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Top E-Commerce Challenges Facing SMBs

image for iJeab/Shutterstock
iJeab/Shutterstock
  • Cybersecurity, competition and order fulfillment are the top three challenges facing e-commerce businesses.
  • The average conversion rate for e-commerce sites is less than 3%, so driving relevant traffic to your site is crucial.  
  • E-commerce has exploded, meaning there's more fierce competition now than ever before. 

As an e-commerce business, you might feel like things are more of a struggle for you than if you ran a brick-and-mortar shop, and that may be true. As an e-commerce business, there is a different set of rules and regulations you must follow ‒ cybersecurity becomes more important, both to the function of your business and its longevity.

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We spoke with industry experts about the challenges e-commerce small businesses must contend with and how to overcome these hurdles.

Victor Congionti, chief information officer and co-founder at Proven Data, knows that small e-commerce sites need the proper cybersecurity practices and tools in place. 

"Small businesses that focus their attention in the e-commerce space need policies and procedures to create a solid cybersecurity framework for the organization. In the case of a cyberattack, a small business cannot afford to have downtime in operations and sales, because every transaction is a marginal financial success that the business depends on," said Congionti. 

Because a small business depends on that income, Congionti said business owners need the proper cybersecurity framework to keep data safe and secure while helping employees at the company feel empowered and safe to implement policies and tech to combat cyberattacks. 

Businesses, added Congionti, must have an incident response plan in place that establishes what to do in the event of a cyberattack. 

"In the case of a ransomware attack, the organization might not be able to access files and data that is necessary in providing service to customers (such as inventory reports). Having a response plan can help the business reduce downtime in operations and continue providing service to clients through other means (such as phone sales)," Congionti said.

Competition comes in many forms for small businesses, especially in the e-commerce space. You have to keep up with competitive pricing, products and service. 

"As a small business, you can overcome price competition by having a very clear company value proposition that consumers can't get elsewhere," said Calloway Cook, founder of Illuminate Labs

The e-commerce space has become so saturated that standing out from other e-commerce businesses is really difficult, through no fault of your own. 

"Distinguishing yourself from your competitors is crucial to standing out and attracting new customers for your business. This can be accomplished by making sure your website looks professional and is optimized correctly to suit today's Google algorithm," said Harsha Reddy, co-founder of Small Biz Genius. "Also, by providing a unique product or service, you can focus on a smaller demographic, making it easier for you to increase your domain authority."

Not everything has to fall on the back of the small business owner. You could be inundated with more orders than you are prepared to handle on your own. 

"Order fulfillment should be outsourced to a third-party fulfillment company whenever possible for increased efficiency," Cook said.

As a primarily e-commerce business, or a business that has an e-commerce site as a secondary means of selling its products, figuring out how to offer your customers the same experience they would get in a brick-and-mortar store can be challenging. 

"One of the most overlooked areas of the customer experience in moving to e-commerce is pricing and customer segmentation. Customer experience is especially important when launching an e-commerce initiative, because customers expect to be treated as well or better online as they are face to face," said George Dunham, CEO of epaCUBE

Dunham said that companies struggle to meet these new demands because it requires very precise handling of pricing, analytics and customer segmentation. Successful experiences in the e-commerce space require the same, if not greater, clarity in product offerings, pricing and more, as is required in a face-to-face buying process. 

"In a world where everything is happening online, your customers expect more, and they also know more about your products, prices, and competition. They expect to be treated the same way online as offline, so if they can get a certain price in person but can't get that price online, they get frustrated and purchase somewhere else," Dunham said. 

Consistent and profitable pricing is a requirement these days for an e-commerce venture to succeed.

Building, designing and running an e-commerce website is hard, but receiving quality converting traffic is even harder, according to Lisa Chu, owner of Black n Bianco. Philip McCluskey, commercial director at One erTH, said that average conversion rates globally are less than 3%, making driving relevant traffic to your site a sticking point. 

"To turn your traffic into converting customers, you must have a website that is modern, clean, user-friendly, trustworthy and virus-free. Every industry is different, so understanding your audience is crucial to designing a website that resonates with your audience," Chu explained. 

Designing an attractive website is just the beginning, though, Maximizing the content on your website through SEO is the next, and maybe most important, step. 

