It’s old news that selling online is the new frontier. More than 80 percent of consumers in the United States are turning to e-commerce marketplaces to buy their favorite goods.
There are plenty of opportunities for entrepreneurs like you, but that doesn’t necessarily mean you’ll walk into a bumper harvest. Many small e-commerce businesses are struggling. In fact, their failure rate is just as high as that of brick-and-mortar businesses.
The truth is running an e-commerce business is challenging, and many of these businesses are unable to overcome them. Familiarizing yourself with and learning from the common challenges is key to being successful when selling on the web.
Let’s dig in.
1. Fierce Competition
By far, the biggest challenge small online sellers face is marketplace competition. To start with, the biggest ecommerce companies, Amazon and Walmart, have about 50 percent of the ecommerce market in the U.S.
That leaves about half the market for small online businesses, which should be more than enough. That’s correct, only that small businesses aren’t really competing with Amazon. They’re competing with each other.
Whatever you’re selling online, there are a handful of other small businesses that are also selling it. Consumers have a lot of choices and often, it comes down to a product’s unique selling proposition. The only way to outsell your competitors is to convince customers that they stand to gain something more (or different) by using your product.
Before starting an online business, ensure you already know what the product’s USP is, as well as how to demonstrate it. If you wait until the product has gone to market to start telling customers about its USP, it might be a little too late.
2. Settling on a Selling Model
You have a couple of options when starting an e-commerce store. You could sell direct-to-consumer (D2C) on your own website, set up a shop on marketplaces like Amazon and eBay, or sell on specific social media platforms. It’s also not uncommon for stores to employ more than one of these models.
On the surface, it can look like pursuing all three models is a smart idea. After all, it opens up your store to more selling opportunities.
That’s not guaranteed, though. A lot depends on the nature of your product or business. Some businesses have found wild success with multiple models and others have been successful with just one model.
For example, if you want to give your customers a more personalized shipping experience (say you’re selling jewelry), D2C is the perfect model. Selling on third-party platforms will dilute the customer experience since you have little control over their operations.
If your business is a clothing brand, selling on Instagram alongside your own website is ideal since Instagram attracts most of the audience you’re targeting.
You’re free to test different models but don’t hesitate to make changes when one isn’t working or meeting your goals.
3. Cybersecurity
For e-commerce companies, the internet is a double-edged sword. It has revolutionized how we do business, but it has also created a thriving underworld of online hackers.
Today, close to 50 percent of all cyberattacks target small businesses, which means your online store is a prime target. If it hasn’t been a victim already, its day is coming.
A cybersecurity attack can damage your online store in various devastating ways. It can cause an outage, which will make the site unavailable to customers, meaning you’ll lose sales. Hackers can also steal confidential customer data, which can lead to lawsuits and regulatory fines.
Recovering from a cyberattack can cost your company about $4 million. Many businesses don’t have such kind of cash lying around, which is why most will go out of business six months after an attack.
As an e-commerce business owner, you definitely acknowledge the looming threat. But allocating adequate resources to cyber defense remains a challenge since most e-commerce stores are running on shoestring budgets.
Unfortunately, you have no choice. You either invest in proper cybersecurity or operate your business at the mercy of hackers.
4. Shipping Fulfillment Issues
Shipping is the lifeblood of e-commerce. It’s what ensures an order goes from the seller to the buyer’s doorstep.
But, as the thirst for instant gratification heightens, more online shoppers are wanting not just same-day shipping, but delivery within 1-3 hours. Of course, they’re ready to readjust expectations depending on the nature of the item and its location, but that doesn’t happen often.
Small e-commerce businesses are struggling to meet these order fulfillment expectations. They lack the shipping infrastructure and expertise to make fast deliveries efficiently and cost-effectively. In fact, the only option most businesses have is to partner with third-party shipping companies, which can be unreliable.
Offering fast order fulfillment is key, but don’t forget that reliability wins customers. You’d rather offer next-day shipping and do so without fail, instead of promising your customers same-day shipping only to come up short.
Strive to partner with the best shipping service providers. You can also start selling on Amazon to take advantage of its elaborate shipping infrastructure.
5. Staying Abreast of Industry Trends and Changes
E-commerce is a fast-paced world. New technologies, threats, and trends are emerging every other day, and it can be difficult to keep up with them. You’re so busy steering your business out of rocky waters that you just don’t have the time to monitor new developments.
Trends come and go, but that doesn’t mean you should ignore them. Hopping on a trend just at the right time can boost your online sales.
You have to keep an eye on what’s happening in the industry. Follow industry leaders on social media and other platforms, catch business news, and try to attend e-commerce meetups or classes. Learn about ecommerce classes if you’re interested.
Overcome the Challenges of Selling Online
Selling online presents a unique set of challenges to business owners, but they aren’t impossible to overcome. As long as you’re willing to learn and adapt, you can build a successful online business.
