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Challenges of Starting an E-commerce Business

Challenges of Starting an E-commerce Business

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Ecommerce has long been the most lucrative business model for those looking to try their hands at entrepreneurship. Yet, it's also one of the most dynamic and demanding sectors to work in. Today, we look at some of the many challenges that come with starting an ecommerce business.

1. Finding a unique selling proposition

If you've thought of it, chances are someone else already did, too. Starting an ecommerce venture requires a sellable product, which is tricky when there're at least ten other businesses selling the same, or a similar, product. That's why a unique selling proposition (USP), or messaging angle, is crucial. Apple's USP is privacy. Android's USP is affordability.

When looking for your USP, start with something you love. If you sell phone covers, consider why you would personally buy one design over another. For example, if you're inclined to buy Doctor Who themed products, chances are, many others are too. That could be your USP—the comprehensive place to buy all things Who.

Your next step is to look at competitors and their market share. In this case, the BBC is the official provider of Who merchandise. There are also hundreds of other businesses that have cashed in on the fandom. What can you offer that all those other sellers can't? Looking at product reviews from your competitors is a good way to find unique angles you can capitalise on. Reviews will also tell you what customers get from the product and what more they want. You can use that information to customise your product offering and your messaging.

2. Generating leads consistently

One of the most successful ways to get leads is to run ads on Google search result pages and Facebook. However, if you're not constantly watching your budget, these ads can get expensive quickly. It's a good idea to explore other channels and ways to generate leads. Consider starting a blog that conveys the value of your product and your brand. Expand your content portfolio to educational material about your industry and even complementary products your customers should explore. Building up content is a long-term game. It'll help you get leads organically and it'll consistently serve you down the road, but you have to invest the time and effort to create high-quality blogs that your potential audience wants to consume.

Based on your product and your target audience, you can also look at alternative content creation options, such as vlogs, podcasts, newsletters, Twitter chats, Clubhouse chat rooms, Facebook groups, and TikTok posts. We strongly advocate for publishing content on channels you own, such as a traditional blog or newsletter. This is called owned media, and it's valuable, regardless of your business size. Owned media provides you with channels to communicate with your audience, even if popular social media sites get blocked or hacked.

Another way to ensure you get leads consistently is to start building email lists. You can do this on your blog or through social media communities. As long as you have a list of people who want to hear from you, you'll get return customers who will likely refer their friends and family to you.

3. Optimising your website

Audit your website's usability regularly, and make sure your visitors are navigating your online store as you intended. Seek help from website testers or friends and family who can provide feedback on how you can improve your website's flow. This will help you find and rectify hard-to-spot communication gaps. For example, a jacket you're selling might have hidden pockets, but if your description doesn't explicitly say this, your website visitors won't know what they're buying. Review the copy on every product page to ensure it covers all features and functionalities, has a grammatically and factually correct description, and includes photos to inform the buyer. The less friction the customer experiences when buying a product online, the better the chances are that they'll complete the purchase.

Analyse your website's traffic, drop off points, and scrolling patterns. These will help you identify which parts of the website your audience is most engaged with and where they lose interest. If you find that a lot of people leave the site after arriving at the checkout page, you'll know that you need to improve that page. You can start to experiment with various changes to content, colours and design, layout, payment options, or something else entirely.

Payment gateways aren't always easy to get right. Because you're working with multiple external vendors and their payment systems, it will take some time to organise things the way your audience wants. Take some time to make sure each vendor's payment gateway is easy to navigate. This will also reduce the number of customer support queries you might get because of a faulty payment gateway.

Here's a guide to building an effective ecommerce website

4. Customer nurturing and up-selling

Ecommerce requires so much more than setting up the perfect online store. Email follow-ups, discount codes, weekly specials reminders, and mobile push notifications are all essential elements of reinforcing your brand and products in the customer's mind. Focus on building a customer nurturing strategy for your business. If you sell a single product, then your nurturing strategy will be the same for all customers. But if you sell multiple products, you could consider individual follow-ups and nurturing strategies for each product.

Include up-selling as part of your nurturing plan—if someone bought a book by Margret Atwood, they'll probably be interested in other books by the same author. As Amazon does, you can display these recommendations on the checkout page for instant up-sell opportunities, but you can also use a customer's purchase data to design customised follow-up email campaigns.

The ultimate goal of these email campaigns and nurturing efforts is an enhanced customer experience. You want your customers to be happy with their purchase, but you also want them to remember you when they want to purchase again. To ensure this, you should aim to be so helpful they automatically think of you. Design emails that help your customers find what they want, but also help them learn about what they've purchased. This is where you can include educational blogs, product help documents and videos, and even re-direct customers to your social media groups. If your content is informative, helpful, and relevant, your customers will return to you.

5. Internal product integration

In our conversations with prospective customers, we often find that a lot of businesses struggle with siloed systems. They might be using the best product in the industry, but if it doesn't integrate with their other information systems, it causes chaos and stress. When you're starting an ecommerce business, identify which software products you want to use for each business function. Then, evaluate whether each product can natively integrate with your existing systems. Not all products have seamless integrations built in, and that's okay. If you find an app you like, but it doesn't have built-in connections, see if that app is compatible with integration tools like Zapier and Zoho Flow, or has an open API you can use to connect various systems.

