I think a contractor should give advice and not his or her opinion. In no way is the contractor obligated to make the business successful either. As long as that is understood by both parties than I see no issues arising. It's up to the business owner to have a good business model and backup plan.

Also it's the internet. No one knows what will be success or not. Some really great ideas/business have gone out of business within a year while bad ideas have stuck around forever.

-PK

As a biz dev consultant, my job is to give opinions, perspective including the good, the bad the ugly. But, I've found that most people go ahead and jump even when told of overwhelming competition, barriers to entry, that they're woefully underfinanced, etc.

However, if you're "simply" (ha!) building a web site/e-commerce system, I think it's up to your personal comfort level. As noted above, none of us can predict with certainty what will and won't work. You could give the client some perspective in terms such as "have you considered?" within the context of building the best site/system possible.

I think that you should tell the client to expect heavy competition or whatever she is up against. However, the client might surprise you with her skill, expertise, and determination.... and someday she might own your company. If you are not up for the job, don't assume that she can't do it.