In 2019, only 3% of eCommerce website visits converted into purchases.
Low conversion rates and difficulties in attaining customers is just the tip of the iceberg: running an eCommerce business comes with its own set of challenges and problems that can damage the revenue, create financial losses and even lead to a decline in reputation.
In this article, we will address the most common challenges of eCommerce and provide practical solutions for each.
We will also:
- Put them into perspective by looking at some eCommerce growth figures
- Take a separate look at some of the emerging challenges in eCommerce advertising
- Look into some trends and opportunities for eCommerce industry in 2020
Putting eCommerce Challenges Into Perspective: The Global Growth Of eCommerce In Numbers
To provide more context for eCommerce issues and challenges, let us look into the performance of e-stores and the state of the global market:
- eCommerce retail revenue will hit $6.54 trillion by 2023. (Source: Statista)
- 96% of Americans have made an online purchase. (Source: BigCommerce)
- 40% of US males aged 18-34 say they would buy everything online if they could. (Source: DDB Worldwide)
- eCommerce is growing at a yearly rate of 23%. (Source: BigCommerce)
- eCommerce businesses could see a 265% growth rate, from $1.3 trillion in 2014 to $4.9 trillion in 2021. (Source: Statista)
As the market continues to grow, so do the challenges for businesses trying to set up an online store, or attract and retain customers.
7 Most Common Challenges of eCommerce + Long-Term Solutions For Each
From absence of online identity verification to problems of creating a multichannel customer experience, these will be the biggest challenges eStore owners will face in 2020.
1. Online Identity Verification
When a visitor registers on an eCommerce website, the information they enter may not be genuine – therefore you cannot know if they are genuinely interested in purchasing.
For instance, cash-on-delivery purchases made with a fake phone number and address can make massive losses in revenue.
That’s why it is important to perform online identity verification of each prospective customer.
- Look for signs of suspicious activity. This can be an unusually high volume of orders, or zip codes that do not match with a state or a city. Always send an automated verification link for customers that sign up to validate that the customer is genuine.
- Make an automated call for a cash-on-delivery purchase, then ask the buyer to validate the delivery address.
- Use software solutions that identify fraudulent attempts by using multi-layered authentication. These programs have features such as SSN verification, identity checks and instant authentication, making it possible for your eCommerce business to stay ahead of fraudsters.
2. Cybersecurity Issues
Cyberattacks can compromise the security of your eCommerce website by infecting it with viruses and, what’s even worse, they may compromise the security of your registered customers’ data.
Hackers can potentially gain access to this confidential data, including your users’ credit card details.
This scenario is one of the greatest challenges to overcome in eCommerce business – and is certainly one of the biggest nightmares of every eCommerce owner.
- Manage your own servers: Make sure your eCommerce website is hosted on a standalone server dedicated only to you. Sharing the same space on one server with multiple other sites is risky; If some of those websites get hacked, the malware files may infect the entire server – including your store.
- Make regular data backups: Creating a backup of your entire database and all your files is essential in eCommerce business. You can’t go wrong with the frequency of doing this, although the general rule of thumbs is – the bigger the website, the more often the backup should be performed. At Digital Silk, we run daily backups of all the websites we maintain.
- Install security plugins and safety components: These are specially designed to prevent hack attacks. There is a great online market of security plugins for different systems and platforms that include Firewalls, Two-factor authentications and more.
- Update your eCommerce platform regularly: Whatever platform or CMS your eCommerce website uses, make sure you update it regularly with official patches, plugins and other software developed by its creators. Their teams work actively on identifying current threats and create solutions to stop them in their tracks.
3. Shopping Cart Abandonment
One of the biggest challenges eCommerce businesses are facing – no matter their size – is shopping cart abandonment.
So, how do you cut down on cart abandonment?
- Redesign your shopping cart: Make sure there are no bugs or needlessly long and tedious processes such as form filling. One of the most common reasons for cart abandonment are tedious checkout processes.
- Nurture your customers via live chat: Having a support client that will proactively reach out to and engage with a buying customer during key stages of their buyer journey can prevent them from leaving without purchasing.
- Optimize for mobile: 70% of global online sales are made via mobile devices. Faster-loading times, optimized images and disabled pop-ups on mobile sites mean fewer obstacles for customers to finish their purchase.
