8 Common Ecommerce Challenges and Practical Solutions
The booming of digitalization has transformed the way that business operates. Enjoying such an ideal condition, E-commerce business has exploited with the fruitful growth of millions of online businesses worldwide. Although this new trend has made shopping much more convenient for both sellers and buyers, some unique challenges, which form the online business bounce to struggle, also come along the way.
In such a virtual environment, there are challenges that obstacle the development of E-commerce enterprise, big and small alike. Profoundly understanding how urgent it is to find out the way of solving these concerns, in this article, we would love to highlight the main issues faced by e-commerce and propose a set of corresponding solutions. We hope that you can make the best use of our information to outperform and get more reputation as well as revenue.
Table of content
- Online identify verification
- Competitor analysis
- Customer loyalty
- Return and Refund
- Pricing and shipping
- Retailors and manufactures
- Data security
- Shopping cart abandonment
- Final words
Online identify verification
When a visitor browses to your store website and then signs up, the portal is possibly unable to verify the correctness of the fulfilled information, which is then left unquestioned. The problem is that because you do not meet your customers in person, then how do you know whether they enter their real name and contact or not? If your verification procedure is not strong enough to protect your own business, you will lose a considerable amount of revenue. Because of that, the verification of customers’ data should be prioritized.
Take steps ahead of the hacker, and you can identify fraudulent attempts without sacrificing positive customers’ experience. Do not ignore any signs of suspicious activity as this often take the form of high value or large orders.
You can validate the customer on across information such as phone number, email address, zip code, etc. For example, when customers sign up by entering their email for purchasing, it sounds helpful to send a link to ask for verification. With Cash On Delivery purchases, an automatic call could even dial to the customer, requiring them to confirm the shipping address.
Besides, using software solutions such as LexisNexis is also a smart choice to speed up client onboarding with instant online identity checks. With the support of multi-layered authentication, including electronic identity verification, SSN verification, instant authentication, etc. for fraud detection, it helps to reduce inevitable risks from hackers.
In a competitive marketplace, everyone all tries to expand their market share and shine brighter than competitors. Developing an e-commerce business is hard, but standing out from the competitors is somehow much more difficult when others will offer similar products and services as you do. So what do you do in this business battle?
Obviously, understanding your competitors and their business practices is the key to success. Then it is essential to know what products or services they offer, the price they charge, how they market their business, ect. Therefore, the research should be carried out to exploit the strength and deficiencies of your competitors in such areas.
If you already understand what your competitors are doing better than you, you need to make ways for innovation, not imitation.
On the other hand, keep promulgating well-though strategies that have differentiated yourself in a concurrence. For example, you can take advantage of social media or to promote products or invest more in exceptional customer service, even offer your unique items. A market that’s already crowded has less scope for expansion. It is vital to provide something unique to your customers to build your own niche and minimize the current competition.
Establishing a solid base of long term relationship with customers is essential for building a successful business. It is shown by the fact that customer retention is much more cost-effective than constant acquisition as it costs five times more to convert a new customer than it does to keep an existing one. Furthermore, 83% of them say that they do not hesitate to recommend a business they trust to others. The success rate of selling to a current client is 3 -4 times higher compared to that of a new one.
However, in today’s digital business climate, the enterprises particularly face this challenge because the sellers and buyers neither know nor see each other. Then, the customer is robbed of the senses they would normally rely on in face to face transactions, which makes them more reluctant to make a shopping decision and then trust the store. For any business, hesitation and uncertainty are the mortal enemies of eCommerce retailers. So how can this be harnessed?
Because customer loyalty is the result of your service, you must deliver exceptional customer service to and create positive experiences so that they will trust you. Here are a few tips to keep customers loyal to your business
Being honest as well as transparent about what customers can expect from your company from your brand from the very first interaction is one of the most vital elements to keep customers stay with you in the long term. The information about your contact, credibility badges, pricing, any policies, customer reviews, and testimonials, etc. should be displayed clearly on your website.
Ask for customer feedback through multi-channel
Customers are willing to share their opinion about your brand. Collecting these responses regularly not only helps you get more opportunities to enhance products up to their expectation but also insert a positive impact on your entire customer base. Furthermore, you can publish these comments on the product review section, which are convincing proofs of your product quality. In this day in age, reviews from customers are as necessary as ever. Research has found that:
- 88% of shoppers trust online reviews as much as a personal suggestion
- 88% of customers have read other’s feedback to determine the business quality
- 72% of shoppers say that positive reviews make them trust a business more
Therefore, there is no time left for a delay when you are about to ask for clients’ feedback and thank them for taking the time to write in.
