90 Reasons Why 90 per cent of Online Businesses Fail (Part V)
• The competition
I can define competition as the non-enabling environment preventing your new business from getting a foothold in a particular territory or sector of activity.
Three (3) cases of competition which can kill an online business are:
Reason #58: Ignoring or Underestimating the Competition
Millions of Home businesses are out there competing against each other for business. And many more are created each day making the competition keener and keener. As an online business you are even competing with businesses outside your national borders.
Despite this some online business owners ignore or underestimate the reaction of the competition when they are launched. But the existing business, perceiving the new one as a threat, aggressively takes steps to defend its custom by:
- lowering prices
- offering package / bundle pricing
- extending terms
- introducing new products
- improving product quality
- extending warranties
- increasing marketing activities, etc.
No wonder new businesses in such circumstances soon find themselves engulfed in an extended competitive “war” which finally suffocates them.
Reason #59: Not Being Cost Competitive
Before starting your business, it would be worth your survival to try not only to get information about but also to understand the cost structure(s) and selling prices of your competitors.
You may find for example that your competitors have lower operating costs than you, have far lower overheads, and use more efficient manufacturing processes. In this case, their margins will be higher than yours even if both of you sell at the same prices. Remember the case above where your competitors may subject you to a protracted price war? Do you think you will survive?
Not in that dirty war since the lowest cost producer always comes out unscathed. To survive in your niche therefore you would have to find ways to reduce the cost disparity.
Reason #60: Not Beating Too Much Competition
New online entrepreneurs make the mistake of selling the same products as everyone else and thus thrust themselves into a competition cyclone. But you don’t really have to plunge yourself into too much competition in the affiliate marketing field. You can identify sectors where there is even lack of competition.
Take ClickBank and Amazon for instance. The two companies alone sell millions of products. Add the others who have several thousand products and you should rather be overwhelmed by the huge offer instead of the competition.
Successful entrepreneurs know that the choice of products is huge but so is the number of people looking to buy them. They therefore match the offer to the huge demand.
To do this, they narrow their choices by actually finding a market of people searching for something to buy and then finding the product to match their needs. In this regard, they use the Google adword tools to find products people are looking for online. For example, they type in reviews of cameras and get general answers arranged in descending order to find the most popular searches. Now, identifying digital cameras for example in the search list they can even further narrow the choice down to specific models. So, using the keywords for one product needed by thousands of people, they go to the ClickBank site to look for those cameras.
The lesson here is that if not a Herculean task, at least it will be a relatively more titanic one to sell mass-market products than it will be to deal in niche or unique products. Advice: so find your niche.
The reason for finding your niche is to make money. Yet some online businesses blow this. I will show how in the next piece.
Do you want to succeed online?
While the web can offer immediate success for some, for most of us it will take some time and hard work on our part to build a successful online business. The secret is to avoid the pitfalls discussed above and you will have a better chance of figuring among the elite online one day.
But, now that you have an idea of why people fail online, aren’t you tempted to learn how you can be part of those who succeed on the web?
“It’s never too late to be who you might have been,” – George Elliot
Sure, you can become part of the 3% successful online workers. By joining Wealthy Affiliate.
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