For example, you'll want your online store to connect with your website analytics tool. When someone places an order on your website, that information should flow through to your inventory system, your shipping management system, and your accounting app. Here's an example of an ecommerce business connecting various systems through Zoho.

Take the time to go through the flow of information in your business process and ensure it's all connected. This way, not only can you stay up-to-date with what's selling through your website, but you can also analyse issues, drop offs, and complaints, and address them promptly.

6. Customer experience and loyalty

We have too many choices nowadays. That's the inherent challenge of retaining customers—especially for ecommerce businesses. Brand loyalties fluctuate with the economy. That's why it's important to have a strong customer experience strategy. PwC found that 74% of  Australians consider a friendly experience a key factor when choosing between options. Leverage that mindset—invest in people and technology that help you provide good customer service. From setting up help desk software and managing customer questions, to offering free/discounted delivery, make sure your customer has a smooth interaction with your brand. This also includes their experience with your website and online store—periodically assess your checkout process to catch delays, bugs, or typos. Every little improvement goes a long way in making customers feel valued.

A popular way to keep customers coming back is to start loyalty initiatives, such as an affiliate program, send discounts and offers for second-time purchases, and provide special-occasion vouchers. How you implement each of these will vary based on your business and your ideal customer. However, having these systems in place will make it easier for your customers to choose to do business with you again.

Branding also plays a big role in building customer loyalty. Think Converse and Nike—these brands have a large following on every social media channel. Part of that loyalty comes from the brands' expensive media mentions and collaborations, but a large portion comes from word of mouth. Be active on social media and build a community of people who like you and enjoy your products. Identify which channel your audience is most active on and invest your time there first. Social media can quickly get overwhelming, so start small and expand as your resources grow. You can also leverage social media ads to get more visibility for your brand. Over time, people who follow your brand will buy from you and those who buy from you will tell others about you.

7. Competitive return and refund policies

Almost every ecommerce business nowadays has free or highly-competitive return and refund policies. However, not every business that offers a free return and refund policy provides a seamless experience. That's where you can stand out. Build your policies so people who have to return products can do so with the least amount of effort on their part. Strategies like giving store credits for refunds, and asking customers to repack products and bear return postage costs can seem too demanding to customers. While many people are sympathetic to the challenges of managing inventory as an ecommerce store and the intermediary process involved, you wouldn't want them to pass on a purchase to avoid the hassle of a potential return.

To create a customer-friendly return policy, consider:

• Providing cash refunds, instead of store credit.
• Refunding the initial shipping cost.
• Bearing the cost of returning a product.
• Offering home pickup for products a customer wishes to return.

These strategies will cost the business in the short term, and may not be practical for every business. However, putting the customer's convenience first will certainly improve their experience and increase their loyalty.

Designing the right return policy also depends on the price of your products and the shipping vendors you choose to work with. There's no one set formula for choosing the perfect carrier. Since each vendor may have their own pros and cons, it's important to compare your options, calculate how much they'll charge you for each shipment, and then decide how you'll price your products or design your return policy.

8. Keeping up with a changing market

Ecommerce is undoubtedly the fastest growing and most-frequently changing business model. Keeping up isn't easy, and not doing so can be costly. There are hundreds of lists online that talk about the latest trends in ecommerce, constantly putting pressure on businesses. However, not all suggestions will be relevant to you and your business. Find ways to tune out the noise and tune into the changes that are most important to your customers. A good way to do this is to spend time with like-minded people. Join business and networking groups where you can meet fellow business owners and managers, share knowledge, and approach common challenges together. For example, Meetup.com brings people of similar interests together based on location. Covid-19 restrictions have also given rise to online groups—especially on social media channels like Facebook, LinkedIn, Twitter, and Clubhouse.

9. Data privacy and integrity

If you collect sensitive information from your customers, you have a duty to protect that data. Before you set up your online store, research your software vendors thoroughly. If you intend to trade internationally, you will have to comply with the privacy regulations of various countries. For example, according to GDPR regulations, all data collected from European Union citizens should be stored and processed within the EU. Non-compliance can be expensive—as many brands have already learnt. If your vendor is in violation of privacy laws, even though you're only inadvertently involved, you will also be held responsible for the violation.

When you evaluate ecommerce vendors, ask how they comply with global data privacy regulations. Vendors have to be transparent about their data processing capabilities. For example, Zoho's commitment to privacy is so strong that we have data centres in Australia, Europe, the United States, and India. If you use Zoho Commerce and collect information from a customer in the European Union, their data will be stored and processed in our EU data centre, ensuring our customer—you—is automatically GDPR compliant.

As you can tell, starting an ecommerce store is only the tip of the iceberg. The competition is often fierce. Before you dive in, make sure you have a clear action plan to overcome the most common challenges. Though having a plan isn't always a guarantee of success, it'll certainly help you prepare for any surprises.

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