Create blogs and offer exclusive knowledge on the website
To build a strong relationship with customers, it is nothing more effective than sharing values, which actually means to them. When customers use your service or product, they will definitely have questions related to its features. The typical way to find the most inside about it is through detailed blogs. Then, we can say that if you are a trusted expert who can address all of the customer concerns by providing them the knowledge in your field, you get more chances to increase customer’ loyalty.
Establish a live chat option to your website
Because customers tend to place more confidence in doing business with companies that can offer hassle-free and instant support, investing for a live chat system is always recommended. According to the eDigital Customer Service Benchmark survey, live chat makes up for the highest consumer satisfaction proposition at 73%, in comparison to 61% of email support and only 44% for traditional phone support. With such the statistic, it is easy to understand why customer return to businesses which provides live chat.
Create a Loyalty Program
The adoption of loyalty programs for repeat purchases gives customers a clear incentive to stick with your brand instead of switching to one of your competitors. Besides, the effectiveness of rewards programs is highly variable and dependent upon the type of program and its implementation on different business modules.
So, how can you create a loyalty program that will work? If you are a retailer, you can consider offering free bonus items to frequent buyers as well as a higher level of accessing specific sales and discount programs. B2B enterprise, for instance, can provide perks such as exclusive content, in-person event, or invitations to webinars.
No matter what approach you take, the ultimate goal is to render it more advantageous for the customer to continue shopping on your store rather than test out their opinions.
Return and Refund
Returns have long been the enemies of many retailor brand. This situation is swelling to a worrisome level as more and more consumers are switching from physical stores to online.
According to the Star Business Journal, Ecommerce return average is about 20 percent, compared to only 8-10 % percent of physical store purchases. Worse, at holiday time, the online return can reach 30 percent. Not mention the fact that the majority of retailers simply are not well equipped to tackle the influx of returns online shipping generates.
Stated in the Intermec study, 52% of distribution center managers lack either abilities or resources to determine whether returned products should be sent to the vendor, moved into inventory, or discarded and 44% of distribution center managers said that returned items as a “pain point” in their operations. Although return can be a nightmare to online business, they are still reluctant to take serious action to make their policy stricter because they may lose customers.
So, there must be a reason why this is the ticking time bomb of e-commerce returns.
Firstly, it has must be due to the convenience of delivery. Back in the day, outbound shipping almost cost money, and free returns and exchanges were virtually unheard of. But everything changes! Nowadays, the direct to customer business dominate eCommerce trend a, no cost shipping is nearly ubiquitous, then hassle-free return and refund are a new normal.
Secondly, online consumers have more expectations for the products along with service from providers. From the first start, they are actually fitting roomer, who replicate the brick and mortar experience at home by ordering different sizes and colors of the same product, pick the most favorite one and return the rest. Let’s have a look at the statistic from a survey of Return Magic. Here is the top reason for a refund:
- Size too small: 30%
- Size too large: 22%
- Changed my mind: 12%
- Style: 8%
- Not as described: 5%
- Defective: 5%
- Other or not specified: 18%
Returns can be a disease — aggressively attacking profit margins, gutting conversion rates, lower your store reputation, and then ultimately threaten your business. In general, when a product is refunded or exchanged, not only does the retailer undergoes incremental supply chain cost, but also the item can not be resold at the original price due to the damage or devaluation through the time. In particular, the cost of online retailers is substantial.
But hold on! Return can also be a Profit Driver. Free returns or exchanges are the number two reasons that make customers more likely to shop online. Online buyers will take a look at the return policy before committing to purchase, and they often shop elsewhere if that store does not have an option for free and easy return. In addition:
- 96% would shop with a retailer again based on an “easy” or “very easy” return experience (Narva, 2018)
- 69% find themselves dissuaded from shopping online by having to pay for return shipping and 67% by restocking (Narva, 2018)
The headache of product return and refund seems to be hard to stop: customers want free and easy return policies, but returns are costly.
So, what should we do to make a balance between customer expectations and our profit? By implementing a standard and procedure for handling returns, you can save reverse logistics from being suffered.
First of all, be sure that the pre-purchase return policy is clear, prominent, and accessible to everyone. For example, instead of terminology, you should use simple words that are understandable to everyone.
Second, offer various apps and tools which can simplify the refund process. In addition to return software, you can consider opening a return bar location where online shoppers can drop off their returns in person. For instance, Happy Returns collaborate with brick-and-mortar stores and malls to set up Return Bars, which do not have to be in the stores where the purchase was made. In over 300 locations nationwide, consumers can make unboxed returns in person for an immediate refund.
The other alternative is considering outsourcing part or all of your returns process and let the most difficult and time-consuming part being handled by third party logistics.
