There are many reasons why Shopify stores fail. Firstly, lets be very clear that it has nothing to do with Shopify whether you fail or succeed. Shopify is simply a shopping platform and it is no different from Woocommerce, BigCartel or any other shopping platform.
Shopify is a tool. It is a platform that allows you to run an online store with zero technical skills. What you do with this tool is what makes the real difference. There are Shopify stores making $1 million plus per day and there are MANY Shopify stores making $0 per day.
What makes the difference between the two?
Obviously there are major differences between big successful stores and smaller wannabe stores. Often it is a series of small things stacked on top each other that makes the big difference.
If you are just starting out on Shopify and hoping to make a big success then there are some very common reasons why Shopify stores fail. Knowing these common pitfalls can save you a lot of time, money and effort.
If you are a dropshipper and you are just starting out then I would be honest with you: you are up against it. The barrier to entry is low and the competition is fierce. However, it is still a great way to start but it should never be the end goal to always be a dropshipper.
You only want to dropship as a way to test the waters. This way you can start with very little capital and once you have “proof of concept” you can start investing in inventory and fulfillment. This does involve upfront costs but the risk is low now that you know you are making sales.
If you are moving store over to Shopify from other platforms like Woocommerce then you will have different issues. I would recommend you get someone in to help you make the transition seamless.
If you are bringing a successful “offline” store online then Shopify is a great match. You will face a lot of similar issues though because once you are online you compete in a much bigger market.
Here are the 7 main reasons why a Shopify store fails.
1. Build It and They Will Come
This is one of the most common things I see all the time – especially with newbie dropshippers. They would build a store, fill it up with “winning products” and then sit back and wait for the money to roll in.
It never does.
Unless you START your online store with a very clear and definite plan for driving traffic to your store then you are doomed to fail.
In many ways your traffic will determine your approach to your store. Yes, big brand stores can be successful with traffic from many different sources but for new stores you need to have a clear idea of your traffic source from day one.
If you are driving traffic from Facebook Ads then your approach will be different from traffic through Google Shopping ads. With SEO traffic your approach will also be wildly different as you will have to structure your store completely differently.
Products will make or break your store. It is by far the most important aspect of your business as everything revolves around it.
Picking the right products, selling it at the right price and selling it to the right audience all needs to work together if you were to stand a chance at being successful with your Shopify store.
There’s been a proliferation of so-called “spy tools” and ecommerce entrepreneurs are obsessed with this idea of “winning products”.
It is good to know what the landscape looks like in your niche. You need to know what’s selling and what people want. This is where spy tools like eComhunt and competitive intelligence can really help you.
What you DO NOT want to do is to pick the top 10 products from your spy tools and throw them into your store.
There are a lot of factors that determine whether a product sells or not and just because it sold well for other vendors does not mean it will sell well for you.
The biggest problem however is that everybody and their dog jumps at these “winning products” and everybody starts selling the same old stuff.
Don’t be a “me too” store.
You have to pick products that are popular but find a way to be unique and different. Be a brand from day one.
Order the products. Check the quality. Take your own pictures. Stand out.
The days of copy and paste products from Aliexpress is well and truly over.
Your product and your audience goes hand in hand. In fact, if you can nail this combination you will be successful.
If you show the right product to the right audience then they will buy – even if the rpie is too high. If they really want it, they will buy even if the price is above their budget. The desire to have product can override all logic when it comes to making buying decisions.
This does not mean that you get to sell over priced rubbish. As you will see later on, you need to always take a long term view as well.
Your audience needs to be very well defined even before you start building your Shopify store. It is one of the main reasons why I do not like general stores.
Building a niche store allows you to really focus on small group of people. The smaller and the more passionate your audience is, the better your chances of success.
People buy from small niche shops because they can associate better with it. The idea of niche stores is that you can better serve your customers. You understand their needs better and you can serve them better because your products meet their needs.
It is very different from an Amazon or a Walmart.
They only sell products.
Your niche store sells ideas, and emotions. Not just products.
If you want to buy running shoes you can go to Walmart and buy a decent pair for $50. That would be okay for most people.
