Why Do Shopify Stores Fail?

Shopify has become a popular platform for entrepreneurs looking to create an eCommerce business, offering a simple and accessible way to set up an online store (check out my Shopify review to get the full breakdown).

However, despite the vast opportunities that Shopify provides, many businesses (roughly 9 out of 10) built on the platform ultimately fail. In this article, I'll explore the main reasons behind these failures and discuss common mistakes that prevent Shopify store growth. I will also provide an overview of building a successful Shopify business, from selecting the right store ideas to optimising your store for search engines with the help of a Shopify SEO checklist.

Choosing the wrong niche

When you've made the choice to set up an eCommerce site because you've had an idea that's going to change the world, there's often little actual thought about whether or not the niche you're about to enter is one that you can genuinely compete in.

And I say this as a reason to pause and think about the reality of eCommerce because it's expensive, time-consuming and to be blunt, it's brutal, especially for someone without any background in how selling online actually works!

That's because there's a lot to learn, from understanding the data to taking ownership of any rules and regulations that might restrict your web content from being displayed in certain regions of the world (or even parts of the United States). And that's on top of everything else that goes into running a successful eCommerce store, like bringing in web traffic and customer support.

Take the print on demand business model as an example. This will involve an awful lot of your time, energy and personal resources unless you find a good company to partner with because you'll have to do literally everything. And that's before you've dealt with refunds and customer problems.

Another problem that often comes back to cause eCom sites problems is using the wrong manufacturer for your dropshipping website. Whilst most niches have manufacturers and distributors that are set up to handle drop shipping smoothly and effectively, some distributors aren't able to offer things like fast shipping and won't take returns (which will be down to you).

On top of all of this, some niches are heavily restricted in how they're allowed to promote themselves, such as alcohol or CBD products. This means that you'll have to rely a lot more heavily on other channels such as social media, SEO and affiliate marketing.

Seasonality also puts a lot of pressure on the store owner because everything needs to be perfect for when the peak season comes around. You simply cannot afford to have anything go wrong whilst your season is happening.

Good, profitable niches (in my opinion as a Shopify SEO consultant) require, at a maximum, the store owner to do nothing other than print out the labels, pack the item(s) up and ship them out. There's too much to do on top of this to consider any other type of model unless the profit margin is really big.

Finally, it's worth mentioning that if you're considering entering a niche that has seasonality, such as golf or gardening (especially in the UK), then you'll be having long periods of very little traffic and sales.

Poor product quality

This should be obvious so I won't spend too much time here, but by having a poor-quality product you're setting yourself up to fail long term.

Unless that is you have an enormous marketing budget, and even then, how long is selling rubbish products sustainable?

Yes, the likes of Microsoft have been mugging the public off for decades with their nasty software, but this is down to cornering a market from the very beginning due to their positioning.

High-risk products

Choosing to sell high-risk products such as crypto or e-cigarettes can lead to all sorts of problems, and to save going over some of what I've already spoken about in the choosing the wrong niche section, I'll simply add this.

High-risk products can lead to issues with payment processors cancelling accounts and holding onto money. For example, PayPal is notorious for freezing accounts for no good reason. And whilst you could simply not use them, there's nothing to say that in the future, all payment providers could do the same.

However, if you have the experience and are willing to risk it because the profits are worth it then go for it, but my advice to newcomers to the eCommerce industry is that avoiding these risky products and niches can save your business from a sudden and apparent collapse, especially if you're in the United Kingdom or the United States.

And seeing as it's likely that you'll be looking to sell your products on 3rd party marketplaces, you should be aware that you probably can't sell these products on Amazon either.

Supply chain issues

Having supply chain issues is something that has personally caused me issues with one of my Shopify stores in the past.

Products invariably come from a long way away and there can be countless delays to things like shipping routes (such as the Evergreen getting stuck in the Suez Canal) or customs being unhappy with whatever they feel like.

But without any doubt, the biggest supply chain issue is the manufacturer. Choosing the right manufacturer is a big, big deal, and in some instances can take up to 9 months to find the right one.

And the problem is two-fold:

1. The quality of the product drops dramatically once you've okayed the samples and placed your order
2. The company you buy from is just eh middleman and not the manufacturer

Both of these problems are a lot more common than you might think so you must be confident before you part with your money.

