“Overall the web is sloppy, but an online store can’t afford to be.” -Paul Graham, YC
If the consumer wants anything, they will first start searching on the internet. Although eCommerce transactions have increased at a crazy pace, the competition to place your product on the top and to make a steady sale has also increased.
Before discussing the challenges faced by eCommerce companies today, let us delve into how exactly an eCommerce company operates today.
How does eCommerce companies work?
Ecommerce companies deals in goods and services, tangible or intangible, earlier, customers have to walk through the door of the sellers ( brick and mortar store ) to make a purchase, when money is offered in exchange of the goods purchased, we call it as an ecommerce transaction.
However, digitalization has transformed the way eCommerce operates. Now an eCommerce transaction can be processed across multiple touchpoints.
With the ease of shopping convenience, digitalization has also brought some challenges and problem for eCommerce companies.
According to Statista in 2015, retail e-commerce sales amounted to 342.96 billion US dollars and are projected to surpass 600 billion US dollars in 2019. Retail e-commerce in the U.S. is projected to generate a hundred billion U.S. dollars in revenue by 2019. The figures clearly explain the power of ecommerce industry.
This doesn’t mean all the E-commerce companies are consistently making money. The small, as well as big companies, have to face various challenges. Developing the business in ecommerce is the hard part. You have to take care of everything, from website maintenance to customer service.
What are the problems or rather challenges faced by eCommerce companies?
Below are the major problems that are faced by most of the e-commerce companies:
1) An absence of Online Identity Verification
When a visitor visits an e-commerce website and signs up, the portal is unaware of the customer except for the information he/she entered. The customer is genuine or not is questionable. It creates huge revenue losses for a company when a customer makes a Cash-On-Delivery (COD) purchase and the information entered like phone number, the address is invalid or fake.
This challenge can be solved by taking the proper steps to verify the customer’s information. First of all recognize signs of suspicious activities like if any customers are placing high priced orders or large orders, Detect fake phone numbers or email address, check zip code whether it is matching with state/city. Besides this when a customer signs up, send a verification link via a text message or email to validate the genuineness of customer. And when a customer makes a COD purchase automated call can be dialed out to the customer and ask him/her to validate the delivery address.
2) Delivering on Omnichannel customer service
In today's business scenario, a customer can contact you at any touch-points. For instance, he can visit your website, contact your agent, leave a message on your social media page, shop from your store or contact you through live chat or messaging platform.
Modern visual engagement tools capacitate your organization to serve your customers across all touchpoints, channels, and journeys.
Equip your team with the right technology - Set up customer support staff with the right technology so that they can reach out to your customers via their preferred channels like phone, email, live chat, video call, online help centers or in-app messaging.
Identify the key channels - Identify the channels which are most important to your customers. Integrate and optimize those channels by adding personalized messages and offer one-to-one interaction with live chat or video calling.
Maintain the Context - Direct the conversations based on a user’s previous response. Keep a track of customer conversations with important parameters like user profile so you can always respond contextually to the customers irrespective of the channels they used.
3) Competitor Analysis
In this competitive world, there will be too many competitors who will be offering the same products and services as you. Unless you have the best strategy that differentiates yourself from other competitors; it will become difficult to survive.
Conduct proper and deep research of your competitors. Put your efforts in making strategy which enables you to shine brighter than your competitors. Use social media platforms and blogs for promoting your products. Invest in promotional offers this will help to get more web presence and customers.
“Businesses with customer’s loyalty programs, on average, are 88% more profitable than customers who do not.”
Carry out research to find which new products are more in demand and remove old and unwanted items less in demand. By offering best & extraordinary customer services can even help you to be one step ahead of your competitors.
4) Stuck at the old school way of selling
The reason eCommerce companies find online selling fiercer is that they are still stuck with the old way of selling. Most of them lack the necessary insight into customer behavior and their buying patterns which can help them strive in the current e-commerce scenario.
Offer your product on prominent marketplaces like Amazon, eBay, etc as these e-commerce sites already have an existing network of buyers so pitching and branding your product becomes relatively easy.
Segment visitors - Visitor segmentation allows eCommerce companies to focus on their website visitors on the basis of their customer journey - past conversations, geographical location, browsing behavior, referral page, and more.
This allows eCommerce companies to anticipate customer needs and offer them personalized service ( free delivery or promo codes ) to convert them more easily.
5) Shopping cart abandonment
Shopping cart abandonment is one of the biggest issues faced by eCommerce businesses today. Even big giants cannot escape the problem of cart abandonment.
For instance, when a brick and mortar giant Nordstrom started its online e-commerce portal, they witnessed a huge loss due to cart abandonment, customers were literally abandoning the cart due to tedious and buggy checkout process.
This lead Nordstrom them to come up with a brand new checkout design which doesn't get navigate to other pages and makes checkout a two-step process.
Consider redesigning your shopping cart, make sure that there are no bugs or unnecessary clingy form filling process.
Fortunately, it has been observed that live chat solutions reduce shopping cart abandonment instances. Features such as visitor segmentation can help you to proactively reach out to your customers during key stages of their journey. You can track visitors who have left the checkout process without placing an order, and engage with them.
