Why B2B Startups Fail? How To Avoid Them?
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You surely must have heard that the growth of the eCommerce sphere is locomoting. But it isn’t all bed of roses as it seems from afar. No, not trying to scare or demotivate you, but facts are facts. This platform may be or may not be rewarding. But here we are, particularly answering the question of why B2B startups fail?
Along with the points, we will also discuss how to avoid the factors. But before that, look at some stats related to the failure of eCommerce startups.
If you own a B2B marketplace or planning on starting a new one, this B2B eCommerce guide to building a successful marketplace highlights some common mistakes you must avoid.
The statistics above show the percentage of entrepreneurs with the fear of their eCommerce platform crashing down. Their fear is justified because of the rate of the startups closing down than opening up.
Why B2B Startups Fail?
There can be various reasons for a B2B startup to topple down, but in this blog, we will focus on major reasons and how to cope with them. Following are the reasons why B2B startups fail.
eCommerce Brobdingnagians don’t intend to let anyone infiltrate their secret garden. Hence, they do anything to crush the newcomers within the lawsuit. Gobbling up their market when there is a fear of potential competition is what these leviathans do.
Established B2B eCommerce companies would never want a newbie to come and disrupt their market. Thus they monopolize the market.
Moreover, the customers of a pre-existing market don’t want to make a shift so often. And in the case of B2B, it may be even a bit more difficult.
Because B2B customers are not an individual but whole business entity which means making a shift will be a big decision.
Since these sorts of decisions are made by keeping in mind a larger interest, the consumer would never think of changing their dealer until they are getting a better offer.
How to break through the market monopoly?
To break the B2B market monopoly, these are the few things you should do-
Opt for niche
B2B giants like Alibaba and IndiaMart generally cover all the possible trade aspects. The reason is, that they want to expand. But since they are so focused on expansion, and their platform is full of uncountable items and categories, they can’t focus on each category individually and improvise it.
Niche in B2B is a real thing, don’t believe it? Check out these marketplaces.
B2B Food Marketplace
B2B Furnishing Marketplace etc.
Opting for a niche will help you focus on your market and the vendors plus customers related to it. Your marketplace will send a clear message to your customers about the particular thing you deal in.
It will help them concentrate on you and your products better in comparison to other big multifaceted marketplaces.
Focus on Target Marketing
Target marketing is a process in which the whole market is divided into sections and then the marketing efforts are aimed at crucial sections subsisting consumers who have similar needs to what you sell.
Target marketing will help you increase your sales and make your business lucrative. If you opt for a niche target marketing will become easier for you. You will have to focus just on your sector. Your marketing strategy will be tailored to your aclove market.
Strategize Your Marketing Method
- Now that you are aware of the fact that you have to concentrate on a very refined audience, strategize your marketing moves and pitching plans.
- Observe which social media channel and promotional plan is getting your platform the most.
- In the case of B2B marketplaces, inbound marketing works well.
- Retarget your audience through chain posts and e-mail marketing.
- Focus on your strength while promoting yourself.
- Ensure your audience gets a clear message about the product or services you are catering to.
- Promote your every move, whether it’s the launch of your new product, an offer, or any seasonal discount. Make sure you are always in the mind and sight of your audience.
- Produce substantial writeups, and press-release to keep people aware of your activities.
Shortage Of Capital
Another factor why B2B startups fail is the lack of enough capital. The B2B marketplace is not a lilliput body with a need for just nominal capital. Before the rush into depth, it is always better to test the waters.
It is always better to pre-design a clear business model and cut out a clear budget allocation estimate.
If your capital is not fulfilling and In case you are planning to pursue investors, that might not be something easy. These are a few things investors look for especially in a B2B startup-
A seed investment-ready business model with the full potential for future expansion and scaling.
A startup team who is well aware of the industry they are going to step in and have a thorough knowledge of the sector plus their prompt resourcefulness.
A team with experienced, committed, and passionate individuals who are ready to invest their skills for the sake of the growth of the startup.
These factors can convince investors to take a risk and invest in your startup.
Mismanagement Of Logistics & Resources
This is also one of the most important factors why B2B startups fail. Mismanagement of resources, capital, and logistics is what we find the most common factor of sinking the ship of any eCommerce company even if it’s B2B.
Proper resource and capital allocation is always necessary at any stage of business but specifically when your startup is taking baby steps.
Here are a few things you can do to manage your resources and logistics properly. Your vendors, as well as customers, will face the consequences of mismanagement of logistics and that’s the blunder you can’t afford to make.
- Evaluate the structure and performance of your company. It will help you get the idea of which section of your business needs to be taken care of on priority.
- Plan your moves based on your assessment.
- For the management of logistics, opt for automation. You can’t monitor the warehouse activity, transportation, etc. It’s better to automate the monitoring and notification process.
The Wearhouse and logistics automation eradicates the need for manual monitoring and appraises you for the consignment tracking while delivery. Notify you whenever any product is about to get out of stock. You will also be able to calculate the stock in your warehouses.
Focusing On Expansion Too Early
In the early stages, instead of focusing on deep-rooting your business, if you focus on Canopying the market, the tree of your business will face a huge fall. This is one of the main reasons why B2B startups fall.
Until you strengthen your base, you can’t expect growth. Focus on the shortcomings of your management and fix them first. Planning for expansion is a necessary step but only when you have a well-settled and running business.
Miscalculating The Market Competition
eCommerce is a domain that witnesses cut-throat competition among the companies and only the fittest survive. Most companies are stomped down by those competitors whom they underestimate. This is yet another reason why B2B startups fail.
You will need to observe and even conduct surveys to know the grip of your competitors on the market. After a thorough observation of all the aspects of your competitors, you can plan your moves. Find the loophole they have left open and take advantage of the loophole.
CedCommerce has been offering the necessary technical solutions specifically made for building one such platform. CedCommerce’s B2B extensions are ready-made and reasonably priced solutions for building a website like Alibaba or a website like IndiaMart. A B2B eCommerce business website armed with these features is undoubtedly going to possess the best in class features.