7 Ecommerce Loss Drivers That Could Sink Your Brand in 2025

Thanks to modern technology, starting an ecommerce business is easier than ever before. You can set up a storefront within minutes, upload product information, and automate operations like customer service, inventory management, and sales reporting. The challenge lies in keeping your business afloat and thriving.

According to recent research conducted in the UK, 70% of ecommerce brands fail in the first 12 months of business. That's more than double the average failure rate for traditional enterprises.

Other estimates are even grimmer, suggesting that 80% of Shopify brands fail within their first year. The worst part? You might not see the warning signs until it’s too late.

No matter where you're at in your entrepreneurial journey, it's crucial to understand the ecommerce loss drivers that could sink your brand. With this information, you can take a proactive approach to safeguard your Shopify business and remain competitive.

Ecommerce is facing significant challenges in 2025 and beyond

Nearly 45% of U.S. consumers prefer to shop online rather than in a brick-and-mortar store. Given this fact, it's no surprise that 22.7% of all retail sales in 2024 came from ecommerce, generating a whopping $1.19 trillion.

Ecommerce sales are at an all-time high, but that doesn't make things any easier for entrepreneurs. Advertising costs are soaring, profit margins are shrinking, and customer expectations continue to rise, pressuring businesses to rethink their approach.

Many retention strategies that used to work no longer cut it because of the demand for hyper-personalized services. Think of generic discounts, which are being replaced by tiered rewards, community-driven incentives, and loyalty programs tailored to individual preferences.

Another challenge is the emergence of online marketplaces like Temu, Shein, or Trendyol. These global retailers offer fast shipping, low prices, and aggressive discounts that independent brands simply can't match without killing their margins.

What's more, governments are tightening regulations around data privacy, sustainability, and product compliance, forcing ecommerce brands to adapt or face the consequences.

For example, the EU’s Digital Services Act (DSA) holds online marketplaces accountable for counterfeit goods and misinformation, requiring stricter seller verification and transparent advertising.

The 7 biggest ecommerce loss drivers — and how to mitigate their impact

These ecommerce challenges don't mean you should give up on your Shopify business. Instead, take note of the biggest loss drivers and develop an action plan to not just survive, but thrive.

1. Rising customer acquisition costs (CAC)

Customer acquisition costs have increased by 222% over the past decade, resulting in lower profit margins for businesses across various sectors. Depending on the industry, ecommerce brands spent from $53 to $91 in 2024 to gain one new customer.

Let's assume you sell custom-printed T-shirts for $25–$27 per piece. The average CAC in the fashion industry is $129, meaning you're losing money instead of making it.

What to do:

• Increase average order value (AOV): Consider offering personalized add-ons, bundle deals, or limited-edition products to drive shoppers to spend more.
• Focus on customer retention: Keeping existing customers costs less than acquiring new ones. Repeat buyers also tend to spend more per order because they trust your brand and products. With that in mind, leverage loyalty programs, ad retargeting, and other customer retention strategies. Returning to the above example, you could reward loyal customers with exclusive discounts or early access to new prints.
• Provide exceptional customer service to reduce churn: Having high-quality products isn’t enough to keep customers around. You also need to go above and beyond their expectations at every touchpoint, from the moment they first engage with your brand to the final sale and beyond. Simply put, prioritize customer service to drive repeat business and stay competitive.

Use a robust customer support platform like OpenDesk to manage, sort, and address buyer inquiries. Our AI-powered tool automatically categorizes incoming support tickets by topic and urgency, which can help improve response times.

OpenDesk also provides the insights you need to identify and fix operational issues before they grow into bigger problems that could cause customers to leave. Tickets Per Order (TPO), our proprietary metric, tracks the number of tickets generated per order.

For example, you can see how many tickets are related to product quality issues or shipping delays and take the steps needed to solve these problems.

2. Return fraud

Many shoppers return products for reasons unrelated to their quality, resulting in logistical headaches. Some do it because of sizing issues or buyer's remorse, while others engage in fraudulent activities, such as returning counterfeit goods or falsely claiming to have received an empty box.

