Why Ecommerce Companies Fail In Nepal ?
Jul 6, 2021
The current growing trend of Ecommerce in Nepal is highly notable. During this period of lockdown, ecommerce companies have got a huge opportunity to grow and make their business sustainable.There are a huge number of ecommerce companies running recently in Nepal. Despite the huge number of ecommerce companies' presence, only a few ecommerce have gained popularity whereas other ecommerce platforms are not even being recognized.
Due to ease of entrance and exit, many new ecommerce companies are emerging and many are unable to sustain the market or trying to survive. In today’s digitalized world, the prospect of online business has become much easier than brick and mortar businesses. But along with the easiest and smartest way ecommerce business comes with unprecedented risks and a high chance of failure if not pre-planned properly.
As we can see in Nepal most of the ecommerce companies are having hard time to grow and sustain these may be the top few reasons for their failure:
- Lack of Proper Marketing Plan:
A marketing plan is the most important key to success in any business. It helps businesses to grow and promote. Not having a proper Marketing Plan can lead to budget problems, low traffic, ineffective tracking, and in the worst cases it may be the cause of business closure. Due to these reasons, companies must make good marketing plans which they can follow.
- Lack of Online Search Visibility:
If people don’t know you exist, they can’t shop in your online store. Online Visibility is the big part of the marketing plan and businesses should work on their Search Engine Optimization. When a customer starts looking for a product 36% start looking in ecommerce companies' websites whereas 35% directly search on google (which means your companies online search visibility also plays an important role in your growth.)
- Selling the wrong products:
Which products to sell? This is the most jeopardized thing while deciding. If you are selling products that no one wants then you will be facing problems from the starting of your business. Choose wisely while deciding what products to sell.
- Low-Quality Content:
Ecommerce companies also should take care on what kind of content they are posting in their website and social media as quality content helps attract customers towards your online business.
- Bad Product Photos:
We can see various products having bad photos, which will drive away your customers from buying in your online store and it creates a bad impression for your online store. Always take care and what kind of product photos you are posting (Posting good photos and content creates a good impression on customers.)
- Logistics Costs and issues:
The high logistics costs are the primary obstacle for any ecommerce startup. Even if you have a good quality product, good online visibility, good customer service but if your shipping costs are high then this will easily drive your customers away. No one wants to pay extra for shipping.
- Lack of Cash Flow
Cashflow means total inflow and outflow of money in a business. Cash Flow is an essential element to boost up your startup. According to business Startups must decide how much to spend in marketing and inventory. If you spend a huge amount of money in inventory then your marketing sector will decline which will lead to decrease in sales.
Therefore you must ensure a positive cash flow of your business that helps to generate profits and increase any business.
- Lack Of patience
There is a proverb “Patience and fortitude conquers all things”. In ecommerce companies will not grow overnight. It is a long process even though you fail the first few times you shouldn’t give up, you must keep trying to establish your ecommerce business. Not giving up easily helps you grow.
- Lack Of Human Resource
Skilled personalities leaving the country has been a major obstacle for Nepal. Since we have a much lower wage rate and limited support from the government to explore opportunities, both skilled and semi-skilled persons prefer to leave Nepal temporarily or permanently.This leads to a lack of skilled human resources in Nepal. The era of eCommerce has been the revolutionary era and somehow Nepal failed to catch up the pace as wedon’t have skilled human resources to adapt and grow as per the world demands.
- Lack of Product Categories
Nepalese have always faced problems with getting all the products easily available in Nepal. Difficulty in international shipment and high tax rates has been a major issue to make sure each category's products are easily available in Nepal. Ecommerce companies in Nepal lack sufficient product categories and even most of the ecommerce companies in Nepal are only showing categories in their website, but when browsing inside the categories to seek actual products we can find most of the categories empty.
Additional Research By Revive Management
Revive Management is focused on providing customized solutions that provide insight to support the strategic, process, leadership, and analytical needs of leading organizations nationwide. Revive Management has been doing research in a similar field for a long time and the question below were asked in the survey. Those data were collected using the internet, Phone Calls, Website References, Social Media analysis, and Revive Management does not guarantee the authenticity of the data that was observed.
Why do you think most of the E-Commerce startup businesses fail in Nepal? (Internal Factor)
Since most ecommerce is facing hardship in order to get them noticeable in the market. We tried to know what is the Internal factor due to which E-commerce startups are failing. In response to this question, 32.6% of the people said poor online marketing as the reason for E-commerce startup failure whereas lack of online search visibility was said to be found by 21.15% of the people. Similarly, it is followed by other several reasons, i.e Not giving any offers/loyalty to attract customers, poor teamwork, lack of capital, Complex Website/App and Not having an app for all devices respectively.
New e-commerce startups need to focus on enhancing online marketing and Search Engine Optimization in order to perform well in the long term.
- Why do you think most of the E-Commerce startup businesses fail in Nepal? (External Factors)
As we knew the Internal reason for E-commerce startup failure Revive Management tried to know the external reason as well for the e-commerce start-up failure and the results were quite distributed. 23% of people think the reason for e-commerce startup failure is because of lack of public awareness, Both 16.98% voted on a Little to no market for their products or services and a Lack of e-commerce regulations similarly to both 11. 32% think the external reason for failure as Retail giants dominating a large share of the market and Lack of technology and infrastructure and Likewise, 5.66% voted the reason as to get outcompeted and the least number of people think cybersecurity threat i.e 1.9%.
- How much do you think consumers are satisfied with the service/product provided by E-Commerce companies?
The findings on the satisfaction level of people towards service/product provided by e-commerce companies showed that 23% of the people are dissatisfied and 9.43% are very dissatisfied whereas only 3.8% are very satisfied and 28.3% are just satisfied. Similarly, 35.85% showed a neutral response towards satisfaction level.
The graph shows e-commerce has still weak points on its service and product which need to be filled to get better among Nepalese consumers.
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