The Internet has provided a rare opportunity especially for small to medium sized enterprises. It moves organizations beyond the physical constraints of their traditional distribution channels and creates a world wide virtual community in which small and medium sized companies can compete with large enterprises. In this research, we focus on the use of the Internet as a virtual storefront where products are offered directly to customers. Our contention is that product characteristics play a major role in the successfulness of its marketing on the Internet. We reviewed benefits of online marketing along three channel functions and identified factors that impact the use of online marketing approach. A framework is proposed to help evaluate the chance for a company to succeed in e-commerce. Data of failed e-tailers in the last two years were collected and analyzed using the proposed framework.