An example of an E-commerce failure and its causes

IBM’s World Avenue Mall was probably launched too early, before online usage became sufficiently popular to justify IBM’s investment in that project. Merchants particpating in the World Avenue Mall also complained that IBM did not adequately promote the project. IBM claims it learned another valuable lesson from the project -- that IBM’s name alone is not sufficient to bring enough customer traffic to the site to make it a success. MCI’s 1-800 Music Now, which permitted both telephone and online ordering of CD’s, shut down in December 1996, only one year after it was launched.
That failure was attributed in the press to a variety of factors, including: (i) weakness in the music industry that year, leading to deep discounting by retailers; (ii) the site was not easy to use; consumers seemed to prefer ordering through traditional stores; and (iii) its prices were relatively high, compared once again to traditional stores. The pricing strategy is a very important aspect that either leads to complete failure or success. Anticipating the cash flow needs to be followed by a well planned and calculated strategy in order to achieve success.
Another,it is very important to identify the demands and need of the consumers as well as to understand the market and the needs of the consumers. So the inability to define clearly and to understand the market demand n the needs of the customer and their buying habits is another reason for failure.