Why Do 90 Of Online Businesses In South Africa Fail

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

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