Visual tools capacitate you to instantly address customer queries during the checkout process.
6) Maintaining customer loyalty
No matter how attractive or fancy your website looks, if you would not be able to build customer trust and loyalty, the business has to struggle another day!
It’s the work of lots of efforts for companies to make a new customer and maintain the same customer for a long time. One of the reasons why e-commerce companies face the struggle while building trust and loyalty with the customer is because a seller and a buyer don’t know each other nor they can see each other while making a transaction, unlike street-shopping. It takes few transactions, time and plenty of efforts by the company to build customer trust and loyalty.
To earn customer loyalty, what you must provide is excellent customer service. You must make sure from ordering online to shipping, the customer is satisfied with your service. There are plenty of online retailers that might be selling the same product like yours, so you must identify your competitive advantage and nurture your customer service accordingly.
The few simple ways to increase trust with visitors are as follows:
- Display your address, phone number, and pictures of staff, customer testimonials, and credibility badges on your website.
- Add live chat option to the website.
- Create blogs. Often blogs help e-commerce to build trust.
- Make customer service as a priority before profit. Always remember, it’s always easy to maintain an existing customer than to find a new.
- Create loyalty programs. As the points are not transferable to other companies, the customer will definitely make next purchases from your sites.
7) The headache of product return and refund
In a survey by comScore and UPS, 63% of American consumers check the return policy before making a purchase and 48% would shop more with retailers that offer hassle-free returns. This clearly shows how conscious consumers are for the return and refund policy.
When the product is returned, due to whatsoever reason, whether a customer was dissatisfied or the product was damaged, the business suffers a heavy loss of shipment and reputation. Cost of logistics and shipping have always been scary for those e-commerce sellers who deliver the product for free.
Return and refund are also part of great customer service, therefore it will be a big mistake to underestimate them. The best thing you can do is build a strong returns policy. Below consideration should be kept in mind while designing returns policy:
Never hide your policy. Be transparent.
Use plain English that even understand by laymen. Not all your customers that will read the policy will be highly intellectual.
Don’t use the scary stuff in the policy like, “you must”, “you are required”, the too harsh policy may stop customer to purchase the product.
Outline what they can expect from you. Provide them various options for payments and shipping.
Educate your staff about your return policy. So, that they can assist customers quickly and effectively.
Be prepared to face the cost of your mistakes. If the product is shipped wrong, then take extra efforts to make the customer happy.
8) The struggle of competing on price and shipping
Online merchants frequently compete on price. Plenty of sellers may list equal products on their sites. The product can be the same but the only difference here is the price. They are vying to sell the product to increase its market share.
The price competition affects the small e-commerce business badly. Because the mid-sized or large competitors often offer products for less price and free shipping on nearly every order, while they couldn’t afford to offer the same with competitive price.
Online sellers like Amazon and Walmart generally have shipping amenities around the country. Their distributed warehouses allow large e-commerce businesses to ship orders from the closest facility; approximately 60 percent of orders are in the same area the customer is in. As the orders are shipped from the nearby warehouses, the cost to send the order decreases and the order arrives in a day or two.
Ultimately every online shopper expects fast and frees shipping that too at the lowest price.
To survive in the competitive market, e-commerce companies need to distribute their own inventory to fulfillment warehouses, become extremely resourceful shippers, or find some unique products to minimize this problem. Because ultimately every online shopper expects fast and free shipping that too in lowest price.
9) Competing against retailers and manufacturers
Many online stores bulk buy products wholesale from manufacturers or distributors to sell that in retail from their online store. This is the basic business model for online stores.
Unfortunately, because of e-commerce's low barrier to entry and other reasons, many product manufacturers and retailers start selling directly to consumers.
The same company that sells your products may also be your competitor. For example, ABC Garments sells not just your online marketplace, but also directly to consumers on its website. Even some of the manufacturers build distributors that make the scenario worse.
Though it is not completely possible to stop manufacturer to sell products to customers directly, few tactics may help to minimize the problem. Below are the tactics that might help the online seller:
Giving priority to buy from those manufacturers that are less likely to sell directly to customers.
Offering the product at fewer prices or with the added benefit to increasing sales.
Restricting the manufacturer to sell the product directly to the customer by enforcing the policies and strict rules while making the contract. It will be not possible for every manufacturer but you can deal with the small manufacturers.
10) A problem of Data Security
Security issues over the web can lead to a nightmare. Fraudsters post lot of spam and they may attack the web host server and infect all websites with viruses. They can get access to all your confidential data about your customer’s phone number, card details, etc.
Manage your own servers and do not use common FTP to transfer files. FTP is prone to theft. If any developer copies any file in an open Wi-Fi network can lose passwords and other confidential data to the thief. By constantly updating the shopping cart you can minimize the risk of data stolen. Most content management systems store their data in the database. Developers should take backups at regular intervals and should retrieve the data if stolen.
The last word:
Surviving in the E-commerce competition, which is no less than war, requires outstanding strategies. If you don't want to struggle, then give extra efforts on your every aspect of the business. You must be prepared for challenges and growth at every stage of your business, and ultimately it will have a better chance to bloom.