- Use retargeting marketing: A retargeting is a strategy of marketing products online to people who have already visited your eShop and looked at said products. Stats show that visitors that are retargeted with display ads are 70% more likely to convert – that is, to return and complete the purchase.
- Send email reminders: If your eCommerce website requires users to register in order to make purchases, you likely have their email address in your database. Create an elaborate email campaign of reminding them that they have not completed their purchase. Some platforms like Shopify have built-in email reminders.
4. Nurturing Customer Loyalty
Customer loyalty is a very fickle thing, even with the best-designed eCommerce websites with a huge assortment of products and smooth functionalities.
Without customer loyalty, any business may struggle as acquiring a new customer is 5 times more costly than retaining an existing one.
Also, increasing customer retention rates by 5% can increase profits by 25% to 95%.
Customer loyalty is a matter of brand integrity and mutual trust between a seller and a customer.
Since there is no face-to-face interaction like in a retail store, with eCommerce stores the development of trust and loyalty takes more time and effort.
Here is how you can harness and accelerate this process.
- “Your culture is your brand”: This saying hits home on so many levels. Customer loyalty is the result of a great customer service, so you need to make sure your customers are satisfied with the entire process of purchasing online, from browsing your store casually, to ordering online and shipping. Nurture your customer service according to a competitive advantage you have over other online retailers.
- Again – add a live chat: Having a live customer support specialist that can reply promptly to your customers’ queries in a kind and reassuring way increases trust and makes your brand trustworthy and reliable in the eyes of shoppers.
- Be transparent: Display your address, phone number, customer testimonials and reviews and pictures and relevant info of your staff. This unmasks your eCommerce business and gives it a humane dimension that makes it no longer anonymous.
- Use loyalty programs: Multi-tiered schemes that reward returning customers with points, discounts and coupons is a great customer service that fosters their loyalty and keeps them coming back.
- Create blog articles: Content marketing such as informative blog posts relevant to your audience build trust and boost your credibility.
5. Product Returns And Refunds
Over 60% of online shoppers look at the shop’s return policy before making a purchase.
Furthermore, 89% of online shoppers have made a return at one point during their shopping experience.
Returns and refunds are a very big deal in the minds of customers.
This presents a challenge for online retailers: how to give your customers peace of mind knowing they can return products they aren’t satisfied with, while not potentially damaging their business through losses in shipment and reputation.
- Be transparent about your return and refund policies: Make sure customers can find detailed info on this very easily in your Terms & Conditions and FAQs pages and also make sure it is very understandable and in no way ambiguous.
- Avoid imperative phrases in your policy wording: “You are required” and “you must” just sound plain harsh and will intimidate customers. Try to soften your language in return policies.
- Give options: Consider providing various methods of shipping, payments and refunds as well as certain bonuses such as coupons and discounts for people dissatisfied with their purchase.
- Returns and refunds are a part of great customer service: Remember what we said about customer service earlier – that it is a reflection of your brand and a gateway to customer loyalty.
6. Competition From Manufacturers And Retailers
Manufacturers and retailers that online stores buy products from in bulk eventually begin selling their goods directly to customers.
This way, the company that used to be your partner becomes your competitor which only gets worse if they create their own network of distributors.
You can’t prevent manufacturers from selling directly to customers – so, what is to be done to minimize the problems?
- Prioritize partnering with manufacturers less likely to sell products directly: The surest way for your retail partner to not become your competitor is teaming up with smaller brands or brands focused on producing and delivering goods to shops rather than selling them directly.
- Offer your products at lower prices or with additional benefits: Such maneuvers help boost sales of products that the manufacturer chooses to sell themselves directly.
- Forge a contract with a language preventing this from happening: When signing a contract with a manufacturer, include a statement that would restrict them from selling a certain product directly to a customer.
7. Providing Omnichannel Experience
Knowing that multi-channel shoppers spend 3 times more than single-channel shoppers is a strong incentive to overcome this eCommerce challenge.
In a world with desktop and mobile devices, official eCommerce stores, live chats, Forums, Facebook, Instagram and other social media pages – the modern shopper has a big number of touch-points they can reach out through.