According to a recent report, customers sent back goods worth $685 billion in 2024. Over 15% of all returns were fraudulent or abusive, costing retailers $103 billion in lost revenue.

What to do:

• Encourage exchanges over refunds: Offer free exchanges, but charge restocking fees for returns to protect your margins.
• Monitor transaction data: Use return management software to identify customers who abuse your return policy. Look for AI-powered platforms that automatically approve or decline returns based on behavior patterns.
• Analyze return reasons: With OpenDesk, you can track the tickets related to product returns and determine the root cause of customer dissatisfaction. Analyze this data to separate legitimate returns from fraudulent ones and take action accordingly.

3. Unstable logistics

The ecommerce market is flooded with suppliers who fall short in product quality, compliance, and delivery times. These issues negatively impact your Shopify brand, leading to shipping delays, understocking, high return rates, and reputational damage.

Let's say you source your products from an overseas supplier. At some point, they start to cut corners on product quality or fall behind on deliveries. Such problems can affect your ability to meet customers' expectations and provide a seamless shopping experience.

What to do:

• Vet suppliers thoroughly: Look for suppliers with proven track records. Ask about their certifications, verify their compliance with safety standards, and request product samples. Also, check their financials for signs of debt, late payments, or declining revenue.
• Adopt a dual-sourcing strategy: Diversify your supplier base to prevent disruptions and have more flexibility. Depending on what you sell, you could work with a local supplier for fast restocks and an overseas company for bulk orders.
• Partner with multiple shipping carriers: In a 2023 survey, 70% of U.S. consumers cited free shipping as the most important factor in product delivery. Next on the list was fast shipping, followed by shipment tracking and free returns.

By partnering with multiple shipping carriers, you can meet customer shipping expectations while keeping costs low. Your customers will have the flexibility to choose a carrier based on delivery speed, cost, or personal preferences.

Make sure you also monitor customer inquiries and complaints to spot operational bottlenecks before it's too late.

For instance, you can track Tickets Per Order to see how often shoppers reach out for support regarding missing items, defective products, or other issues. Use this data to proactively improve your services and address supply chain problems.

4. Chargeback fraud

Consumers are entitled to chargebacks in the event of an unauthorized transaction, billing error, merchant abuse, and similar issues.

However, some shoppers file chargeback claims to receive a refund, saying they received a defective product or didn't authorize the payment. Others purchase and use digital goods like software licenses or eBooks and then dispute the charge. This practice is known as chargeback fraud, or friendly fraud.

Chargeback fraud is expected to cause losses of $28.1 billion by 2026, according to Mastercard research. That's a 40% increase compared to 2023. What's more, every successful chargeback costs merchants about two and a half times the transaction amount.

In the U.S., ecommerce companies reported chargeback losses of $7.2 billion in 2020, $7.9 billion in 2021, and $8.5 billion in 2022. Mastercard estimates this number will reach $12.85 billion by 2026.

What to do:

• Keep detailed records of shipments, order information, and customer communications.
• Address customer inquiries promptly to prevent buyers from initiating chargebacks.
• Use OpenDesk to bring all your support tickets into one place and quickly see time-sensitive messages like those related to returns and refunds.
• Deploy fraud prevention tools like Verify, Ethoca, or Charback.io to spot transactions that could result in chargebacks and reduce fraud risk.

5. The ever-changing SEO landscape

Like most ecommerce merchants, you likely rely on search engine optimization (SEO) to attract website traffic and gain exposure. However, the SEO landscape is constantly changing, which might leave you scratching your head.

One reason is that search engine algorithms are more unpredictable than ever. For example, Google rolled out AI Overviews in 2024, reducing organic click-through rates.

Plus, many consumers are now using ChatGPT Search, Perplexity, and other AI search engines to find information online. These tools provide answers directly in search results, bypassing websites like yours and "stealing" your traffic. The same goes for Google AI Overviews.

