Why online businesses fail

It is estimated between 90-99% of online businesses fail. If doing businesses online is supposed to be so great, then why do so many businesses fail?

1. Poor segmentation and targeting: This is what makes the Internet so useful for business. If you don't take advantage of the ability to micro-target and segment your audience, there is a very small chance you will succeed. The Internet is simply too large to try and jump start a business purely by attempting to reach as many people as possible. Niche marketing is made very easy in the online world, so take advantage of it!

2. No differentiation: You want to start a store that sells customized jewelry online. Great idea! The only problem is there are already dozens and dozens of stores offering the same thing. What will make your business stand out? If you don't offer a benefit that sets you apart from the other customized jewelry stores, you are bound to fail. See what these other stores are doing to make themselves stand out from the pack. Think about why you would choose your store over these stores.

3. Falling behind market trends: Stay up to date with online marketing, business, and technology trends. The Internt is constantly evolving, and new best practices and standards are being set all the time. In addition, people online expect things to be up to date and current. If you are not staying on par or ahead of online trends, you are going to have problems.

4. No market testing: Test, test, test! On the flip side, don't be over zealous in fully implementing changes to your online business without testing them first. Don't drop a new webpage design out of nowhere with completely new interface unless you have tested it already with your target market. Sudden changes without any warning often cause problems for online businesses. People don't like it when they are forced to relearn how to do something, especially without warning. Similarly take advantage of A/B testing when running a new ad campaign, or sending emails intended to spur action on the receivers part. This is a great way to see what messages your audience is receptive to.

5. Loan Shark Mentality: Trying to succeeded independently in the online world can be very hard. Look for potentially symbiotic partnerships with other, noncompeting, better established companies or websites. Cross promoting can help drive more traffic to your site, while also giving it credibility before you have gained a substantial customer base. Credibility is especially important in the online world where consumers mainly rely on social proof when choosing where to do their business.