Since its inception in the 90s, eCommerce has been changing constantly. The B2C (business to consumer) and B2B (business to business) landscape today bears little resemblance to the ‘start-up’ culture that characterised the dot-com boom era. If eCommerce businesses are to survive and thrive, they must act fast to overcome the challenges that come with a maturing eCommerce industry. YC’s Paul Graham says, “Overall the web is sloppy but an online store can’t afford to be.”
Here are a four key challenges that big and small businesses need to tackle to survive as the industry matures.
Cyber-Security and An Absence Of Online Identity Verification
As the internet has been increasing its reach, it has brought with it security risks that have become a major challenge to e-commerce. Indeed, the internet has made businesses whose operations are reliant on the network particularly vulnerable to cyber-attacks. This was especially evident when the Ransomware virus spread all through the world, businesses big and small were forced to fork a lot of money for their crucial data or they lost it completely.
Small businesses are particularly vulnerable to such attacks as most lack both the financial and technical capacity to deal with ‘big’ computer viruses. Those in e-commerce are also exposed to financial fraud because of the lack of an effective online identity verification system. As it stands, on most e-commerce websites, when a user signs up only the information entered by the customer is used for identification. This is just the name, the address and the phone number — information that can be easily stolen or manipulated by today’s tech savvy criminals.
To ensure the safety of both the customer and the business itself, small businesses must take measures to safeguard themselves against this criminal element. They can start by verifying customer information to ensure that it isn’t false.
Software solutions like LexisNexis can be used to verify identities and control fraud by using multi-layered authentication. It has features such as electronic identity verification, instant authentication, SSN verification and identity checks.
Software that automates a call or send a verification SMS upon placing an order can help reduce the number of cancellations and bogus orders.
By 2021 it is estimated that e-commerce will be 15% of all global retail. While that growth has meant an exponential increase in the number of online buyers it also means an increase in the number of sellers. In North America for instance, there are over 1.3 million e-commerce companies while globally they are approximately 3 million excluding China. So, while the global population may be well over 7.5 billion, the number of sellers and the global nature of e-commerce makes competition very stiff.
When it comes to competition the default mode for most players is to imitate and better your rivals. However, as late Apple co-founder Steve Jobs put it “You can’t look at the competition and say you’re going to do it better. You have to look at the competition and say you’re going to do it differently.”
Differentiation is the key to winning. Calloway Cook, founder of Illuminate Labs in an interview advises small businesses to “overcome price competition by having a very clear company value proposition that consumers can’t get elsewhere.”
The e-commerce competition is going to be won by companies that can set themselves apart from the rest and provide a truly unique experience to their customers. To do this one will have to carry out in-depth research to find out for instance which products are more in demand and remove outdated items. Carry out research on your competition so that you can find your own special edge on the market.
E-commerce companies face a particular challenge of building customer loyalty as the seller and the buyer don’t know each other. They only interact on the online platform without that personal contact they would normally get at a traditional physical store.
Moreover, studies have found that it can cost up to 5 times more to acquire a new customer than to retain an existing one. Also, there is a 60–70% success rate of selling to current customer compared to a meagre 5–20% success rate of selling to a new customer. Customer loyalty is thus a very important component to have so as to succeed.
To build trust one must ensure that the customer is satisfied by the whole process, from ordering online to shipping. Customer service must be a priority, even over profit.
It is also important to share information such as addresses, phone numbers, customer testimonials and even blogs so as to show the human side of your organisation.
As mentioned earlier, online businesses have the special challenge of offering a service that is comparable to the brick-and-mortar service that most customers are still used to. The survival of online business will depend on their ability to keep customers engaged and happy throughout the buying process.
Most companies however fall short of these demands as it requires very precise handling of analytics, pricing and customer segmentation. Offering a successful online experience requires similar, if not greater, clarity on pricing, product offering and more as that in the physical buying process.
Customer demand is constantly changing and businesses are facing the increased need to personalize every customer’s experience to keep them. For instance, one of the major problems online stores have been facing is shopping cart abandonment. A tedious and hence bug-filled checkout process causes customers to flee. Online stores like everythingeshop.com have solved this by having a very tidy and efficient system that encourages customers to continue shopping with the checkout option just a few clicks away.