Why e-commerce projects fail

30th June 2009

What causes e-commerce projects to fail?

There are many reasons why e-commerce projects fail, some of the more common ones are as follows;

1. When there isn’t an experienced e-commerce practitioner on the board, this often leads to key decisions being taken without the depth of insight required to support them. Issues can include:

– Setting unrealistic expectations. Forecasts are often either too low or too high and are unsubstantiated. I still hear multi channel retailers stating that their website should be their number 1 store, and that’s the benchmark for e-commerce. Surely the opportunity is significantly greater than this? Would reviewing the performance of your competitors or of your sector in general not be a better benchmark for determining the scope of opportunity online?

– An insufficient level of investment in the development of the channel. This has been a common occurrence as retailers ‘dip their toes’ in e-commerce waters and it often leads to them having to replatform within a short space of time

– The structure being ineffective. No two businesses have the same structure for their e-commerce team. So there is a real lack of best practice around the optimal structure required

– The e-commerce channel is developed as a silo and not integrated with key business functions

– The wrong suppliers are appointed and sometimes the wrong technology is adopted

2. A lack of cross-functional teamwork (because it takes more than a head of e-commerce to deliver a successful web channel). For the best results collaboration must take place between the following operational units: buying and merchandising, retail operations, marketing, supply chain and fulfilment, as well as customer service.

3. Involving other team members who need to interact with and be involved with the e-commerce application too late (early stakeholder engagement is a necessity). 

4. Inadequate team skills (the speed and level of growth of e-commerce has meant that there’s a shortage of skills across various remits). 

5. Overall resistance to change

What can you do about it?

Proactive and forward-thinking businesses can prevent many of these pitfalls and in doing so, save time and money while creating a smoother transition and implementation of e-commerce.  

Follow these steps for the best results:

1. Enrol key stakeholders in the planning phase, both executives who will input into the vision and operational stakeholders who will be involved day-to-day with supporting the e-commerce operation. 

2. Communicate the benefits of the channel to all affected operating units ensuring everyone sees the benefit to them and to the business. Given the growth potential, this should be a simple task.

3. Run stakeholder workshops and interviews assessing the impact e-commerce will have on remits and job tasks, functions and processes, and employee roles in the execution phase.

4. Develop an operational structure that maximises the opportunity and optimised processes that minimise the likely impact caused by the change e-commerce brings to people’s roles.

5. Analyse your competition and other online sectors and get hold of as many KPIs as you can to clarify what the likely scope of opportunity should be for your business. EConsultancy.com, Mintel, IMRG, Forrester, Verdict, Shop.org, Internet Retailing are among various online resources you can tap into in order to get a better view of expected KPIs and to help you build your business case

To be successful, e-commerce projects also require executive-level sponsorship or senior leader consensus around the business need for the project. Again the growth of e-commerce should make it a relatively easy task for project sponsors to attain executive level buy-in.

You also need to ensure that the overall business strategy takes account of the impact that e-commerce has on all other channels of the organisation. By demonstrating the potential for organisation-wide benefits it will be easier to build a business case, for budget and support. After all, e-commerce is a driver of sales for all channels of the business.

So don’t think of e-commerce as a silo, or an individual channel. And if you can communicate this successfully then the board will see that the value of e-commerce and of the web channel in general terms is business-wide.

While e-commerce has much to offer to the business, it isn’t easy to develop and implement and therefore it’s absolutely vital that you gain commitment and build consensus at each stage and from all of the stakeholders.

If you don’t focus on getting stakeholder commitment and a clear understanding of the challenges and capabilities required from the outset of your e-commerce project, you run the risk of spending too much time and money at the back end of the project, trying to resolve internal problems. So ensure you engage all stakeholders in the planning phase for e-commerce.

Make sure you engage the right suppliers. In my next blog, I’ll talk about the criteria you should adopt when doing your diligence on supplier selection.

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