This creates an imperative for retailers: to adopt omnichannel customer strategy. The alternative is lagging behind competitors and eventually be completely left behind.
- Identify the most important channels for your customers and optimize them: Optimize channels such as live chat, video calls, help centers, in-app messaging and others through which support clients should contact customers. This optimization means personalization of messages and one-on-one interaction.
- Be consistent and keep track of context: By keeping track of customer interactions and conversations, you should be able to direct conversations based on their conversation history and reply to them contextually.
Two eCommerce Issues And Challenges In Advertising To Look Out For
Digital marketing is of special importance to online retailers and this fast-changing field presents its own set of eCommerce issues and challenges.
Digital Marketing Is Still More Affordable Than Traditional – But It Is Getting More Expensive
Digital marketing has long been a more affordable form of advertising, compared to traditional marketing.
However, it appears this is coming to an end, as marketers begin to realize how effective digital marketing is in growing online market.
The cost of digital marketing rose 12% on average across all channels, meaning that every dollar eCommerce managers invest may have less impact now than it had in the past.
- Try targeting very specific audiences. This increases your chances of higher conversion rates. Also, exploit retargeting marketing that we’ve talked about earlier.
- Be very thorough in tracking your marketing analytics and following how efficient your digital marketing campaigns are.
Influencer Marketing Effectiveness Rate Will Not Follow The Rise Of Its Cost
Social media and Google algorithms are making influencers charge more so they can afford to get their posts to reach more people – 25% more, in fact.
The said algorithms are making it harder for sponsored posts to gain momentum, hence the steep rise of the cost of these influencer services.
- One way to use influencer authority to build your brand and amplify your message that is much cheaper – virtually free, in fact – is influencer blogger outreach. Try to find an influential blogger that writes articles relevant for your eCommerce niche, locate their SEO and social media stats to find the one with the best possible reach for your brand and reach out to them asking them to create content about your products or business in general – in exchange of which you can give them product discounts, commissions or social media shout outs.
- Using customer brand ambassadors and customer advocacy is a very effective way to use the influence of happy customers to increase sales. A 12% rise in advocacy results in twofold revenue rise.
Beyond eCommerce Problems: 5 Growth Opportunities And Trends For eCommerce In 2020
Some of the most significant trends that shape the future of eCommerce – and, subsequently, open doors to many opportunities for growth – include the following.
1. Social Media Shopping Is On The Rise
Over 55% of shoppers have bought a product through social media posts.
As this number continues to rise, social media will become much more than just a place for brands to engage with their audience and grow their reputation.
Platforms like Instagram are making it easier for eCommerce brands to sell products through their social media pages, by leading users from them directly to a product page on their website.
2. Mobile eCommerce Will Continue To Grow
As we pointed out earlier, mobile contributes to 70% of global eCommerce sales, which will rise to 73% by 2021.
According to the same research by Statista, mobile eCommerce could collect $3.5 trillion in sales by then.
3. VR And AR Will Claim Their Place In eCommerce
Virtual and augmented reality are revolutionizing industries and making it possible for shoppers to see, feel and even try out the products they mean to buy.
eCommerse sites selling items like clothing and furniture can benefit greatly from this trend.
More brands are releasing apps that use VR so customers can try different items before buying them.
4. Online Shopping Experience In Offline Environment Will Become Common
eCommerce is growing, but still only represents about 16% of total sales worldwide.
The trend of online to offline in eCommerce is the one to watch as marketers begin to provide digital experiences that can match in-store feel to their customers.
5. eCommerce Automation Is Becoming Commonplace
Online merchants’ operational needs are shifting as well.
The big trend in eCommerce is automated order fulfillment and minimal human involvement in the functioning of eCommerce website on a daily basis.
This automation will be vital for the success of these businesses as it reduces redundant, repetitive tasks to a minimum.
Takeaways On eCommerce Issues And Challenges
Managing your own eCommerce business, you may have already encountered some of these challenges while some others may be around the bend.
However, as we’ve shown with some actionable tips, there are lasting solutions for them as well.
In a nutshell, eCommerce websites require a much greater deal of optimization than accounts not only for the technical side of things, but also the improvement in spheres of marketing, content and, especially, customer service.
Getting these roadblocks out of the way is the only sure path towards a thriving and sustainable eCommerce business.