That's not to say that all middlemen are bad because they're not. Some factories won't deal with small orders so you might have no choice, just make sure that you do your due diligence first.

My recommendation is to use a reputable sourcing agent that has direct connections to the industry you're in because they speak the language, understand how the factories operate and will organise all of the shipping and paperwork.

Cash flow problems

Having a good and consistent cash flow is huge, and one that far too many businesses don't take the time to plan and get right from the beginning.

Cash flow can cause a good, well-run company to fall into difficulty when the unexpected happens, such as supply chain issues.

It's also one of the main reasons Shopify stores fail. Entrepreneurs often don't take great care in calculating profit margins and how the money will flow in and out of their business, resulting in a business that may generate decent sales but isn't truly profitable.

Understanding your cash flow and ensuring your store offers quality products with healthy profit margins is crucial for long-term success. Having a well-thought-out business plan, including a marketing strategy will go a long way to solving this problem.

Ignoring the strength of your competition

It goes without saying that if you're new to a niche or entering e-commerce for the first time, your competition will have some major advantages over you, such as a loyal customer base (people aren't always keen to change from a product they know and like), market insights and intelligence and existing rankings within Google.

And this problem is exacerbated when entering a hyper-competitive niche that's dominated by large brands that have been fine-tuning their advertising and have built large email databases to market to on a weekly basis.

These companies often have large budgets, top-quality products and have the ability to expand and refine their product lines every year.

However, another way to look at it is that if you've done your research on your competitors and have figured out their strengths and weaknesses, you can find ways to eat into their customer base and differentiate yourself through a good unique selling proposition (USP).

I'm a firm believer in starting small with a really good product or two that's much better than the competition because this will teach you so much and give you the confidence you need to build on. You'll learn what your customers do and don't like and exactly where your best customers are.

Remember, competition is often a good thing because it means there's already an existing market for your product, you just need to find a way to stand out.

Poor website build

I'm a firm believer in getting your product to market without everything being completely perfect before you launch, and by being perfect, I mean your website. Your site should have a good UX (user experience) so that people can find, understand and buy your product. Every web page doesn't have to be perfect!

However…

Technical issues and poor user experience WILL cause issues that can play a significant part in a store's failure, and I speak with first-hand experience here.

One of my first sites was built on Magento by a developer that wasn't able to set it up in a way that allowed me to do the things I needed to do, and seeing as I was new to eCom and there was very little in the way of support, I ended up chasing my tail trying to fix mistakes that were holding me back.

This ultimately cost me too much in terms of development fees which ultimately detracted from my marketing budget which equalled failure.

And I'm not going to lie, that experience hurt!

This is where Shopify comes into it's own because there's very little in the way of coding and site build if all you want is a basic store, which is what most of us want.

Shopify ensures your store functions smoothly, loads quickly, and offers a seamless shopping experience for customers which will make a huge difference to your store's success.

Don't invest in SEO from the beginning

Okay, so I'm an eCommerce SEO consultant, so of course I'm going to be adding this in here!

But when done correctly SEO is the gift that keeps on giving long into the future and when your PPC has stopped providing an ROI due to increased costs from the always greedy Google and your Facebook target audience have blocked your ads.

To give you a mile-high overview of what SEO is, it comes down to three things:

1. A well build website with good UX
2. Content that has the correct search intent
3. Backlinks

If these 3 things are done well then it's simply a matter of time and building on your success as you start to see results.

SEO does take time when launching a new site, there's no way around that fact but I promise you this, the brand awareness and traffic SEO brings to your site will convert better and it won't go away if you need to pause your SEO work.

Google looks at content and backlinks when it's understanding where you fit into it's organic search, and by building topical authority through relevant content and links you'll cement your place at the top of the SERPs and will become very hard to beat.

Inadequate Customer Retention Strategies

Focusing solely on acquiring new customers and neglecting the ones you already have is essentially leaving money on the table (yucky phrase, I know), so make sure that they always have you top of mind when making their next purchase.

Customer retention is an intangible part of the success of your Shopify store and can lead to failure if you're not bringing them back to buy from you, assuming they can.

It's so much cheaper to keep the customers you already have rather than gain new ones so building strong relationships with customers and fostering repeat business can help to create a sustainable and thriving eCommerce store.