…all we have to do is take 10/500,000

That means there is only a .002% chance for you to land on page 1.

With the Digital Leasing model we’ll talk about later…you’ll only have maybe 20 competitors in a given area…but more on that later.

The point is that because the barrier of entry is so low, that means a lot of people can get started.

When you see all those others involved right at the same point you are…it gets discouraging, and a lot of people quit because of how hard it is to break the proverbial glass ceiling.

And that leads us to our next point and why most people can’t ever break through the ecommerce glass ceiling…


Not Enough Capital


Yep, this is quite possibly the biggest reason why ecommerce businesses fail.

Ecommerce businesses require a huge upfront cost. In most cases we’re talking at least $10,000 and that’s just for inventory…not including marketing or shipping.

Beyond that most courses that teach you will also cost a couple thousand dollars themselves.

To be frank, not a lot of people will be able to front all that dough.

We’re sorry if you weren’t expecting all those upfront costs, but that’s the reality. Gone are the days of starting a profitable ecom business with $500.

But we don’t blame you for thinking you could start an ecom business for super cheap…

No instead we blame all those flaunty youtube ads and youtube videos that mislead you into thinking you can start an ecom biz without a hefty investment.

You can find them if you look hard enough, but very few ecommerce youtubers will confront this start up capital issue…they all kinda just gloss over it.

And for good reason…

If a lot of people understood just how much money you’d have to front to get started in ecom, people likely wouldn’t even join the course they’re probably selling!

Sad but true.

Too Early

ecommerce businesses fail

Ecommerce requires a lot of research. You want to make sure that you pick the right product to buy and start selling.

Unfortunately, sometimes you can have the right product, but sell it at the wrong time.

When this happens the sales won’t be coming through and you’ll have lots of inventory left over that you’ll have to either keep…or sell at a loss.

Most often times people sell at a loss so they can just move on. At least, that’s what the big retailers do…

If you’re just getting started, a mistake like this could be what cripples your whole operation!

And that’s the reality for most people.

They take everything they have and throw it all into one product.

When it doesn’t hit, they sell for a loss and exit the business altogether.

Poor Customer Service

reasons for ecommerce businesses failure

The last big reason ecommerce businesses fail is because of poor customer service.

When you’re a one man show and you’re trying to ship and acquire products all over the world, it can get busy pretty quick.

Because you’re not personally delivering these products to your customers doors there are a lot of issues that can arise in that process.

Unfortunately, smaller, brand new, ecommerce businesses are notorious for poor customer service when these issues occur.

This usually occurs because it can be difficult to get in touch with foreign suppliers, especially during Covid-19, and that hurts with communication to the end customer.

As you can imagine, a customer will only give a seller so much time before they ask for a refund and leave a bad review.

And reviews are everything!

The first couple people might buy when there’s no reviews, and that’s fine…but when real reviews start rolling in, if they’re not positive, then you’ll not be making many sales.

That’s just the reality of the situation.


reason for ecommerce businesses failure


Again, we didn’t want to rain on your parade, but we also didn’t want you to be misinformed and dig yourself into a hole.

And we didn’t even mention about just how bad the shipping issues can get during the pandemic.

But we’ll save that one for another time.

Oh yeah, but what you’re probably wondering…

What’s this online business model that just absolutely destroys ecommerce?

Digital Leasing

Digital Leasing

It’s pretty much exactly as it sounds. You get the equivalent of rent payments for websites.

Here’s how it works.

Find a local owned service based business and decide to build a website and rank for it.

When the leads start coming in, pass them off to a business owner and start collecting the checks.

Is it really that simple?


You see compared to ecommerce, you don’t have to run any paid ads to a site. So, you’re only out of pocket like $8 a month for hosting and $11.99 a year for your domain.

And if you can’t afford that, well maybe we have other issues we need to talk about.

But seriously, lead generation sites make bank and they’re extremely passive.

Once you have them ranked, you don’t have to touch them again because they run on autopilot.

But what about the competition you ask?

Virtually nonexistent compared to ecom.

With ecommerce you’re competing with literally millions of people globally.

With lead generation we’re talking maybe 20 of the same type of business in an area. Most of which don’t know anything about ranking a site.

It legitimately couldn’t be any easier.

The best part?

These sites are worth $500-$1,000 on average a month!

If you had just 10 of these sites, you’d be making $5,000-$10,000 a month from passive income!

And your margins are literally 90-100%!

But that’s enough of that…

Check out this business model that absolutely crushes eCommerce!

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