6 Major Challenges of Running an Ecommerce Company and How to Beat Them

Written By Alla Levin
September 11, 2020
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Challenges of Running an Ecommerce Company and How to Beat Them

Is your business one of the over 1.8 million online businesses in the U.S? Thumbs up! In a country where the vast majority of consumers shop online, your eCommerce company is best placed to make a lot of sales.

However, being in a good position to find success doesn’t necessarily mean the job is done.

In fact, many online businesses struggle. According to one study, 90 percent of ecommerce companies die within the first three months.

Why is this the case? There are simply far too many challenges and most new businesses aren’t able to overcome them. To help you steer your business to success, we’re fleshing out the major challenges eCommerce businesses face and how to beat them.

Read on!

1. Ecommerce Company: Strong CompetitionEcommerce Company

The internet was perceived to offer a level-playing field for every business, but this isn’t the case.

Big e-retailers like Amazon dominate the online marketplace. These companies often engage in practices that undercut the small online businesses.

For instance, if your ecommerce company offers an innovative product, nothing stops a big retailer from developing a similar product and selling it at half the price.

With such a move, you’ll certainly lose most of your customers. Even where the big retailers are unable to directly undercut a small business, they can easily acquire it.

An acquisition isn’t what you want when your dream is to grow your small ecommerce business into a giant corporation.

Overcoming market competition isn’t an easy task, but there are steps you can take to stay ahead. Offering quality products and services isn’t negotiable. Couple this with creative marketing and you might just manage to find success.

2. Finding the Right Products to SellFinding the Right Products to Sell

What is it that you can start selling that isn’t already on Amazon?

It’s possible to invent a new product that shakes the market and tilts it in your favor, but if you’re anything like most small eCommerce entrepreneurs, you’re selling products that are already in the market.

Yet, your product has a direct impact on your success as a company. The right product will attract sales easily while the wrong product will rot on your shelves. It’s not impossible to find a product that sells online. You just need to do plenty of research.

If you’re inventing a product, ensure there’s adequate demand for it before bringing it to market. If you plan to sell an existing product, ensure there aren’t way too many companies already selling it online.

3. CyberattacksCyberattacks

As of 2019, 43 percent of online attacks target small enterprises. A single attack can halt your operations for days or even weeks. Recovery will cost you about $200,000.

Hackers are developing a bigger appetite for small businesses because they’re soft targets.

Most small e-shops don’t have the best cyberattack protection systems in place, unlike the big companies that have invested heavily in state-of-the-art defense systems. To prevent cyberattacks, you have no choice but to do what the big boys are doing. You have to invest in the best cyber defense systems.

And no, this doesn’t mean you’ll spend a lot of money. Most cybersecurity providers offer custom protection solutions that’ll suit your budget and are just as robust as those utilized by big companies.

4. Order FulfillmentOrder Fulfillment

Fast and free. This is how online customers want their orders shipped. Unfortunately for most small eCommerce businesses, this is a combination that’s hard to achieve.

You’re already struggling to keep a profit margin in your pricing, so offering free shipping is out of the question.

At best, your customers have to pay for a shipping fee and wait one or two days before getting their order. Not ideal, but the good news is most online customers are willing to compromise, as long as you have a quality product and it arrives in perfect condition.

You shouldn’t settle with that, though. There are steps you can take to improve your order fulfillment. Dropshipping is one strategy, as long as you’re working with a reputable drop shipper.

Selling on Amazon is another option. There’ll be greater competition for customers on the platform, but you can count on the company’s robust shipping infrastructure for fast and efficient order fulfillment. 

5. Keep Up with Customer Demandecommerce company

Competition is fierce, yes, but it’s not uncommon for a small business to break into the market with a bang and generate phenomenal demand. Perhaps a video of your product wen viral and now your e-commerce site is collapsing under the weight of thousands of orders.

When it rains, it pours! This should be a good problem, only that it isn’t. Failing to keep up with customer demand can hurt customer experience and ruin your brand’s image.

You can go from trustworthy to untrustworthy real fast. How do you prepare for such a challenge?

It’s all about analyzing your data and forecasting. In most cases, a surge in demand won’t happen out of the blue. There’ll be a clear trend pointing to an imminent surge.

With this information, you can increase your inventory and ramp up your shipping infrastructure accordingly.

6. Ecommerce company: Geo-Politicsecommerce company

This wasn’t really an issue until the Trump administration came into power and Brexit happened. Take Brexit, for example. Online businesses that are based in Europe or ship into Europe have been thrown into a state of uncertainty.

They don’t quite know how Brexit will affect existing trade agreements. If you’re a UK-based e-commerce company, will you need to obtain new licenses to ship into the EU?

Will new trade agreements prevent your business from shipping to the EU? This post delves deeper into the intricacies of Brexit and e-commerce.

The worst part about geopolitical issues is you have no control over them. The best you can do is try to minimize your risks, such as focusing on your local market until the uncertainty clears.

You Can Overcome the Challenges of Running an Ecommerce Company Running an e-commerce company comes with great promise, but it also has its fair share of challenges.

From stiff competition to geopolitical tensions, there’s enough to cause your business to fail. But it doesn’t have to fail. You can overcome these challenges and build a successful online business.

Keep reading our blog for more business insights and advice.

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