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January 04, 2021 - BY Admin

10 Problems That Every Ecommerce Business Faces and Their Solutions

“Overall the web is sloppy, but an online store can’t afford to be.” – Paul Graham, cofounder of seed capital firm Y Combinator.

When a consumer wants something, the internet is where they go (at least at first). Ecommerce has grown at an incredible rate since conception, and so has the competition among online sellers – one of the challenges faced by ecommerce companies today.

An industry with huge potential

The rise of digitalization has transformed the way companies operate. Customers no longer need to take a trip to brick and mortar stores to make their purchases. Ecommerce companies still deal in goods and services, but now this takes place across multiple touchpoints within an online environment.  

According to Statista, in 2015, retail ecommerce sales amounted to $342.96 billion and projections for 2019 said sales would surpass $600 billion. With these kinds of figures, the power and potential of ecommerce are clear.

But, challenges have arisen

Although the online approach has made shopping a lot easier for consumers, it has also brought unique challenges for ecommerce companies.

Not all businesses are making money consistently. There are challenges standing in their way, big and small alike. Developing an ecommerce business, especially preparing your eshop to cater to your customers' needs, is hard. You have to take great care over everything, from website maintenance through to customer service.

Want to deliver digital experiences that resonate with your customers? Listen to this podcast on how to improve your service and grow your brand on Shopify and beyond.

So, what are the challenges ecommerce companies face?

1) The need for online identity verification

When a visitor goes to an ecommerce website and signs up, you need to somehow be sure that this is a legit person who wants to buy. This way, you'll avoid fraudulent accounts or bots – which could result in revenue losses when it comes to Cash-On-Delivery (COD) purchases (when an invalid or fake phone number or address has been used, for example).

How can this be solved? By taking the proper steps to verify the customer’s information.

First of all, look out for signs of suspicious activity. This could take the form of particularly high value or large orders. Use automation to identify fake phone numbers and email addresses and check whether zip codes match with the state/city.

Always send a verification link when a customer signs up, via text message or email. With COD purchases, an automated call could even go out to the customer, asking them to validate the delivery address.

Related: Your Ecommerce Information Center: Get free educational resources to help you grow your brand and forge strong customer relationships.

2) Delivering an omnichannel customer experience

In today's interconnected world, customers can reach out to your brand through any number of touchpoints. They may visit your website, contact your support agents, leave a message on your social media page, shop from your store or use a live chat or a messaging platform.

According to ecomdash, “any business that isn’t moving toward an omnichannel retailing strategy will likely be left behind by its online-savvy competitors.”

So how can this be addressed? Make sure to equip your team with the right technology.

Up to date, visual engagement tools enable your organization to serve customers across all touchpoints, channels, and journeys.

To form your strategy:

  • Identify the key channels first – which are most important to your customers. Then, make sure your customer support staff contact customers via their preferred channels, phone, email, live chat, video call, online help centers or in-app messaging. Integrate and optimize those channels, adding personalized messages and offering one-to-one interaction with live chat or video calling.
  • Maintain context. Direct the conversations based on a user’s previous interactions. To do this, keep track of customer conversations using parameters like a user profile in a tool with a unified view. This way, you can always respond contextually, irrespective of channel.

To learn more about the e-commerce customer experience and how you can stay relevant, download our whitepaper for free.

3) Outshining the competition

“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

Others may offer the same products and services as you, but that doesn't mean you can't differentiate yourself from the competition.

How do you start doing this? First, you need to conduct thorough research into competitors and the market, and develop your strategy accordingly.

Carry out research, find which products are more in demand. Remove outdated items. Use social media platforms and blogs for promoting products and your brand. Invest in promotional offers to help create more web presence and therefore more customers. Remember that businesses with customer loyalty programs, on average, are 88 percent more profitable than those who do not offer these programs.

And also, don't forget about a key element of customer experience: customer service. Give the right tools (e.g. live chatshared inbox) and motivation to your team to go above and beyond when assisting customers.

4) The need to revamp their approach to selling

The reason many ecommerce companies find online selling difficult is that they are, ironically, stuck in the past. Some lack the necessary insight into customer behavior and buying patterns, data which can help them thrive in the current ecommerce environment.

To change your approach, you can first consider offering your products in prominent marketplaces like Amazon and eBay. These ecommerce sites already have a vast network of buyers so pitching and branding your product (and figuring out what works and what doesn't) becomes relatively easy.

And, you need to segment your data. Visitor segmentation allows ecommerce companies to identify and communicate with visitors based on their customer journey, past conversations, geographical location, browsing behavior, referral page, and much more.

In turn, ecommerce companies can anticipate customer needs, offering their customers a personalized service, such as free delivery or promo codes, which help increase conversions.

5) Shopping cart abandonment

Shopping cart abandonment is a huge issue for any ecommerce company – even e-commerce giants are not immune to this problem.

For instance, when brick and mortar heavyweight Nordstrom started an ecommerce portal, they witnessed big opportunity losses from abandoned carts. The tedious and bug-filled checkout process was causing customers to flee mid-purchase.

So, Nordstrom had to come up with a new checkout design, turning it into a much easier two-step process.

