The Most Common Challenges Faced by Small eCommerce Businesses

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Over the last decade, eCommerce has entirely transformed the global retail sector. Small eCommerce businesses have not only come into existence dynamically but also grown and modernized in due course to address the not so static desires and needs of today’s’ consumers.

Global outlook (2016- 21) report on global e-commerce business forecasts a constant growth through 2021 when eCommerce sales will reach a figure of US$28tn.

Statista says, e-commerce revenue will experience 8.2% growth annually, attaining a market share of US$3,299,490million by the year 2024 and this trend will continue in the future. 

Opportunities Vs Challenges in eCommerce

Shoes, apparel, furniture, electronic appliances, groceries, cosmetics – eCommerce allows consumers to now order almost everything online. While ensuring delivery to online consumers’ eCommerce businesses are likely to face certain risks. Fake orders/identity, fraud in payments, etc. are very common. In such a situation, keeping user details confidential has been emerging as a key challenge in the eCommerce world.

With rising global competition, the need to identify the targeted audience, get traffic, find prospective leads, convert them into customers, and build loyalty with them has become more important for e-commerce businesses today. Cybersecurity issues may become an additional headache for your eCommerce store, but you should learn to upgrade with technology and grab on to plenty of opportunities coming your way.

As you enter into the eCommerce world, you will come upon opportunities and challenges alike. The easier you handle them both, the better your eCommerce journey will be.

Ecommerce Businesses – Changing Landscape

Ecommerce sector in the USA continues to grow rapidly, and online vendors are preferred by consumers instead of traditional retailers these days. This growing craze brings along with it a bunch of challenges for eCommerce owners. The eCommerce business world is never constant, and the market condition throughout the world has changed and advanced a lot in recent times.

Be it the B2C or B2B sector, the scenario for competition in 2020 is barely the same as last year. Additionally, many new investors have implemented the idea successfully while a significant number of startups have moved farther in their businesses.

 Growth & Demand: Ecommerce Market 

The total numbers of online shoppers every year tell a different market story, or disclose a variable pattern: As per Statista, the number of e-retail sales is likely to become twice of what it was in 2019 ($3.53 trillion) by 2022 ($6.54 trillion). While eCommerce opportunities are plenty at a global level, there is a wide difference in online sales region wise.

There is also a significant difference in online shopping and the behavior of shoppers’ product-wise.

Common Challenges Facing Small eCommerce Businesses in 2020 and Beyond

Unlike traditional retailers, small eCommerce businesses are likely to find prospective customers for their services and products all over the world. However, some of the most obvious advantages available to small eCommerce merchants (i.e. fairly low start-up expenditure, versatility, world reach) result in more competitors that continue to grow constantly.

It’s predicted that eCommerce will take over 95% of retail sales in 2024 and it would generate $56.4 billion additional revenue in the USA making it $600 billion in 2020. As per expert analysts, small eCommerce businesses are now facing challenges in four different dimensions. They are as follows:

‍1. Financial challenges – The financial or investment challenges facing small eCommerce businesses cover the business setup costs, the number of competitors online, expenses associated with infrastructure updates, and the availability of a skilled workforce. Researchers have found out that 90% of eCommerce website hosting is done on servers located in America and other rich countries that constitute only 16% of the global population.

2. Technology-related challenges – The main technological challenges facing small eCommerce businesses are eCommerce security issues, bandwidth/data transfer availability, and integration of advanced technology with existing apps and databases. The growing popularity of the eCommerce industry has made it a soft target for cybercriminals.

With the latest ‘hacking’ activities, consumers’ confidence in retailing is getting affected and asking for improved payment security. Additionally, the trustworthiness of network infrastructure and integrating new technology with an already developed eCommerce application come as challenges too; eCommerce technology is continuously evolving, and keeping pace with it is never going to be easy or cost-effective.

‍3. Social/language challenges – There are always cultural and language differences when it comes to creating a customer base beyond a local region for an eCommerce. Unlike traditional retailing that could be managed well using region-specific marketing tricks and language, online product/service sellers struggle with social, cultural, and language variance in the globally targeted customer base.

4. legal/Tax challenges – Small eCommerce businesses are subjected to legal hassles regarding taxation, intellectual property rights, etc. It is no less than torture for them to discover that they have become a target for taxation in countries and states looking to build up their tax revenue.

The Future of eCommerce Businesses: Growth Obscured by Challenges 

A new study on the eCommerce market by Shopify recognizes top trends that will guide and change the prospects of online retail sales in the future. They are as follows:

  • Online to Offline Retail Growth: Due to rapid growth in recent times, eCommerce has gone up and is still growing. It has taken over almost 11.9% of retail sales worldwide. Hence, online to offline retail share is a trend to consider, as eCommerce aims to provide a virtual in-store experience to shoppers that is unmatched in every sense.
  • Multi-Channel eRetail Sales: Mobile users are estimated to make for $319bn in eCommerce sales by this year, and multi-channel retail sales, opening up more avenues for customers to quickly purchase products will be far more crucial in the coming years. So, online retailers will require an infrastructure for handling and maintaining multi-channel eCommerce to help compensate for the inherited challenges of online sales.
  • Automated Ecommerce Operations/Management: The functional needs of eCommerce merchants are evolving along with technology. Automating order entry/delivery to make sure that the business site goes well with the recently integrated technology without much manual work on a day-to-day basis will be crucial for the long-term success of eCommerce businesses.
  • Mobile Responsive Ecommerce in Growing Demand: Mobile traffic counts for great opportunities for eCommerce businesses. Most online sales are accessed and closed by consumers over mobile. Though desktop users are no less involved in eCommerce transactions, mobile responsiveness brings more potential customers to eCommerce businesses through browsing.
  • Exposure to the Global Ecommerce Market: McKinsey’s study suggests that eCommerce entrepreneurs may like to shift their operational areas all over the world while looking for more global sales opportunities. Forging local partnerships, learning about laws and rules in the region, and implementing robust, efficient marketing will enable eCommerce businesses to expand successfully worldwide.

It has been 2020, many small eCommerce businesses are confirmed to be facing the challenges in the area of success and growth—moving ahead of their start-up status, and making the most of the opportunities that promise growth and maturity. Navigating the untested waters of eCommerce maturation will call for plenty of business expertise, insight, and the capacity to stay flexible to adjust to an ever-changing and growing business area.

We can assist you with eCommerce application development and steer clear of all the above-mentioned challenges. Trust us with your eCommerce needs as we are far more specialized to enrich your eCommerce journey. 

Guest post by Jay D

Jay D – Do what you do best in – that’s what I’ve always believed in and that’s what I preach. Over the past 28+ years (yup that’s my expertise ‘n’ experience in the Information Technology domain), I’ve been consulting to small, medium, and large companies ‘bout Web Technologies, Mobile Future as well as on the good-and-bad of eCommerce tech. Currently working at Andolasoft the web and mobile app development company in the USA. 

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Karthik Ramachandiran

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