More interesting, instead of putting returned products back in inventory or throwing them away, you can choose to liquidate them as many, and omnichannel retailers do.
Pricing and Shipping
Another major challenge faced by online merchants is price and shipping competition. When the same product is provided by many retailers, price becomes the sole differentiator for all eCommerce business. Today, consumers have inflated expectations of the eCommerce site, and a major of them keep an eye on the price before deciding to place an order.
While consumer demand grows considerably, the price war aided by price monitoring software makes life tough for any business that operates in this space. For small and even medium eCommerce stores, price wars can be so difficult and time-intensive. That is because they not only have to be price-competitive with major retailers but also at the same time pay attention to competing for eCommerce stores, keep low prices, make a profit, but still satisfy customers. On another hand, large competitors are not likely to be affected as they can offer products for less. Combine with shipping amenities distributed across the country, warehouses, and close facility, and they have more advantages to win the game.
To compete with big-name providers, you need to implement effective shipping strategies, some of them are listed below:
Be upfront: It means that you should be as forthcoming about shipping costs as you possibly can be. Do not wait until customers spending much of their time to search, add items to cart, and abandon them all because of outrageous shipping charges which are finally displayed on the checkout page. You can easily give customers an estimation of fee, including shipping cost right on the product page by using the Shipping Cost extension.
Offer more than shipping carriers. If you can not ship on our own, it sounds great when you can look into using a local delivery or courier company that can quickly deliver your good to customers at a competitive rate
Give more options for shipping
- Include the shipping charge price on the product page
- Provide free shipping when the total amount is over a certain amount. All customers love to get free shipping. By giving them such a credit, you not only satisfy their needs and want but also have a chance to sell more.
Retailors and manufactures
For many decades, the role of manufacture is to use machines, raw material, and labor to mass-produce goods and sell them in bulk to retailers who then sell the products in small quantities to the end-user at a higher price, basically at the MSPR (Manufactures Suggested Retail Price).
This module of business has been continued for years because it was the only way for manufacturers to bring their products in front of the customer. Retailor provides infrastructure, human resources, and retail space that manufacturers could not afford on their own. In the past, manufacturers consider that selling directly to customers means losing their wholesales accounts and ruining the reputation as reputable manufactures.
However, with the rise of the internet as well as a lower barrier to e Commerce’s entry, product manufacturers now are capable of challenging the old business system and sell the goods directly to the customer. We are finding that the manufacturers are now active competitors in the retail market. Of course, they want to get rid of the fact that they are supposed to do all the legwork (product development, purchasing, warehousing, etc.) while drop-ship retailers are gaining benefits oftentimes at a higher rate than the manufactures themselves make.
For now, they are turning to retail eCommerce websites in order to expand their customer base and increase sales.
By selling directly to end clients, manufacturers are not only violating the trust found in manufacturer- retailer relationship by competing their customers again, but also selling goods at, below, or even nearly cost compared to MSRP. But we can not blame them!
So, how can small retailers minimize the influence of this trend?
In most of the case, if the manufacturer has already been selling online, you will have to undergo a difficult time to get them to stop if you are one of their top clients and you can threaten to stop purchasing from them.
However, this seems to be only possible with small manufactures. With other big names, we still have a few tactics to tackle. Stopping manufactures selling products without passing through any third party may not be feasible, but you can narrow their playfield by offer products at a lower price or with additional benefits to increase sales. Because most manufacturers just want to boost their sales, but become a true competitor, then you can use price as a “weapon” to compete with them in this war.
Besides, you are still customers of these manufacturers; you can make your own choice by giving priority to manufacturers who less likely to sell directly to customers. You should be remembered that this should be set out in the contract to make sure that they can not violate the rules which were just by mouth.
Although technology has brought the blossom of eCommerce business, it is the typical platform from which we have experienced the negative impact of online hacking. As the world of online sales continues to expand at a rapid rate, so do the concerns about the security of data that customers share with eCommerce merchants. Therefore, the is a strong demand to build a solid defense for both customer and business data.
Although many people think that online fraud tends to increase during the periods of seasonal sales such as from Back Friday to Christmas period, most security experts exclaim that the hacker does not restrict their activity to the busiest sales periods. The hacking would fall to online retailers who are not able to remain vigilant through the year and proactively secure their website and data.
Here is the data that reveals the fraudulent online activity in eCommerce transaction reported by Security Magazine in 2017:
- From the second quarter of 2016 to the second quarter of 2017, total fraud increased by 5%
- More valued online purchase was more immune to fraud, the fraud rate of transactions exceeding 500$ was 11.64%, 22 times higher than the rate of that worth less than 100$
- The cosmetics and perfumes business was at the top of an industry that severely influenced by online fraud.
