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3 Big Challenges for Small E-Commerce Retailers (and How to Overcome Them)

3 Big Challenges for Small E-Commerce Retailers (and How to Overcome Them)
Small e-commerce merchants are under a lot of pressure to keep up with the standards set by larger retailers like Amazon. / Credit: Online checkout image via Shutterstock

Thanks to the growing number of website-building and e-commerce tools available, it's easier than ever for aspiring entrepreneurs to launch an online store. But with large retailers like Amazon setting the bar for shipping and customer service so high, it's also easier than ever to get trampled by the competition.

E-commerce experts discussed three of the biggest challenges small online retailers currently face, and shared advice for how to overcome them.

Same- and next-day delivery, easy tracking options, and hassle-free return policies are just a few of the standards that e-commerce giants have set in place for the industry. Customers have come to expect this level of service, no matter what site they're purchasing from, which places a lot of pressure on small retailers. [12 E-commerce Solutions for Small Businesses]

"Many e-tailers simply give up and charge flat shipping rates because integrating real-time rates is too difficult," said Jarrett Streebin, founder and CEO of shipping application programming interface (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."

But shipping really does matter, and customers notice when their options are limited or vague. Transparency is the best policy when it comes to shipping, said Brad Stronger, co-founder and chief technology officer of Kickstarter 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."

Streebin noted that the demand for easy delivery tracking has increased as well. Instead of making customers do the legwork and track their own package, retailers should be proactive about communicating with their customers about delivery status through email or text-message notifications. It may cost you some money up front to integrate the necessary systems for flexible shipping, tracking and returns, but once they're in place, your customers will keep coming back.

Once an e-commerce merchant has established itself as a national retailer, the next frontier is to expand overseas. However, the number of legal and shipping hurdles required to sell internationally can make some smaller businesses hesitant to jump into the global market.

"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."

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, so do your research to make sure your business is legally compliant.

One of the biggest concerns today's consumers have is the risk of fraud when they're shopping online. With highly sophisticated malware and savvy cybercriminals, customers' card and bank information can easily be stolen if a merchant doesn't take the proper security measures. Mike Keresman, founder and CEO of e-commerce payment solution provider Cardinal Commerce, noted that the consequences of fraud are much more severe for small businesses.

"Sometimes, hackers will target small merchants because they can't fight it," Keresman told Business News Daily. "[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."

There are many solutions available for preventing fraud, such as consumer authentication and utilizing trusted, established payment platforms like PayPal and Google Checkout. However, Keresman warned against placing too many layers of security between your customers and their purchase.

"If you're too uptight with fraud screening, you might insult a good customer and lose their business," he said. "The easier and more comfortable you make the buyer experience, the more likely the customer is to make an order."

Originally published on Business News Daily.

Nicole Fallon

Nicole received her Bachelor's degree in Media, Culture and Communication from New York University. She began freelancing for Business News Daily in 2010 and joined the team as a staff writer three years later. She currently serves as the managing editor. Reach her by email, or follow her on Twitter.

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