3 Critical Challenges of Online Retailers and How to Overcome Them

The challenges of online retailers continue to grow. Amazon continues to dominate the online marketplace. In 2018, it accounted for 33.7% of all e-Commerce sales for a total of USD 232 billion in net sales.

According to the US Commerce Department, e-Commerce represented a growing share of the retail marketing in 2018, taking a 14.3% share of total retail sales last year, up from 12.9% in 2017 and 11.6% in 2016. The industry is also forecasted to grow 25% further in the next 5 years.

But because of the Amazon effect, online retailers struggle to keep up with the changes and innovations in the industry. With more choices, often cheaper alternatives, and faster shipping, Amazon has become a primary choice for consumers.

But it’s not all dark clouds from here.

“The brands that are winning,” says Fab Dolan, Head of Marketing at Google Canada, “are the ones that understand and own the fundamental interplay between experiential and transactional…But it’ll always depend on how you navigate the interplay between offline and online worlds, how you — the brand — interlock customers and products.”

In other words, to succeed in online retail, brands must focus on their customers more than ever. That means providing them with the best experience wherever they are, not differentiating between different stores or online/offline experience. That means putting customers’ experience first.

3 Critical Challenges of Online Retailers

Challenge 1: Selling on Multiple Platforms

The first challenge online retailers face is the decision to sell on multiple platforms. On the one hand, selling on multiple platforms, like Amazon, means gaining access to millions of customers instantly; but the downside is it takes a lot of resources to manage different platforms.

So, to sell or not to sell?

That’s a question online retailers ask themselves whether they want to sell on Amazon (or other online marketplaces) apart from their own website.

The biggest apprehension with selling on Amazon are the additional fees, resulting in lower profit margins. While this may not matter to big brands that command a higher price point or have some sort of protection from copycats (in the form of patents), this isn’t the case for smaller ones who have razor-thin margins.

Selling on multiple platforms also mean more costs in terms of manpower. It takes time to set up and manage multiple online storefronts. Inventory management, order fulfillment, and customer service — these three activities are where most eCommerce sites spend their resources on.

Managing an eCommerce site running on an off-the-shelf software like Shopify is different from one that’s custom-built, and it’s also different from running a store in a marketplace like Amazon. All these are reasons why online retailers often choose to sell only on one platform — their own website.

Challenge 2: Lack of Integration Across Different Platforms

Another common complaint by eCommerce site owners is the lack of integration across different platforms. Shopify, one of the popular eCommerce software, makes it easy for anyone to start their own online shop.

And while Shopify makes it easy to start an eCommerce site, it is lacking in the growth aspect. For example, if you want to send email marketing campaigns or create segmented email nurturing sequences, you would need to install (and pay) 3rd-party apps.

They have their own App Store where you can find apps that give you these functionalities. But they only enhance the features of Shopify itself, like providing you with tools for email marketing or contests or referral systems.

This is understandable — Shopify doesn’t want you to leave their platform. That’s also why it doesn’t have much support for anything else outside the Shopify ecosystem. And if it has, it has limited functionality that won’t allow you to do what you want.

Take, for example, the Amazon-Shopify integration. It only supports products within 8 categories. If you sell products outside those categories, you won’t able to utilize this feature.

Or, say, you want to create a report on your inventory and sales for your eCommerce site and on Amazon. You would need to create the reports individually on each platform, download them into a spreadsheet, clean the data, then combine them again before you can see your company’s overall performance.

This lack of integration makes it difficult for small online retailers to invest in multiple platforms knowing it will involve extra costs that can leave them in operating in the red.

Challenge 3: Growing Expectations from Customers

Customers are more demanding than ever.

The Amazon Effect, a phenomenon that elevates consumers’ behaviors and expectations, is something every online retailer need to overcome.

For example, Amazon Prime customers get their items delivered within two days. They have discounted one-day shipping. Refunds and returns are handled without any hassle to the customer. Apart from this, Prime customers have added benefits such as video streaming, storage, music, and a lot more.

Customers are conditioned to expect more from companies.

Lower price
Better products
A higher level of service
More freebies

And if that isn’t hard enough, with you running a business and juggling multiple hats, it’s making it extremely difficult to compete.

A seamless experience across multiple channels requires specific software and training. It takes time to build a team that also embraces this type of customer-first culture.

More importantly, building this infrastructure takes money and resources — something eCommerce owners don’t have a lot of.

Conclusion and Next Steps

Selling on multiple platforms is the key to success. And while managing multiple storefronts is time-consuming and costs a lot of money, there’s a better alternative.

To overcome these challenges of online retailers, use custom software to integrate all platforms into a single source of truth.

The custom software must:

Affect the bottom line and increase your profitability
Automate redundant tasks
Provide robust reporting and analysis
Help provide outstanding customer service

To grow and succeed in the eCommerce industry, you need to meet your customers where they are, and provide a seamless experience before, during, and after their purchase. Using custom software will help you overcome these challenges.