Cybercriminals use various techniques to commit their crime. They can post spam and attack the web host server, infecting that website with viruses. More seriously, they can access confidential data about your customers, such as phone numbers, credit card details, to steal the money.
There is a case of Boost Mobil’s customers whose data was hacked by credential stuffing. By this method, criminals shop around on the dark website to find out the old name and password in the hope that one unlocks the administrative panel of your website.
However, most of the cybercrime in the E-business can be seen right at the state of the transaction through credit card. Cybercriminals inject code into a website that sends all the submitted payment information straight to them. This transaction seems to pass without any errors on the customer end so that they can not recognize suspicious activity on their bank count until losing the money. And this is precisely what happened to nearly 38,000 customers using British Airway.
Hackers may use different methods to steal your sensitive data, but at the same time, you can build a solid defense to protect this information from the wrong hands. Here are effective techniques that you can apply to keep your site secure
- Install trustworthy extensions that secure the checkout and transaction: Secure Pay, Sage Page, etc.
- Use a web app firewall
- Install an SSL certificatefor eCommerce store
- Update plug-in regularly
- Backup and restore important information
- Use automated antimalware software
- Let you employee join in security awareness training course
- Develop a cybersecurity plan
Shopping Cart Abandonment
Shopping Cart Abandonment is one of the critical issues that can not be topped. It happens when shoppers add an item to a website shopping cart but leave before finishing the transaction.
E-commerce customers cross through a number of distractions that try to stop them from completing their purchases. According to the Baymard Institute, 68% of the eCommerce cart gets abandoned regularly on average. It means, out of every 100 sales on online stores makes, it will lose 68 other potential customers.
There are many reasons that stop the customer from completing their purchase.
55% of customers choose to abandon their cart due to extra cost because they feel annoyed and irritated due to the hidden cost, which takes the form of shipping cost, tax, and fee.
In other cases, shoppers do not complete their checkout because the total purchase would not reach the minimum amount to get free shipping qualified. The solution for this issue is already mentioned in the Price and Shipping section, so here is the summary:
- Leave no hidden cost for the purchase tab
- Provide more than one shipping carriers
- Offer free shipping
Another reason that leads to cart abandonment is due to the absence of guest checkout. Some E-store does not allow guests to checkout until they create an account in your store. Although profiling customers plays an essential part of your marketing strategies, you should not put some data over the purchase. The obvious solution to reduce the abandonment rate caused by no guest checkout is to enable guest checkout. Let’s imagine yourself as a customer. How unsatisfied you are when you must be a member if you simply want to buy a bag of potatoes and lettuce. Of course, being a member usually comes with other benefits; however, it is not mandatory.
Still related to checkout, but it is the complicated checkout that begs impatient shoppers to take business somewhere else. A complicated checkout makes this process time consuming than it should. If you aim to develop your marketing strategy, the shopper’s email address is supposed to be the only information needed. That is because it opens a direct channel between them and you. The more efficient and straightforward process that you can offer, the higher chance that you keep customers stay with you. Then, think about using any module that simplifies and reduces steps for checkout.
Finally, it comes as no surprise that the cart abandonment is due to payment method, which is either payment security concern or insufficient payment methods. All of these can be enough to scare potential clients off from purchasing your products. There is no way to protect your customer transaction rather than installing trustworthy modules that can safeguard the payment gateways, as we have already discussed in the previous section. Besides, because for some reasons such as security, many of your clients prioritize this payment method over another one. If your business has a global audience, you are likely to provide them a wide range of payment methods. There more payment methods available in your checkout, the less cart abandonment you should expect. Here are some techniques that you can consider to implement to your site:
- Credit Cards
- Debit Cards
- Mobile payment apps
- Payment gateways
- Online baking
The last solution that is not categorized in the above categories is remarketing. It should be deployed after customers already abandoned their cart. There are different channels such as email, Facebook, Instagram, etc., which remind customers about customer’s forgotten cart and give them more deal to continue with the checkout.
There will be more solutions for improving your page checkout. Just take one of them or make a flexible combination to get the most impressive outcome.
Surviving in the E-commerce battle is no less than a war, which requires well-thought strategies. For any business, it is still their mission that they do not just operate a business; they must solve a problem in the market. Although there have many obstacles on the way as we have already mentioned, the space to develop and bloom flourish is still open.
We hope that the information provided here will be helpful for you no matter how big your enterprise is. If you can take effort into every aspect of the business and be well prepared for challenges and innovation at every stage of your business, you are about to get success!