"Extensive short tail keyword research should be conducted to ensure you are optimizing your pages for relevant search terms. It is likely that the competition for these terms when [they are] just starting out will not realize immediate web traffic; therefore long tail keyword research should be conducted to understand the relevant 'what,' 'how,' 'who,' and 'where' within your niche," McCluskey said. 

Shirley Tan, partnership manager at Yahoo Small Business, said many businesses used to take the approach of, "If I build my online store, customers will somehow discover it." 

"Today, that is no longer the case. When there were fewer e-commerce stores, they may have been able to rely on a 'stumble-upon' effect, but now the internet is too crowded and noisy. Therefore, engaging the customer and getting their attention has to be more meaningful and impactful," Tan said. 

To combat the noisy e-commerce space, Tan said e-commerce SMBs need to understand who they are targeting, so they can create a select group of customers who will be their constant source of revenue and their loyal shoppers.

How are you supposed to get quality traffic to your site and turn visitors into customers if people can't find your site to begin with? It's a big issue for e-commerce businesses, and one that could make or break a business. 

"If the company doesn't show up on the first page of Google's search results for relevant keywords, then it's unlikely that prospective customers will find them," said Michael Anderson, marketing and SEO specialist at GeoJango Maps. "The best way to overcome this challenge is to invest in SEO. E-commerce companies should conduct keyword research, implement on- page SEO best practices and work on building high-authority links to their website." 

Anderson continued to say that if all of the above is done correctly, it will lead to higher search visibility and an increase in qualified leads. 

"For clothing businesses, influencer marketing works very well, but if your e-commerce business is based around a product that solves a problem, getting your website to rank on Google for keywords related to that problem through SEO efforts might be your best bet," said Nicholas Rubright, digital marketing specialist at e-commerce market research firm Zik Analytics. "Understanding your audience is key to figuring out which marketing channel will generate traffic that actually converts into sales."

Having a good return/refund policy could be the difference between success and failure. That sounds extreme, but it's true. 

"If you want your brand to stand tall, then customer satisfaction should be the first priority, and whatever you're selling should be the same as what's advertised," said Syed Ali Hasan, digital marketing manager at Film Jackets

In an ideal world, yes, there would never be an issue with the product you're selling, but that's not always the case. Sometimes the purchaser has buyer's remorse, or it wasn't what they thought it would be. 

"Be transparent and create a smooth, fast and easy return policy. Make it easy to understand and not too strict so the customer won't have to go through hassles [to return an item]," Hassan said. 

Rubright said that if you don't have a good return/refund policy, people are less likely to trust you're selling something worth the money. 

"When a site says 'no returns or refunds,' it makes the customer much more likely to think it's a risky purchase, or worse, a scam, since online businesses can be less known," said Rubright.

"The first step of any business is to find product/market fit, and e-commerce is no different," said Rubright. "Product-market fit is the degree to which a product satisfies market demand. The easiest way to find that fit quickly is to build a product that solves a problem you have." 

Finding the right market for your product isn't the easiest task, though. Rubright offered insight into how to make it easier. 

"If you haven't figured out your ideal customer yet, I recommend making some assumptions as to what your target market is and running Facebook ads to this audience. When you finally do make a sale, try and understand everything you can about who bought your product and find more of those people by any means necessary," Rubright said. "Once you have product-market fit figured out, then you can figure out the best way to reach your ideal customers."

Once you have your products figured out, your website set up and your marketing set, the next step is making sales! It seems like a no-brainer; however, it's not always that straight forward. 

"To increase sales, e-commerce SMBs need to have the right product at the right price and ensure they are top of mind when the customer is ready to make a purchase," Tan said. "This traffic can be hard to get; to drive sales, it's important a brand endears themselves to their customers." 

Aside from customers already having you in mind when they need something and feeling positive about your product, your website plays a big part in how many sales you'll make. 

Tan suggested asking yourself the following questions to determine the efficiency of your website: 

  • Is the website layout easy to navigate?
  • Is the checkout experience simple and easy?
  • Are there coupons that can be applied when customers send a certain amount to get a discount? 

"Website functionalities like these can greatly increase conversions and make the customer experience more enjoyable," said Tan.

Jennifer Post

Jennifer Post graduated from Rowan University in 2012 with a Bachelor's Degree in Journalism. Having worked in the food industry, print and online journalism, and marketing, she is now a freelance contributor for Business News Daily and Business.com. When she's not working, you will find her exploring her current town of Cape May, NJ or binge watching Pretty Little Liars for the 700th time.