Starting up and running an e-commerce business is a true testament to how far we have come. It’s functionality and convenience is making it an increasingly popular way of doing business for owners and customers alike. It is estimated that 11% of all sales in the U.S alone are entirely online sales, with that rate increasing on a yearly basis. Entering into the e-commerce market is a clear way for your business to grow and thrive. With this new form of retail, however, comes a host of new challenges, and some businesses are struggling to cope. Here are some challenges that e-commerce retailers face:
Inventory Housing
Once an order has been made online the business immediately comes across its first challenge. With a virtual company selling product there is always the issue of where this product is going to be held in the real world. Warehousing can pose risks and issues that an online retailer may not originally be aware of, such as temperature controls and the amount of space needed and allocated to the products, as well as the cost for holding the merchandise. Stacking and holding the product can lead to more problems as delicate merchandise can easily be damaged through mishandling or crushed under heavier products when stacked incorrectly. The logistics of the matter become muddled as the online market is hard to predict thus sales may be much higher or lower than originally projected, especially with a new eStore, leaving the owner scrambling for a way to procure more stock or struggling with higher than projected warehousing fees. Since it is an online business there is no ‘back room’ where more merchandise can be held, so finding the right space to hold the right amount of product can be especially tricky. Businesses must use companies that they can trust when finding appropriate storing facilities for their inventory.
When it comes to packaging this is no different. It’s a huge benefit to work with a provider that can store and stock the packages you need and deliver them when you need them. What little space you do have as a retailer should be used for your products and not a year’s supply of boxes.
Shipping
With an online business, customers cannot walk into a store, find what they like and immediately take it home. Shipping poses a risk for e-commerce retailers, as once the package has left the hands of the retailer it is now at the mercy of the shipping company. Packages can easily be damaged by third parties, yet the damage is almost always reflected back upon the retailer, which can affect their reputation. Certain methods, however, can be used to avoid damage, such as packing appropriately and securely before shipping it out, or using a shipping company that is both reliable and dependable.
Returns
Returns are inevitable, despite how hard a company may try to avoid them. Unfortunately, they can be even more troublesome for online businesses. Bad reviews can severely damage the reputation of a company, and with the anonymity of the internet, people are more eager to speak out negatively without recourse. Processing returns weigh on the finances and resources of a company – in particular when dealing with a limited amount of storage space that is available, as well as any shipping costs that are incurred from needing to return the item. Not having an actual storefront means that dealing with the logistics of returns can be headache-inducing at best and catastrophic at worst.
Security/Fraud
While brick and mortar stores have to deal with shoplifters, e-commerce retailers have their own brand of thieves to secure against, and the stakes are much higher. They are not only protecting their own merchandise, but also the secure data of their customers. Online retailers have to make sure any payments to them are legitimate, without offending their customers with too many authorization pages. At the same time, they also must keep themselves protected from hackers looking to acquire their customer’s secure data – this includes finding a trusted payment provider whose security they can also trust. In e-commerce, security is a two way street and poses even more challenges than that found in traditional storefronts.
CRM/ERP
Many companies use CRM (customer relationship management) and ERP (enterprise resource planning) to help give their customers what they need and maintain a balanced stock based on demand. With an online business the customer is faceless and their desires are impossible to predict. CRM cannot be used in the traditional way but must rely solely on emails, surveys and staying on top of customer reviews, and even then that does not touch upon the countless others who do not bother to leave such feedback. An online business can often times find themselves in the dark when it comes to customer needs and expectations and this can truly be challenging to meet.
Running an e-commerce business is undeniably different from that of a ‘normal’ business model, and with that comes unique problems that one faces when dealing in the virtual world. Sometimes simply knowing what these challenges are, though, can help businesses plan ahead and thrive.
