Blog 3 minutes

The 9 biggest challenges to online businesses

Catharina Mensak
May 11, 2020

Owning a business can be tough and all business owners face challenges they must overcome to thrive in their industry. Whether you own a brick-and-mortar store and want to dabble in online sales or you’re ready to jump headfirst into e-commerce, it’s important to know about challenges you may face.

When you understand the common barriers for online business, you can develop a solid plan to navigate these challenges.

1. Finding the right product

One problem that e-commerce businesses face is ensuring they offer the right product for the time, demographic, and industry. The online marketplace is inundated with inventive and unique products and your business may fade into the background if it can’t offer the right product at the right time. Amazon alone had almost 119 million products listed for sale in 2019; consumers have enough choices that they can be selective.

No matter what e-commerce industry you’re in, to compete with other online sellers, you must:

  • Identify customer pain points your product addresses.
  • Communicate your USP to customers so they can recognize the value you offer.
  • Take an ordinary product and make small changes so it’s unique.

Examining your competitors’ products and identifying how you can improve its quality or functionality also helps ensure you’re selling the right products.

2. Finding the right market and competitor analysis

E-commerce businesses can have more competition than brick-and-mortar stores. In most cases, consumers can compare one company’s products to every other online offering worldwide, as opposed to only those stores or products available in a single town or region. Therefore, it’s crucial for online stores to find the right market, and understand the competitors active in that market.
A strong competitor analysis allows e-commerce sellers to better understand their market and how other sellers approach it. To create a successful e-commerce marketing strategy, you must conduct a strong competitor analysis by:

  • Researching the products and services competitors offer.
  • Reviewing competitor price points.
  • Learning about competitor marketing strategies, including where and how they advertise.
  • Finding out about promotions, discounts, and other benefits competitors offer.

When you become an expert on your competitors’ businesses and products, it’s easier to identify your market and how you can stand out.

3. Choosing the right technology

Whether you implement an e-commerce wholesale business model or sell products directly to the consumer, the right technology is crucial to your success. Integrated e-commerce software keeps your inventory organized and ensures your customer has a good experience with your brand. When choosing the technology you need for your online business, consider:

  • How the software helps with the order process.
  • If it’s easy to fulfill orders quickly through the software’s order management system.
  • The customer’s shopping experience.
  • If all staff members can easily access and operate the software.
  • The accuracy of inventory, numbers, and statistics.
  • Your ability to customize the software to meet your business’s needs.

Advanced technology can help you avoid online order errors so you can lower your return rate and keep customers happy. An easy-to-navigate customer portal is crucial to keep track of orders and record customer details. This data can be used later when deciding how much inventory you need and to keep in contact with customers.

4. Data and cybersecurity

To serve customers efficiently, your e-commerce business must store data, such as customers’ names, contact information, order history, and payment methods. Consumers put their trust in your business to collect, store, and utilize this data with care. Cybersecurity measures for your e-commerce business are key to maintaining this trust. To ensure you have the right procedures in place, it’s important to:

  • Train your staff on how to keep data safe.
  • Ensure you and your staff know about all federal and local consumer data privacy laws.
  • Implement a safe data storage plan with robust and secure software.
  • Maintain and update your software regularly.
  • Frequently change passwords to systems.
  • Create a disaster plan to address cybersecurity attacks or data breaches.

Data storage and cybersecurity is a unique problem for e-commerce businesses since most brick-and-mortar retailers don’t need to worry about this challenge. Keeping your eyes peeled for suspicious behavior and training staff on how to identify potential threats helps keep your data safe.

5. Marketing, visibility and lead conversion

Brick-and-mortar retailers may focus their marketing efforts on eye-catching signage or involvement in community events. As an e-commerce business, you’ll have different marketing obstacles to conquer.
Your marketing plan should center around online visibility and converting leads into customers. To create an effective marketing campaign, you should:

  • Identify your target customer and cater marketing messages to them.
  • Keep track of leads and segment your leads into different categories.
  • Keep in touch with email subscribers regularly.
  • Develop a congruent brand voice used throughout your social media, website, and other outlets.

As an online business, you have numerous digital marketing opportunities that can help increase brand exposure. Take advantage of these opportunities to gain visibility and convert leads into sales.

6. Customer experience and loyalty

Brick-and-mortar retailers can develop a memorable customer experience with interesting store decor and friendly staff. A good customer experience creates loyalty and turns browsers into customers.

As an online retailer, your customer experience is just as important. To provide a customer experience that’ll win you a loyal fanbase, make sure that your:

  • Website has a clean design and is easy to navigate.
  • Product descriptions are interesting and helpful.
  • Website includes answers to frequently asked questions, such as shipping rates.
  • Checkout process is simple and easy to navigate.
  • Website is optimized for mobile shopping.

Get feedback on the customer experience frequently and make changes and updates as needed. Consider offering discounts or other rewards to loyal customers.

7. Pricing and shipping

While e-commerce businesses don’t pay rent for a retail space, they do have inventory and shipping costs to consider. Your product pricing is a crucial component to success. You want to be competitive but you also want to make a profit. When determining product pricing and shipping costs, think about the:

  • Product manufacturing costs.
  • Inventory storage costs you’re incurring.
  • Cost to ship items and shipping parameters you can afford to offer.
  • Number of product returns you experience on average.

There’s a fine line between offering competitive pricing and ensuring your company makes a profit. You may need to continually adjust pricing to meet customer expectations while making money from sales.

8. Return and refund policies

Online shoppers are generally more wary of retailers with complicated return or refund policies. When e-commerce businesses don’t offer returns or refunds, consumers may be hesitant to order.
A simple return and refund policy is crucial to increasing sales. When developing your policy, it’s important to:

  • Create an easily understandable return or refund policy without a lot of exceptions.
  • Decide how you’ll handle return shipping costs.
  • Be lenient about returning items that are damaged, wrong, or don’t work.
  • Ensure your return policy doesn’t cut into your revenue too much.

9. Increasing sales and long term growth

Implementing these strategies may increase sales and allow you to create a large customer base. However, maintaining this growth for the long-term is what’s important for the longevity of your business. To ensure you remain profitable, you should:

  • Analyze your inventory costs and cut where you can.
  • Attempt to reduce shipping costs whenever possible.
  • Look into order returns and try to minimize the financial impact.
  • Read through customer reviews and make improvements when necessary.
  • Ensure your software and website remains up-to-date.

In the e-commerce sector, you face a unique set of challenges that threaten the success of your business. By confronting these obstacles with strategies that set you apart from competitors, you’ll see an increase in sales and exposure.

Discover additional resources for B2B and B2C e-commerce marketing strategies and trends

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