Why Do 90 Of Online Businesses In South Africa Fail

It is​ estimated that over 90% of​ new websites fail within the​ first year of​ existence. Interestingly enough,​ the​ same can be said for the​ restaurant industry,​ as​ only 1 out of​ each 10 new restaurants experience real rewards.

With such negative odds it​ seems that many are taking a​ foolish gamble for a​ shot at​ success. Yet,​ there are certain individuals who are able to​ launch successful restaurants and online businesses time and time again with amazing success rates.

Why is​ this? Almost all of​ these entrepreneurs failed many times before they succeeded,​ but,​ the​ key to​ their success is​ a​ winning formula derived from trial and error.

The Internet is​ no different. Through the​ Dot-Bomb era,​ millions of​ websites failed and through this collective information,​ it​ was possible to​ develop a​ successful formula. a​ formula used by R.O.I Media to​ ensure the​ success of​ their websites and their clients’ websites.

Highlighted below are some of​ the​ modern principles for online success. it​ is​ guaranteed that if​ businesses actually adhered to​ these principles,​ 90% of​ them would be smiling rather than crying.

1. the​ 5 P’s (Prior Planning Prevents Poor Performance)

The key to​ launching a​ successful online business is​ down to​ proper planning. Before launching any online business you​ need identify your potential target market and demand. Online Businesses have distinct advantage over traditional brick and mortar businesses due to​ the​ fact that we can identify demand for any industry based on​ the​ daily demand indicated in​ search volume.

For instance,​ the​ keyword “cape town accommodation” is​ searched for ± 350 times a​ day. Therefore it’s feasible to​ launch a​ site that offers bookings for accommodation in​ Cape Town. the​ demand is​ visible in​ the​ searches done by users.

2. Competitor Analysis

It’s surprising how many new online businesses launch and when asked the​ question,​ ‘name your top 5 competitors?’ few can give you​ a​ direct answer. By identifying your competitors,​ you​ gain valuable competitor intelligence which can help mould your business model. It’s important to​ see:

How much competition is​ in​ your industry?
More competition makes it​ harder to​ compete. Sometimes the​ better angle is​ to​ target segments with less competitor saturation.

Price Comparison
Customers in​ this day and age are becoming more and more price sensitive. With the​ internet,​ customers are able to​ shop around for the​ lowest price within minutes and most of​ the​ time they are drawn by a​ low price. It’s sometimes better to​ make less profit as​ opposed to​ no profit.

Don’t be caught off guard. Identify all your competitors’ prices and position yourself to​ be competitive and make sure you​ are able to​ make enough profit to​ sustain your business expenses,​ including marketing.

USP – Unique Selling Proposition
This is​ a​ vital question that few business owners can answer. What is​ your unique selling proposition? Simply put,​ what do you​ offer that your competitors don’t offer or​ what do you​ do better than your competitors. By launching a​ product range that is​ not unique in​ any way,​ will not give you​ a​ distinct advantage in​ the​ marketplace and will set you​ up for failure.

3. Build it​ and they will come (Traffic)

Many new websites spend far too much time and money on​ launching a​ website. Once the​ site is​ launched,​ they do far too little to​ promote the​ website and as​ a​ result few people come to​ the​ website. Being out there is​ not enough; you​ need to​ actively promote your website online in​ order to​ get traffic to​ the​ website. Traffic can be generated through SEO (Search Engine Optimisation) and PPC (Pay per Click services).

Interestingly,​ 88% of​ all internet users use search engines to​ find what they are looking for. in​ February 2008,​ there were nearly 10 billion core searches done in​ the​ US alone. Search Engine Optimisation is​ the​ process of​ bringing a​ website to​ as​ high a​ position as​ possible in​ the​ search results when a​ user types in​ a​ search term in​ the​ search engine.

In Layman’s terms,​ you​ go to​ Google and type in​ “Blue Widgets”,​ and a​ website comes up number 1 selling blue widgets,​ this is​ due to​ an​ effective SEO strategy.

4. Leading the​ Horse to​ water (Conversion)

You can lead a​ horse to​ water,​ but you​ cannot make it​ drink. the​ same can be said online. All the​ traffic in​ the​ world will not guarantee sales. More traffic does not always correlate to​ more sales.

Website effectiveness is​ measured using a​ simple metric called Conversion or​ a​ website Conversion Rate. to​ work out your site’s conversion rate,​ you​ divide the​ total amount of​ unique visitors (NOT hits) by the​ total amount of​ sales.

For Example: 100 unique people visit your site,​ 2 people buy out of​ that 100,​ you​ have a​ 2% conversion rate.
Conversion Rate = Desired Action/Total Number of​ Unique Visitors
The average global conversion rate is​ 2.4%.

The average South African website conversion rate is​ under 1%. What does this mean? if​ you​ are spending an​ average of​ R10 per Click (PPC),​ driving 100 people to​ your site will cost you​ R1000. if​ only 1 in​ 100 purchase,​ that sale (cost per acquisition) has cost you​ R1000. Let’s hope that you​ made more than R1000 profit or​ you​ will generate no return whatsoever. the​ reality is​ that most websites suffer from terrible conversion rates. Usually,​ their sites generate zero returns and actually lose money as​ their advertising costs exceed their profits.

Did you​ know that 75% of​ browsers back out of​ a​ shopping cart? It’s even got its own term,​ called “shopping cart abandonment”. People enter the​ shopping cart,​ and something freaks them out to​ the​ point that 3 out of​ 4 run away. Was your delivery cost too high? Did they think your site was a​ fly by night? Was the​ return policy not clear? Were they worried about submitting their credit card details? These are some of​ the​ reasons that can lead to​ this.

5. a​ website is​ a​ website,​ or​ is​ it?

The first step before spending vast amounts on​ marketing is​ to​ refine your site’s conversion ratio.
There are websites and then there are online selling machines. the​ difference is​ linked to​ the​ conversion ratio,​ one sells and makes money,​ and one does not.

By effectively increasing a​ website’s conversion rate,​ you​ generate more sales,​ and more profit without spending more on​ marketing.


By following these key guidelines and contacting an​ expert company with a​ great track record,​ online success should not be contributed to​ luck. Proper planning and execution will ensure long term sustainable success.
Why Do 90 Of Online Businesses In South Africa Fail Why Do 90 Of Online Businesses In South Africa Fail Reviewed by Henda Yesti on August 02, 2018 Rating: 5

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