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7 Types Of Challenges Entrepreneurs Face In E-Commerce Businesses

7 Types Of Challenges Entrepreneurs Face In E-Commerce Businesses

Thomas Blake1573 06-Oct-2018

According to Statista, the scope for e-commerce sales is going to hit 4.88 trillion dollars by 2021. The recent boom in this industry increases the number of entrepreneurs who want to join the e-commerce business. The previous year saw Amazon’s owner Jeff Bezos becoming the richest person in the world which further reinforces the belief of entrepreneurs regarding the potential for growth in this industry.
While it is a bonanza period for the e-commerce industry, it is still a tricky business for the novice. There are many impediments that arise from cutthroat competition.
So if you are a newbie entrepreneur who wants to make it big in this industry, you need to get ready for the below-mentioned challenges:
1.    Stiff Competition
According to Pipe Candy, there are between 2 million to 3 million e-commerce websites in the world. That is too many online retailers to compete with. As more brick & mortar businesses move to e-commerce, the competition continues to grow.
It is difficult to grapple with such huge competition. But this is what makes it interesting. You get the best out of your abilities only when you are pitted against strong contenders. However, if you want to supersede the competition, it is important that you get yourself prepared for the tough competition. An in-depth market research and competitor analysis will help you cope with the severe competition.
2.    Converting Leads
Conversion optimization is a continuous process that seeks to convert more leads into buyers. However, it takes a holistic approach to hook your leads at a certain stage in a purchase funnel and make him buy your product. To ensure a foolproof conversion optimization process, you need a dedicated team at every echelon of your marketing and sales channels which is not always possible for a startup that runs on a limited budget.
3.    Competitive Pricing
Pricing is another factor that affects the success of an e-commerce business. On the other hand, it is a strong weapon for big shots like Amazon, eBay, and Alibaba that sell their products at competitive pricing. The fact behind their competitive pricing is associated with their ability to ship products in much less time and money than their competitors do.
They have a competitive edge over their competitors since they have warehouses to store the inventory which significantly cuts down on the time and money that go into shipping a product. Besides, the majority of their warehouses are located near their target buyers.
All these things reduce the aggregate costs of their inventory and they are able to set a competitive pricing for their products. Amazon alone has more than 100 warehouses in different states of United States of America.
For a small business that runs on limited finances, it is not possible to own a network of warehouses and the majority of startups have to hire services of distributors to deliver products. This adds to the overall costs of business and it makes it difficult for a small e-commerce business to compete on pricing.
To cope with this scenario, you should either own an inventory and warehouse service or offer a unique product in order to beat the competition on pricing.
4.    The Client’s Need For Content Consumption
The changing realities of online business have changed the way business engage their potential leads. Today, customers have multiple channels to get information about a product before they make a purchase.
They can seek a word-of-mouth from social media, they can use Google to read product reviews, and they can use online marketplaces to get further details about a product. They all are different contact points where you can inform the leads about your products.
So unless you have the required team to fulfill requirements for content consumption of your leads, it will be difficult for you to sell your products.
5.    The Struggle To Retain Customers
It is commonplace to see online retailers struggling with customer retention. The reasons can be plenty. Among the major reasons, the most common is poor communication. When you are running an online store, you can’t have a one-on-one communication with your customer. Therefore, you have to make the extra effort to make sure that your customer is satisfied or he will change loyalty.
Today’s customer has too many options to make a choice. Therefore, if you fail to meet his requirements, he will not think twice and switch to other online vendors.
6.    Competition With E-Commerce Heavyweights
Amazon, eBay, and Alibaba are leading the online retail business. Taobao (16%), Amazon (16%), Tmall (11%), and eBay (5%), are currently the major online marketplaces, reveals Statista. Taobao and Tmall are the subsidiaries of Alibaba group.
Together they hold 48% of the total market share of the e-commerce industry. The website also shares the figures of American market where Amazon and eBay together constitute 77.8% of the total market share.
That’s a huge chunk of buyers who purchase from these bigwigs of e-commerce business. To compete with them, you need to have some good products that match the quality and pricing that match with the competition.
7.    Stifling Competition On Digital Marketing Platforms
The evolution in online marketing has paved way for many digital marketers to pitch their products. The emerging digital marketing platforms have now become a new battleground for online retailers to drum up their business. In technical language, we call it “social commerce”.
Invespcro has some interesting facts to share regarding the role of social commerce. According to the website, social media websites generated $14 billion in sales for e-commerce retailers in 2015. In another research by the Pew Research Center, it is revealed that 24% of adults between the ages of 18-29 years have purchased something after following a link from social media.
These facts indicate the growing influence of social media in the purchasing behavior of customers. Today, social commerce is a reality and many online retailers are aligning their marketing strategy with social media.
This shift in the attitude of e-commerce marketers has led to a cacophony of different online retailers that blow the trumpet of their products and it makes it difficult for a novice to market his online retail business. To get heard in this crowd, you need to have a solid marketing strategy that meets the current requirements of your target market.
Running an e-commerce business can be a tough call. Considering the influence of online marketplace giants like Amazon, eBay, and Alibaba, it takes a good strategy to survive the competition. This article provides you just an overview of the current challenges the would-be online retailers might face in the e-commerce business. Hope it helps you prepare to tackle these challenges in your business.
Author Bio
Thomas Blake is a Digital Marketer, Academic Writer, and a Blogger. As an academic writer, he is part of a veteran team of Essay Writers UK and helps learners and students successfully accomplish their academic papers. he has authored many e-books on topics of online business, educational technology, and digital marketing.



Updated 07-Feb-2020

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