A successful ecommerce website can bring a major windfall to the entrepreneurs. However, the most common scenario is the fall back of such online stores due to the lack of understanding, and not-well approached research beforehand. The eminent mistake is the consideration of the known internet challenges and missing the lesser-known but critical challenges of running an ecommerce business.
I would love to elaborate on those lesser-known challenges here:
1. Drop Shipping
Drop shipping is the process of sending the product directly from the manufacturer/ supplier to the end-customer without stocking it in your own store. On one side, the drop shipping brings cost-efficiency, as only the virtual presence is required for the store instead of the actual store and its maintenance. But on the other side, there exist some associated challenges with it.
The prevalent challenges include the quality of the product delivered and going out-of- stock. The quality is one factor that could make the value of your brand in the customer’s eye. Indirect shipping process, the quality measures are not possible to undertake as you don’t have the control over the inventory and the shipping method.
Delivery time is also a significant factor, which you can’t control. So, make sure to commit your customer with the exact value that you could possibly deliver.
Moreover, the ecommerce business owners generally forget to align their store databases with the manufacturers’/suppliers’ database. The entrepreneurs need to properly think on the questions like what would happen if the customer orders for a particular item, which isn’t present in the manufacturers’ inventory, but without your knowledge? Also, what will be the consequences if that happens after the order confirmation? The cancelation of customers’ orders never ends up in customer retention and the good word-of-mouth publicity.
However, the precautionary measures or extra services could save the entrepreneurs from this disaster. The services, for instance, eCommHub, enable the synchronization of the ecommerce store with the suppliers’ real-time inventory feed. It will automatically update your database as according to the inventory status of the supplier.
The package shipment is the next big challenge of running an ecommerce store. Several parties are involved in smoothing the cross-border ecommerce pathway including the manufacturers, shipment crew, customs etc. The challenge arises with the difference in the business objectives and the motivation level of each party.
The damage could result either in transit or in the form of package loss. The risk rate shoots up higher in case of global shipment as compared to the local package delivery. Although proper packaging will cost a few extra bucks, but it is essential to make a proper investment in packaging, so as to handover the product to the customer with extra care, which eventually will result in up-branding.
The package loss, on the other hand, is still out-risky with less cost-efficient preventive measures. The early stage entrepreneurs usually don’t seem to know the frequency of the package loss and its implications. The extra expense of excise duties in some countries increases the cost of delivery. The unreliable and poor postal networking also acts as a big challenge.
While setting up a global ecommerce network, the entrepreneurs should get the hands-on knowledge of all the legal issues and limitations on the package deliveries in such states.
3. Consumer fraud
Fraudulence is one other challenge of ecommerce. Might you remember the buzz of online credit card frauds? These frauds are the most common in the ecommerce business. The credit information gets hacked easily by petty hackers through the online shopping sites.
These hackers usually use sophisticated malwares or savvy cybercriminals to steal the customers’ information. They mostly target the small ecommerce sites, as they are new in business and almost always least protected. According to a 2014 Internet Crime Report - FBI, US economy suffered a loss of about $8 billion due to online frauds during 2014.
For some developed ecommerce platforms like Amazon, bearing such losses might be affordable, but for any newbie ecommerce startup, this could be disastrous.
A common mistake of most ecommerce entrepreneurs is the loss-digestion, while letting these fraudulent attempts go un-noticed. At various times, the theory behind is the costlier protection strategies than the loss per transaction.
However, the consequences might get more drastic with time. The hacker community gets tracks of the online fraudulent activities and the possible mitigation strategies. If such ecommerce sites don’t take preventive measures, they end up becoming the favored targets.
Many new ecommerce entrepreneurs tend to overlook taxes involved in e-businesses. But the taxation is more deeply involved nowadays, as different states and countries have varied taxation norms, and incorporating the concept into the web fabric is a big real-time challenge.
Not only is the taxation law of the home state/country important to take into consideration, but of all the states/countries where the end consumers reside. The internet is a global place and doing business over here doesn’t imply the diminishing of the physical boundaries between countries and states within them.
However, it truly depends on the products/services you are providing online. If these are merely the ‘downloads’, the taxation might not be the issue, but for a clothing e-store or a furniture e-shop like IKEA, the taxation, depending upon where the merchandise is to be delivered, needs to be planned out with serious caution. Overlooking it could trap you in late and costly package deliveries. So, in order to get past this challenge, the best way is to sell the products globally on the all-inclusive amount basis. If you don't have any idea, then Look at QuickBooks Sales Tax Calculator which will gives you a complete taxation idea.
5. Demand & supply management
The demand and supply management is the area where even the most settled ecommerce outlets are struggling, as the unfitting inventory management could damage the business beyond limits, especially for smaller companies.
When your scope of e-selling is global, then trending and forecasting is a big challenge. You might come across instances where a commodity is highly in demand, but you won’t be able to find a reliable supplier for it on that particular time.
Managing such issues at critical times with good output is a big win. The best way is to equip your site with the trending and forecasting tools. Read well your target customers before advertise the products to them.
What’s your take on this?
Have you got some of your own experiences and observations to share with us? Feel free to do so in the comment section below.
Khawar Zaman is the co-founder of Technorian.com, a Woocommerce and Magento support specialist company. Specialists in also providing dedicated developers to startups.