If you are a running enthusiast however you want to go to a running shop. You want expert advice and insights about the latest and greatest shoes. You want something that really suits your specific needs.
You can not get that from Amazon or Walmart.
This is the mindset you need to have when building your Shopify store. You are looking for those “fanatical” people in your niche that really want to buy from an expert.
In every niche there are a group and often many different groups of people (sub niches) that are truly passionate about that niche. They will spend money on the right products without blinking.
You need to append most of your time identifying these audiences and then matching products to that audience. Once you have an audience identified you can quickly figure out what they want and give them more of that.
If you are advertising on Facebook they make it quite easy to find your audience and you can be very granular in your targeting.
If you are advertising on Google Ads then you can find your audience with the keywords you target. You can do the same with Pinterest Ads.
Finding products and starting to get decent sales consistently is most certainly not easy. Once you do, I would first like to say, well done!
The next step is often where Shopify stores fail – especially dropshippers and that is with fulfillment. If you are using Oberlo or AliDropship then your fulfillment process is very hands off as you can fulfill your orders with just a few clicks.
The problem however is that shipping times is a huge problem if you fulfill your orders from China. Customers do not like waiting 3 weeks for their order and you will spend a good chunk of your time putting out fires in your customer support.
Fulfillment is an incredibly important part of building a successful Shopify store.
Dropshipping should never be the long term plan.
Dropshipping should only be a way of testing the walters and seeing whether your store works or not. Once you start seeing consistent sales you need to make the switch to a more reliable and streamlined fulfillment option.
There are 3 ways you can handle fulfillment for your Shopify store.
1. Do it yourself:
Depending on where you live and where you sell this is a great option. You can bulk order your product(s) to your own home and just fulfill the orders yourself. This can save you a ton of money and allow you to greatly improve your ROI as your profit margins will be much higher.
You can also offer customers express shipping and charge more for shipping because you now have full control over shipping.
This also allows you to do proper quality control before you ship products to make sure there are no flaws.
This is the best way to reduce (and even eliminate) refunds, returns and chargebacks. Yes, it’s a bit more work but fulfilling 20 to 50 orders per day will only take a few hours of your time.
2. Fulfillment Agent:
If you insist on shipping from China and you really like the whole hands-off idea of dropshipping then you should consider a fulfillment agent.
A fulfillment agent is someone in China who will source your product, warehouse it and fulfill your orders for you. In 99% of cases they can find the exact same Aliexpress products and offer you a better price.
They also use express shipping channels and most good agents can get products delivered in the USa in 5 to 8 days.
So, what’s the catch?
Fulfillment agents want volume. Most of them have a minimum of 50 orders per day so if you are not at that level they will be reluctant to work with you.
You also have to pay for stock upfront and this demands a high level of trust. Chinese agents can be very dishonest and you need to take great care when picking an agent.
I would suggest you stick with companies like CJ Dropshipping as they effectively do the same thing. With Cj you can even ship stock to their USA warehouse and have it fulfilled from there for super fast shipping.
This is more of a traditional ecommerce setup where you would bulk order your products and ship them to a warehouse. The warehouse will log your products and your Shopify store will then be connected to them so you can easily send through orders and monitor stock.
This is a great option of you do decent volume as most of the fulfillment centers require minimum orders per month.
The two most commonly used warehousing/fulfillment options are Ship Bob and Dollar Fulfillment. Both are good and reliable.
They can also help you with branded packaging.
Bulk ordering stock from Alibaba or DHGate can be tricky. Its usually a big upfront cost and you will need to make sure that you have the cash flow to sustain these levels of sales. Being left with thousands of units of stoick can be a costly mistake – especially if you have to pay for warehouse space.
Getting products to your customers in a timely manner is super important. I would say 5 to 7 days is the maximum wait time that customers in the USA are willing to put with.
This varies in other countries but your goal should be to get parcels to your customers within 7 days of them placing an order.
If you are fulfilling your Shopify orders from Aliexpress is leaves you with another big problem and that is returns and exchanges. Accepting returns and offering exchanges (for sizes) is a normal part of any ecommerce business.
