Pitfalls In Ecommerce: The 4 Major Setbacks

Pitfalls of Ecommerce

Ecommerce has grown a lot in recent years. And looking at the growth right now – this might grow even bigger in coming years. And will be representing an increasing share of total retail sales. As more and larger online stores open, small sellers may face new business-threatening pitfalls in ecommerce too for online selling. The concept of ecommerce has long been the small businessperson’s friend. Because owners can easily enter the market with this segment and can acquire relatively low resources. Yes, the continuously evolving ecommerce market has led to tremendous competition between online sellers too. And the ones who do not keep up with the ever-changing trends tend to disappear very quickly.

Likewise, ecommerce marketing is also a much more straightforward concept. People want your product – and you sell that product. This sounds easy, right? Well hold on – because this might be the first pitfall almost every business owner faces – whether a new one or an established one. And this also affects mobile SEO for ecommerce in the long run. The reality is that ecommerce marketing is more challenging and competitive today than it ever was. The competition is rising because of new trends in SEO, paid search, social media marketing. And learning to interpret these analytics are slowly making it even bigger. Small mistakes that may seem insignificant at the time. Can cost you enormous amounts of your marketing budget down the line.

While there may be dozens of obstacles standing between your business and its success. It doesn’t mean you cannot overcome those. Having a good knowledge about these and focusing on what is more important – can help in growing business, a lot. Here are 4 major pitfalls that every business owner must be knowing about :

Pitfalls In Ecommerce : Working Capital Finance

Working Capital FinanceMostly, the businesses which are large and established already with their offline outlets – are doing really well online. Because of easy access to their working capital. This is because they already have the resources, banks and even physical assets as large turnovers and collaterals. But, here’s a big but.

  • A new entrant to this ever changing industry, does not generally have easy access to any of these.
  • They might be able to fund the early stages of expansion from the initial capital they used to set up the business. This capital might have been borrowed from the bank. Or has come from their own savings which they have saved from years. However, this may not be enough.
  • A major problem faced by growing businesses is over trading. A lack of working capital in the time between investing in growth and realizing the profits can cause serious problems for a business.
  • Lack of working capital finance does not mean there will be no profit. But its effects can be dangerous.

Key Takeaway: Hence, negative cash flow by extending payments to suppliers can haunt you for a short time. Stopping expansion for a short period, freezing salaries and increasing prices – might save you some respite. And can enable revenue levels to catch up.

Pitfalls In Ecommerce : Price Competition

Price Competition, pitfalls in e commerceCompetition on pricing is a steep one in ecommerce industry. And that is because many thousands of online sellers list identical products on marketplaces. And quite often the only differentiator is the price-point.

  • This sort of price competition that especially hurts retailers. Who do not have the purchasing power to compete with large online sellers.
  • This calls for changing your prices from time to time. But you should also understand its potential impact.
  • Frequently review your sales numbers to determine if the changes are having the desired effect. Because a price change may take longer than you realize for impact to occur.
  • Most of the time, you probably don’t want to sell a product at a loss. However, if you’re clearing out inventory from last season, it’s often better to discount these items.

Key Takeaway: So you can free up funds that are tied to old inventory. And use them to purchase new products. Selling at a loss can also lead to additional sales. Many times, the low prices advertised are used to bait customers into the store. With the objective being getting them to buy additional items at full price.

Customer Loyalty

Customer Loyalty - Pitfalls of E commerceCustomer loyalty is arguably the most important factor in business today. Not only will it bring repeat business, but also translate to more opportunities and even more conversions.

  • Simply put, it’s easier and much more profitable to sell to loyal customers than it is to constantly search for new ones. Smaller ecommerce sellers rarely have resources to drive loyalty for their products or store.
  • Video trends in ecommerce industry are also a great way to gain customer loyalty.
  • A significant aspect of customer loyalty comes down to your likeability. People would definitely want to remain committed to a brand. If they believe they’ve developed a beneficial relationship based on trust and genuine.
  • Take advantage of any opportunity to get to know a client on a personal level. Organize your operations to keep a mindful eye out for information that can help build a relationship.