What to do:

• Publish in-depth guides, product comparison charts, and helpful articles to build authority and trust.
• Use semantic markup, metadata, and clean, structured text to make your site AI-friendly.
• Optimize your website's speed, call-to-action (CTA) buttons, text fields, and other elements that affect the user experience.
• Conduct regular website audits to detect SEO issues like broken links, missing alt text, duplicate content, and non-secure pages.

6. The rise of cybercrime

The annual cost of cybercrime increased from $860 billion in 2018 to $8.15 trillion in 2023—and it's expected to reach $13.82 trillion by 2028. Small businesses are particularly vulnerable to phishing attacks, account takeovers, spoofing, and other cyber threats due to limited security resources and a lack of dedicated IT teams.

For example, hackers can exploit vulnerabilities in payment processing systems and access consumers' credit card details. Per Juniper Research, the ecommerce losses to online payment fraud reached $41 billion in 2022 — and this number continues to increase year after year.

Then there's phishing, which accounts for 58% of all cyberattacks targeted at retailers. This type of security incident can lead to fraudulent transactions, data breaches, financial losses, and reputational damage, eroding consumers' trust in your brand.

What to do:

• Collect only the necessary information and encrypt all sensitive data, such as customer names and email addresses.
• Enable multi-factor authentication (MFA) to add an extra layer of security.
• Update your plugins, add-ons, and software regularly to patch vulnerabilities.
• Use fraud prevention tools like Shopify's fraud analysis, NoFraud, or Kount to detect and block high-risk orders.

7. Not having an exit plan

From cybersecurity incidents to poor market fit and unexpected expenses, there's a lot that can go wrong when running a business. These risks are even higher for startups and small companies, which have limited resources.

While it's important to stay positive, you should still have an exit strategy. Think of it as a way to safeguard your financial future if things don't go as planned.

A well-thought-out exit strategy allows you to increase your business value if you ever decide to sell. Not only does it ensure a smooth transition, but it can also help you secure a profitable deal.

Failure to prepare for a sale can lead to undervaluation and financial loss. You've worked hard to grow your business, so don't let a lack of planning diminish its worth.

What to do:

• Organize your financial records, such as tax filings, sales reports, and growth forecasts.
• Analyze your operations to identify value-driving factors. These could include recurring revenue, high customer retention rates, low overhead costs, and other aspects that make your business appealing to potential buyers.
• Maintain customer service documentation, as well as records of all relevant communications with suppliers.
• Pay off your taxes, invoices, and due debts to minimize liabilities.

When you're ready to sell, request an offer from OpenStore. We’ll review your company's past performance, forecast revenue growth, and make you an offer within three to five business days.

Once the transaction is completed, our experts will structure and manage your business to maximize its potential.

For example, OpenStore increased Jack Archer’s revenue from $1 million to $10 million within nine months of acquisition. Securing an exit allowed Jack Archer’s founder to pursue a new venture while seeing the company become even more successful.

Prepare your business for the unexpected

While it's impossible to eliminate the risks of running a business, you can mitigate them with a proactive mindset. For example, embracing a customer-centric culture would allow you to quickly identify and address buyers' concerns, which may result in fewer product returns, increased profits, and repeat purchases.

For starters, join OpenDesk to improve your customer service operations. Our platform serves as a central hub for all your inboxes while providing key operational insights.

Powered by AI, OpenDesk can automatically sort, label, and prioritize support tickets, ensuring no message goes unanswered. The platform categorizes customer inquiries by topic, such as "Fulfillment," "Discount Code," and "Shipping," and you can see which channels they came from and when.

Then there's the time-saving aspect. With OpenDesk, you can automate responses to common inquiries like those related to product sizing or delivery terms.

Upload documents about your brand and products, determine which ticket topics to automate, and let the AI do the rest. Its responses will be clear, contextually relevant, and human-like, making shoppers feel understood.

But don't just take our word for it. Instead, try OpenDesk for free to level up your customer service and secure long-term business success.