If you fulfill orders from Aliexpress you can’t really do that due to the long shipping times. Usually you will just eat those costs – and it will eat into your bottom line.
5. Cash Flow & ROI
You can have a store that does decent sales, sell great products and still have your Shopify store fail. Running into cash flow problems is very common.
The two main reasons why Shopify stores run into cash flow problems are:
- Refunds and Returns:
I’ve seen so many dropshippers break out the champagne when the sales start rolling in. Three weeks down the line the party mood quickly dies out as the refund requests start rolling in.
If you ship your products from China you WILL get a lot of refunds. The slow shipping times and inconsistent product quality makes this inevitable.
Make sure that you always budget for this. It can be as high as 20% to 30% which is why I suggest you move away from dropshipping asap. It is better for you, your customers and your future Ferrari.
- Operating Costs:
If you are buying ads then having a very good understanding of your profit margins is crucial. Ads costs are going up all the time and even if you sell products with a high margin you can still lose money because of your ads costs.
I would highly recommend you use an app like TrueProfit. It allows you to see your true profit as it takes all costs and fees into consideration.
Most successful ecommerce stores have a 20% to 30% profit margin. This is true profit. Not profit that you eyeball from looking at your sales vs. your product costs.
Most dropshippers who run ads on Facebook quickly run into cash flow problems. This is partly because you often have to run your ads at a loss in the beginning and rely on the Facebook algorithm to kick in and start making decent ROI.
When you get to a point where you do not have enough cash to fulfil your orders then you are truly screwed.
6. Building a Business
There big difference between building a business and making money online. The vast majority of Shopify stores that fail, attempt to accomplish only the latter.
There most certainly is a quick buck to be made from dropshipping or print on demand.
The real question is whether you can turn it into a brand or not. A brand and a business does not necessarily mean you sell different products but you have vastly different approaches to running your business.
Selling high quality products, taking great care with your customers and branding your products to be in line with your customers’ values is how you build a long term business.
You will often have to sacrifice profit in the short term but the long term begets are immense.
When your Shopify store is a business and a brand then you build brand loyalty. People love you and your products and they end up buying from you over and over again.
With the increase in ecommerce competition is fierce and you simply can no longer afford to have just one-off sales. You have to get repeat customers and have high AOV’s just to survive.
7. Lack of Passion
This is a much under-rated part of running a successful ecommerce business. Times will get tough no matter what business you run. There are always issues and problems.
Having a passion for your business is what will get you through these tough times.
With a lack of passion for the business you will quickly jump ship and find something else that is easier.
Passion is also an intangible part of business that is incredibly important. Your passion and love for your business will be infused in everything you do.
Think of a Steve Jobs and how his passion for Apple products infused everything from their marketing to their product development.
Its hard to put your finger on exactly what passion brings to a business but when you see it you know.
It really is the flavour that affects every single aspect of your store. You can make money with your Shopify store wif you do not have passion but it is usually short lived.
The really successful Shopify stores are those with deeply passionate people behind it.
This does not always mean that you have to have a passion for the subject. If you sell shower heads then there is not much to be passionate about in the niche. It is more about your passion and love for the business itself and the customers you serve.
Closing Thoughts on Shopify Store Failures
These are just the main reasons why why Shopify stores fail. There are many more. Things like technical issues with your store, not being able to set it up properly, not understanding the basics of sales ec. Are all things that can easily be overcome.
Making any of these 7 fundamental mistakes will most certainly see your store fail. There are a number of factors that affect different types of stores.
If you are dropshipping then having your Shopify store shut down for high risk products or having your Paypal account placed on hold can easily ruin your business.
If you advertise on facebook then having your ad account banned for no apparent reason is very common. This\ can be incredibly frustrating but these are issues that you have to overcome.
Like I said in the beginning, ecommerce is not easy. You need to do everything you can upfront to stack the odds in your favour. Then you stand a chance. If you start off with risky products that Facebook is prone to ban then you are up against it from day one.
In the end you need to focus on selling quality products that fulfill a need. It is as simple and as hard as that.