If you're noticing the same problem, consider redesigning your shopping cart, making sure there are no bugs or an unnecessarily long and frustrating form-filling process. And, tools like live chat can reduce shopping cart abandonment instances.

Combining this with features such as visitor segmentation, it's possible to proactively reach out to customers during key stages of their journey, providing the opportunity to engage with customers who would otherwise drop out without purchasing. Visual tools can help address customer queries during the checkout process – for instance, if a customer has trouble creating an account, your agents can initiate a cobrowsing session to show them how to do it.

6) Maintaining customer loyalty

Even with the best-designed website out there, without customer trust and loyalty, your business is bound to struggle.

But, acquiring and maintaing customers requires massive effort. One of the reasons ecommerce companies (as most online B2C businesses) face a challenge in building customer trust and loyalty is that often the seller and buyer don’t know each other. Nor can they see each other, making the interactions less personable than they would be in-person or in B2B where there are lengthy decision-making processes between salespeople and customers.

This can only be made up for through time and effort. Across multiple transactions, eventually, the company can build this trust and loyalty.

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

You should first make sure your customer service processes are effective, from ordering online to shipping. Also, you can increase trust with visitors by:

  • Displaying your address, phone number, pictures of staff, customer testimonials, and credibility badges on your website.
  • Add a live chat option to the website.
  • Create valuable content.
  • Make customer service a priority over profit. Remember, it’s easier to maintain an existing customer than to find a new one.
  • Create loyalty programs. If a customer doesn't want to lose their loyalty prizes, they need to purchase from you.

7) The headaches of product return and refund

A survey by comScore and UPS, showed 63 percent of American consumers check the return policy before making a purchase and 48 percent would shop more with retailers offering hassle-free returns.

The thing is, when a product is returned, whether due to a dissatisfied customer or damaged product, the business suffers a heavy loss in shipment and reputation. Logistic and shipping costs have always been problematic to ecommerce sellers delivering their product for free.

However, you can't avoid having good return and refund policies – they're a big part of great customer service. The best thing you can do is build a your policies carefully and communicate them clearly. Consider the following:

  • Be transparent. Never hide your policy hoping customers will not see it and return their items.
  • Use plain English. It's important for these policies to be understandable to everyone, regardless of cultural background or education level.
  • Try avoiding phrases like, “you must” ‘’and “you are required”, which may seem harsh and put off potential customers.
  • Outline what they can expect from you. Provide different options for payments and shipping.
  • Educate staff about your return policy, so they can assist customers effectively.
  • Be prepared to face the cost of your mistakes. If the product is shipped wrong, take extra effort to keep the customer happy.

8) The struggle of competing on price and shipping

Despite customer experience being the most important thing for consumers, online merchants frequently compete on price, too.

Price competition particularly affects small ecommerce businesses, as mid-sized and large competitors can often offer products less expensively.

For example, online sellers like Amazon and Walmart generally have shipping amenities distributed across the country. Their warehouses allow orders to be shipped from the closest facility. Approximately 60 percent of orders come from the same area as the customer. As they are shipped from nearby warehouses, the cost of distribution decreases and the order arrives in a day or two.

Add the luxury of free shipping in the mix, and smaller companies simply can’t afford to compete.

So what can you do?

To survive in a competitive market, ecommerce companies could distribute their inventory to fulfilment warehouses, become extremely resourceful shippers, or find some unique products consumers won't be able to find elsewhere.

9) Competing against retailers and manufacturers

Many online stores bulk buy products wholesale from manufacturers or distributors, selling them with retail online. This is the basic business model for online stores.

Unfortunately, due in part to ecommerce's low barrier to entry, product manufacturers and retailers have started selling directly to consumers. The same company that sells your products may also be your competitor. For example, ABC Garments sells to not just your online marketplace, but also directly to consumers on its website. Even some of the manufacturers create distributors, making the scenario worse.

What can you do about this? Stopping manufacturers selling products directly to customers may not be possible, but there are a few tactics to minimize the problem:

  • Give priority to manufacturers less likely to sell directly to customers.
  • Offer the product at a lower price or with additional benefits to increase sales.
  • Restrict the manufacturer from selling the product directly to customers by setting this out in the contract. It will be not possible for every manufacturer, but you can work with smaller ones this way.

10) The heightened demand of data security

Security issues can lead to nightmare scenarios. Fraudsters may post spam and attack the web host server, infecting the websites with viruses. They can potentially gain access to confidential data about your customers' phone numbers, card details, and more.

Consumers, though, don't care what you do, they expect you to protect them fully. To do this, here are some ideas:

  • Manage your own servers.
  • Do not use common FTP to transfer files
  • Employ cyber security services or engineers
  • Have effective verification processes (as we mentioned in #1)

Also, if any developer copies files in an open Wi-Fi network, passwords and other confidential data can be stolen. By constantly updating the shopping cart, you can minimize the risk of stolen data.

Most content management systems store their data in the database. Developers should take backups at regular intervals retrieving the data if stolen.

Ecommerce challenges can be opportunities

Surviving the fierce ecommerce competition requires outstanding strategies. Be prepared to address all possible challenges and focus on building a customer-centric culture. This way, you may not only address challenges but you may also find what makes your customers tick, and offer them a customer experience they'll remember.