The rise in e-commerce has made it increasingly attractive to start an online business. Selling online allows you to carry a greater variety of merchandise and reach a wider pool of customers, with lower overhead costs and storage needs than you'd have with a physical location.
While it's easier than ever to enter the online retail industry, there's also more competition here. With conglomerates like Amazon setting the bar for shipping and customer service so high, it's difficult to keep your head above water as a small retailer.
Frank Weil, chief customer officer at retail software company KWI, noted that Amazon entering your space can put a company out of business, so it's important for brands to build up a great deal of credibility and integrity to not get swallowed up. To that end, here are some of the biggest challenges small retailers currently face, sharing advice on how to overcome them.
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1. Creating a consistent, customized shopping experience
If a small retailer sells online and at a brick-and-mortar store, the lines between online and offline shopping have blurred, according to Tim McLain, manager of segment marketing at Netsertive.
"Shoppers want to have a unified experience both online and in-store, and retailers need to seamlessly bridge the gap between the two to be successful," McLain told Business News Daily. "While online is touted as paramount for customer experience, brick-and-mortar locations also need to be at the top of their game, since people value the personal feel of browsing in-store."
When trying to unite your online and physical storefront experiences, McLain advised syncing your online and offline inventory. If you encourage consumers to browse online and buy or pick up in the store, it's critical that the items listed on your website and advertised in your digital marketing campaign match what's available today, he said. This is especially important during the holiday season, when "shoppers are using the web to figure out what gifts to buy, choose brands and decide where to make a purchase," added Brendan Morrissey, CEO and co-founder of Netsertive.
A seamless experience also applies to online-only sellers with a presence on multiple channels, especially when it comes to mobile. McLain urged e-tailers to make mobile a priority.
"In the age of immediacy, even a small issue with a store's mobile experience can turn off a potential buyer," he said. "Consumers, especially younger ones, are increasingly tied to their cell phones and use them for everything from browsing to buying online. Retailers need to ensure that their websites are fully optimized for mobile."
Weil agreed, noting that businesses should focus on making the online shopping experience simple and tailored to the customer's needs.
"If [customers] want to shop and checkout in a few clicks, they have to [be able to] do that. If they want to spend 10 minutes and have an experience watching product and brand videos, they need to be able to do that as well," he said. "Technology solutions should really be about delivering your customers exactly what they want. You need to be personalized, relevant and targeted," he added.
2. Shipping and tracking
Today's buyers demand a seamless process in not just placing an order, but getting it delivered. Customers will notice when their shipping options are limited or vague. Transparency really is the best policy when it comes to shipping, said Brad Stronger, senior security manager at Slack and former CTO of product shipping fulfillment service Swish.com.
"People will buy based on shipping, not on product price, and that's really telling about how consumers are thinking," Stronger said. "They'll look at a small retailer's site [with a lower price] but don't get an accurate shipping estimate. If they buy through Amazon [Prime], they know they'll get it in two days."
Many e-tailers simply charge flat shipping rates because integrating real-time rates is too difficult, added Jarrett Streebin, founder and CEO of shipping API EasyPost.
"This costs them money when shipping is higher than the flat rate and leaves money on the table when it's not, or the customers just never buy because shipping rates are too high," he said.
McLain said customers also demand access to order status and delivery notifications, and most small e-commerce retailers miss the mark with both their packaging and tracking capabilities.
"Don't forget your packaging," he said. "The fastest-growing subscription retailers brand their plain brown boxes with logos and other messaging so they stand out on the front stoop. Don't overlook package design and investing in, testing, and tuning your shipping process to delight your customers each and every order."
3. International sales
You may have been able to expand your e-commerce business to other states, but what about when you're ready to expand overseas? Some smaller businesses may be hesitant to make that jump due to legal and shipping difficulties.
"Many small retailers sell online domestically but are afraid to expand internationally," said Amine Khechfe, co-founder of shipping software solutions provider Endicia. "We encourage our clients to sell to international markets, because overseas buyers will generally pay more for [U.S.] products."
With a little planning, international sales can become an important revenue source in short order, said McLain. When you're deciding what countries to market in, he advised researching the demand for your product.
"See which local retailers [in other countries] are offering similar products in your top categories, paying close attention to pricing, brands and quality," McLain told Business News Daily.
He suggested starting by selling a single item on eBay. Target your potential countries and fulfill a few orders before jumping in with both feet. That way, you'll get a feel for the process and learn the ins and outs of each market, all while protected by eBay's buyer and seller policies. Once you reach scale, it's time to update your website and plan a marketing launch for each location.
Khechfe recommended starting with English-speaking countries like Canada, Australia and the United Kingdom to start boosting sales and growing your business. Other countries have different commerce regulations, though, so do your homework to make sure your business is legally compliant.
4. Payment fraud
It's no secret that small businesses – which often have small security budgets – are easy targets for cybercriminals.
"Sometimes hackers will target small merchants because they can't fight it," said Mike Keresman, founder and CEO of e-commerce payment solution provider CardinalCommerce. "[Larger retailers] that have a lot of orders might be able to underwrite a 2 percent fraud rate, but smaller merchants can't afford to play the numbers game."
To fight fraud and other payment challenges as a small e-commerce retailer, WePay CEO Tina Hsiao suggests refining your payment system, making sure to accept credit cards so people pay immediately upon purchase, and being clear about payment terms.
Consumer authentication and trusted payment platforms like PayPal and Google Checkout can prevent fraud, but Keresman warned against placing too many layers of security between your customers and their purchase.
McLain recommends getting a security certificate, also known as an SSL certificate, for your website to encrypt traffic and get indexed by Google. He also noted that using card code verification (CCV) adds a second level of protection because it ensures the customer is holding the card in their hand at the time of purchase.
Finally, McLain urged small e-commerce businesses to find a good payment processor.
"You have a business to run," he said. "Your processor must do the heavy lifting to ensure that payments are secure. Their job is to capture, process and protect your customer's data from end to end so none of your buyer's data lives on your service. Cybercriminals can't steal your data if you don't store it."
Additional reporting by Nicole Fallon. Some source interviews were conducted for a previous version of this article.