- Pay-per-click advertising isn’t always cost-effective for e-commerce businesses. Fraudulent clicks by bots or people don’t translate into real sales.
- Creating a simple checkout process and allowing customers to easily edit their carts can help lower cart-abandonment rates.
- To help relieve customers’ concerns about security threats, be sure to implement thorough cybersecurity protocols.
- This article is for business owners who want to know the challenges in running an e-commerce business and ways to work around them.
E-commerce has changed how businesses operate today. It has given life to thousands of new companies and an additional revenue channel to existing businesses. While it may be easy to set up an e-commerce website (or add an e-commerce component to your business’s existing website), issues regarding customer service, search engines, payment gateways, inventory management or order fulfillment are common and pose significant barriers to achieving and maintaining success.
In this article, you’ll learn about some of the most common e-commerce problems business owners face so you can more easily avoid these stumbling blocks.
E-commerce problems affecting businesses
The digital age has provided multiple access points for consumers to buy what they need. Still, going digital can be a risky business decision. This is especially true if you’re selling hard goods, such as furniture, appliances, tools, electronics and jewelry. Businesses in these industries are likely to struggle to match the cost of goods sold until they sell enough of their inventory to break even. The cost of goods sold is how much it costs the retailer, manufacturer or distributor to produce their products.
Based on recently released surveys and reports, here are additional common issues plaguing online retailers, and some ways to resolve these problems.
Digital advertising is constantly changing.
Advertising strategy is a big differentiator in a space where many people sell the same products, according to Kevin Zhang, co-founder and CEO of Kreator eCommerce. “It’s a never-ending battle against everyone else in the space,” Zhang told Business News Daily.
Success in e-commerce comes down to two main factors: traffic and conversion. E-commerce websites need relevant traffic, and they need that traffic to convert, or result in a purchase, according to Andrew Scarbrough, co-founder and CEO of Delegator.
“On the traffic front, you must have relevant, unique content to get the attention of the search engine and to educate your shoppers,” Scarbrough said. “For conversion, your site must be mobile-friendly, as mobile traffic often surpasses desktop traffic for online stores.”
As an e-commerce business owner, you should curate a catalog of unique products that ensure a proper fit with your intended market. This will give your online store a competitive advantage and keep customers coming back. As the business grows, your focus switches to building a solid social community within your customer base to increase loyalty and improve retention rates.
E-commerce merchants using pay-per-click advertising lose money on fraudulent traffic.
Despite the popularity of the pay-per-click (PPC) online advertising model, it’s not always cost-effective for e-commerce businesses. Fraudulent clicks by people or bots don’t translate into real sales, and then there’s the money you’ve lost to the PPC marketer to advertise your products.
In fact, research by ClickCease found that click fraud affects 90 percent of PPC ad campaigns on Google and Bing. Further, the cost of digital ad fraud reached $81 billion in the U.S. in 2022, Statista reported. This invalid traffic also skews the data your business needs to assess its performance and make important decisions, such as planning future marketing campaigns.
Online shoppers abandon their carts for numerous reasons.
One of the biggest obstacles e-commerce businesses face is the dreaded abandoned shopping cart. Research from Baymard Institute shows that online shoppers leave e-commerce sites without completing their intended purchases for a variety of reasons, including too many extra costs (48 percent), an account creation requirement (24 percent) and a complicated checkout process (17 percent).
The research also found that 58.6 percent of U.S. consumers have abandoned an online sale within the past three months because they weren’t ready to make a purchase. To recoup some of these abandoned purchases, you might consider removing barriers such as checkout registration and complicated cart editing and giving customers the ability to save their carts for later. Baymard Institute suggested that creating better checkout flow and design could lead to recovering $260 billion in orders.
To help lower cart-abandonment rates, don’t require customers to register before checkout. Instead, simplify your checkout process and make it easy for shoppers to edit their carts.
U.S. retailers are missing out on global sales.
A key advantage of e-commerce over brick-and-mortar retail is the ability to easily expand your business’s geographical borders. However, a survey by the U.S. Chamber of Commerce found that only 9 percent of small businesses export their products. This means U.S.-based small businesses could do a lot more to reach global online shoppers.
U.S. e-commerce merchants need to ensure they tailor the shopping experience to international consumers. To reach international customers, choose a service that can translate your website copy into multiple languages, and use an e-commerce platform that provides currency options for potential customers. According to Shopify, sites with product prices available in a shopper’s local currency experience a 40 percent increase in their conversion rates.
Payment processors can freeze your cash flow.
An e-commerce business’s livelihood can be at the mercy of payment processors and financial institutions.
“I’ve had a situation where my banking partner shut down one of my accounts and withheld close to half a million dollars for 180 days — this almost put us out of business,” Zhang said. “It happened because we grew too fast, and they wanted to conduct an audit of our business. When all your money is digital, it can be scary when things get in the way of you accessing that capital.”
When you’re choosing a payment processor, make sure it supports your business type (and the products you sell); otherwise, you risk having your funds frozen or your account closed. Additionally, if you anticipate fast growth that will cause your processing volume to spike, work with one of the best full-service credit card processors for your business and communicate with them regularly as your processing needs change. Spikes in volume or ticket size raise red flags for card processors, and they may put a hold on your money or your account until their concerns are resolved.
Hackers are attempting to breach your e-commerce website security.
Secure Sockets Layer (SSL) and its successor, Transport Layer Security (TLS), are encryption-based internet security protocols developed to ensure privacy, data integrity and authentication in web communications. Anyone who attempts to intercept SSL- or TLS-protected data will see a mix of illegible characters that’s almost impossible to decrypt unless you’re a skilled hacker who has an SSL certificate decoder.
E-commerce websites are exposed when the same passwords are used for many sites, which makes it easier for hackers to use stolen passwords from other sites to retrieve your data, according to Caleb Sylvest, creative director at Apollo Crypto DAO.
“SSL encryption isn’t typically an issue anymore if you’re using a big-name e-commerce platform like Shopify, because they provide SSL by default,” Sylvest said. “But if a store does not have an SSL certificate, all site actions and purchases can be sniffed out by bad actors.”
Hackers can obtain unauthorized access to consumers’ personal and payment information by running malware programs. As if credit card fraud weren’t a big enough scare, additional security issues — such as man-in-the-middle attacks, bad bots, phishing scams and distributed denial of service (DDoS) attacks — can plague the online environment of your e-commerce website.
Ask your e-commerce platform provider about the security protocols they have in place. Are they PCI compliant? What fraud-protection technology do they use? What do you need to do to ensure you’re doing your part to protect your e-commerce website?
Shoppers avoid online merchants who have experienced security breaches.
Data breaches are becoming all too common in the modern world of retail, and if your business is hit by one, it could have devastating effects. A PwC survey found that 62 percent of consumers believe businesses must protect their data and uphold proper cybersecurity measures to earn and maintain shoppers’ trust. About 57 percent of the survey respondents said it’s extremely important for a business to protect their data.
For these reasons, a security breach can cause customers to lose trust in a business and take their buying power elsewhere. In a PYMNTS survey, 47 percent of consumers said concerns about data theft and fraud could reduce their trust in an e-commerce business.
Assure your customers that their data is safe with you by securing your website with HTTPS protocol and an e-commerce platform that prioritizes data security. Also, ensure your e-commerce platform or shopping cart is PCI compliant, and require your customers to use robust passwords.