Key Takeaway: Therefore, Google is now judging content in context with what’s being conveyed on the entire web page and rewarding sites accordingly. Which has been a part of latest innovations in ecommerce. With that in mind, make sure to modify your content based on who the traffic is. Small business owners and marketers rarely have the sort of resources available to large competitors. So these small stores will need to take extraordinary measures to retain shoppers.

Returns Policy

Returns Policy - Pitfalls of E commerceMarketplace policies are highly favourable for buyers.

  • The seller would have to pay commission to the marketplace even if the product is returned in a damaged state. Also, generally it’s the seller who pays for the return charges.
  • The biggest challenge is to resell the product, once the label or the packaging are significantly damaged.
  • Ecommerce sellers can connect with various refurbished goods sellers, who are more than willing to buy such products, although at discounted prices. This is one of the ways to boost sign ups in ecommerce industries.
  • For many sellers, the process of handling product returns has been mostly on an ad hoc basis.
  • However, many successful organizations have realized that the returns process incurs significant costs. And that, an effective product returns strategy, can provide a number of benefits.

Key Takeaway: Consequently, product returns management can become a profit center if managed and administered properly in your online store builder. Turning product returns into a profit center requires cost savings, companies improve the recovery value of returns and, if possible, obtain revenues from various reverse logistics activities. More efficient product returns programs can reduce variable costs, resulting in improved margins. Companies often find that they can reduce processing costs if their existing processes are inefficient. Strategically and operationally, efficient returns management can reduce costs, improve revenues and enhance profitability as a result. As one of the supply options for online store.

Pragyan Sharma
Content Writer at BuildaBazaar
A quiet person, likes to keep things to myself - well mostly. Have a passion for writing. Loves singing and playing Guitar. Reader. Dreamer. Wanderlust.

15 thoughts on “Pitfalls In Ecommerce: The 4 Major Setbacks

  • November 22, 2016 at 12:25 pm
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    I think every shopping is going to be digital in no more time because of d changes in lifestyle.

    Reply
  • November 28, 2016 at 1:02 pm
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    Because of d busy schedule’s the proverb now is “If you can’t go to a shop, a shop will come to you.”.

    Reply
  • November 30, 2016 at 5:57 pm
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    Ecommerce industry is a force that no investor can afford to ignore.

    Reply
  • December 1, 2016 at 12:06 pm
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    Do not stretch ur feet more than u can. This is the same proverb which can applied in working capital in Ecommerce.

    Reply
  • December 1, 2016 at 12:50 pm
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    Without high degrees of Capital, you dont get d vigour of debate and exchange dat hard prob’s demand.

    Reply
  • December 1, 2016 at 1:17 pm
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    If some of ur products r not selling, put them on sale. So that you can free up funds that are tied to old inventory and use them to purchase products which have high sales potential.

    Reply
  • December 1, 2016 at 3:55 pm
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    You can easily use d BCG matrix and apply it on price competition.

    Reply
  • December 1, 2016 at 4:37 pm
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    Competition is the final price determinant.

    Reply
  • December 2, 2016 at 11:37 am
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    Competitive prices may result in profits which force u to accept a rate of return less than u hoped for.

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  • December 2, 2016 at 1:25 pm
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    Beat the price competition from Chinese products, and you have achieved it.

    Reply
  • December 2, 2016 at 2:34 pm
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    Start some customer loyalty programmes best way to keep ur customer’s getting back to u.

    Reply
  • December 2, 2016 at 3:01 pm
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    Business with loyal customers are 88% more profitable.

    Reply
  • December 2, 2016 at 3:42 pm
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    It is 9% much cheaper to sell to loyal customers than it is to constantly search for new ones.

    Reply
  • December 2, 2016 at 4:11 pm
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    If ur selling the best product, why would customers want to return it.

    Reply
  • December 2, 2016 at 4:30 pm
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    Why fit in when ur born to standout.

    Reply

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