7 Problems That Every E-commerce Faces and Their Solutions 2018

author
Laduram Vishnoi
CEO, Acquire.io
6 min read
7 Problems That Every E-commerce Faces and Their Solutions 2018

Overall the web is sloppy, but an online store can’t afford to be.” -Paul Graham, YC

In the era of the Internet revolution, E-commerce industry is the brightest star! According to Statista.com 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.

Below are the major problems that are faced by most of the ecommerce 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. This 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.

Solution:

This challenge can be solved by taking 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 e-mail address, check zipcode whether it is matching with state/city. Besides this when a customer signs up send textual message or e-mail 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. Competitor Analysis

“You can’t look at the competition and say you’re going to do it better. You have to look at the competition and say you’re going to do it differently.” – Steve Jobs

In this competitive world, there will be too many competitors who will be offering same products and service as you. Unless you have the best strategy that differentiates yourself from other competitors; it will become difficult to survive.

Solution:

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, 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.

3. Maintaining customer’s loyalty

No matter how attractive or fancy your website looks, if you would not be able to build the 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 a customer and maintain the same customer for a long time. One of the reasons why ecommerce 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 the customer trust and loyalty.

Solution: 

“Customer service is what you and your organization provide. Customer loyalty is the result of the service.” – Shep Hyken

To earn the customer loyalty, 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 the selling the same product like yours, so you must identify your competitive advantage and nurture your customers accordingly.

The few simple ways to increase the trust with visitors are as follow:

  • 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 the blogs. Often blogs help the ecommerce 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.

4.   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.

Solution:

Return and refund are also part of great customer services, therefore it will be the 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.

5.   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 is same but the only difference here is the price. They are vying to sell the product to increase their market share.

The price competition affects the small ecommerce 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 the shipping amenities around the country. Their distributed warehouses allow large ecommerce 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 lowest price.

Solution:

To survive in the competitive market, ecommerce companies need to distribute their own inventory to fulfilment 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.

6.   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 ecommerce’s low barrier to entry and other reasons, many product manufacturers and retailers to start selling directly to consumers.

The same company that sells your products may also be your competitor. For an example, ABC Garments, sells not just your online marketplace, but also directly to consumers on its website. Even some of manufactures builds distributors that makes the scenario worse.

Solution:

Though it is not completely possible to stop manufacturer to sell products to customers directly, but few tactics may help to minimize the problem. Below are the tactics that might help the online seller:

  • Giving priority to buy from those manufactures that are less likely to sell directly to customers.
  • Offering the product at fewer prices or with added benefit to increase the 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.

7. Problem of Data Security

Security issues over the web can lead to 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.

Solution:

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 shopping cart you can minimize the risk of data stolen. Most content management systems store their data in the database. Developers should take the backups at regular intervals and should retrieve the data if stolen.

The last word:

Surviving in the Ecommerce competition, which is no less than war, requires the outstanding strategies. If you don't want to struggle, then give extra efforts on your every aspect of 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.

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