5 Lesser-Known Challenges That Can Shatter Your Dream of a Successful Ecommerce Business

A successful e-commerce website can bring major windfalls to entrepreneurs. However, the most common scenario is the failure of such online stores due to a lack of understanding and poorly approached research beforehand.

The eminent mistake is considering the known internet challenges and missing the lesser-known but critical challenges of running an e-commerce business.

I would love to elaborate on those lesser-known challenges here:

1. Drop Shipping

Drop shipping is the process of sending the product directly from the manufacturer/ supplier to the end customer without stocking it in your own store. On one side, drop shipping is cost-efficient, as only the virtual presence is required for the store instead of the actual store and its maintenance. But on the other hand, there are some associated challenges with it.

The prevalent challenges include the quality of the product delivered and going out-of-stock. Quality is one factor that could make the value of your brand in the customer’s eye. In the indirect shipping process, quality measures are not possible to undertake as you don’t have control over the inventory and the shipping method.

Delivery time is also a significant factor that you can’t control. So, make sure to commit to your customer the exact value that you can possibly deliver.

Moreover, ecommerce business owners generally forget to align their store databases with the manufacturers’/suppliers’ databases. The entrepreneurs need to think properly questions like what would happen if the customer orders a particular item that isn’t present in the manufacturers’ inventory but without your knowledge?

Also, what will be the consequences if that happens after the order confirmation? The cancelation of customers’ orders never ends up in customer retention and good word-of-mouth publicity.

However, precautionary measures or extra services could save entrepreneurs from this disaster. For instance, eCommHub services enable the synchronization of the e-commerce store with the suppliers’ real-time inventory feed. It will automatically update your database according to the supplier's inventory status.

2. Shipping

Package shipment is the next big challenge of running an e-commerce store. Several parties are involved in smoothing the cross-border e-commerce pathway, including the manufacturers, shipment crew, customs, etc. The challenge arises from the differences in the business objectives and motivation levels of each party.

Damage could result either in transit or in the form of package loss. The risk rate shoots up higher in case of global shipment as compared to local package delivery. Although proper packaging will cost a few extra bucks, it is essential to make a proper investment in packaging so as to hand over the product to the customer with extra care, which eventually will result in up-branding.

Package loss, on the other hand, is still out-risky with less cost-efficient preventive measures. Early-stage entrepreneurs usually don’t seem to know the frequency of package loss and its implications. The extra expense of excise duties in some countries increases the cost of delivery. Unreliable and poor postal networking also poses a big challenge.

While setting up a global e-commerce network, entrepreneurs should gain hands-on knowledge of all the legal issues and limitations on package deliveries in such states.

3. Consumer fraud

Fraudulence is one other challenge of ecommerce. Might you remember the buzz of online credit card fraud? These frauds are the most common in the ecommerce business. Credit information gets hacked easily by petty hackers through online shopping sites.

These hackers usually use sophisticated malware or savvy cybercriminals to steal customers’ information. They mostly target small e-commerce sites, as they are new in business and almost always the least protected. According to a 2014 Internet Crime Report by the FBI, the US economy suffered a loss of about $8 billion due to online fraud during 2014.

Bearing such losses might be affordable for some developed e-commerce platforms like Amazon, but for any newbie e-commerce startup, it could be disastrous.

A common mistake of most e-commerce entrepreneurs is letting fraudulent attempts go unnoticed. At various times, the theory behind this is that protection strategies are costlier than loss per transaction.

However, the consequences might become more drastic with time. The hacker community tracks online fraudulent activities and possible mitigation strategies. If such e-commerce sites don’t take preventive measures, they end up becoming the favored targets.

4. Taxes

Many new e-commerce entrepreneurs tend to overlook the taxes involved in e-businesses. However, taxation is more deeply involved nowadays, as different states and countries have varied taxation norms, and incorporating the concept into the web fabric is a big real-time challenge.

The taxation law of the home state/country and all the states/countries where the end consumers reside is important to consider. The internet is a global place, and doing business here doesn’t imply the diminishing of the physical boundaries between countries and states within them.

However, it truly depends on the products/services you are providing online. If these are merely the ‘downloads,’ the taxation might not be the issue. However, for a clothing e-store or furniture e-shop like IKEA, the taxation must be planned out with severe caution depending upon where the merchandise is to be delivered.

Overlooking it could trap you in late and costly package deliveries. So, in order to get past this challenge, the best way is to sell the products globally on an all-inclusive amount basis. If you don't have any idea, Look at QuickBooks Sales Tax Calculator, which will give you a complete taxation idea.

5. Demand & supply management

Demand and supply management is an area where even the most established e-commerce outlets are struggling, as unfitting inventory management could damage the business beyond limits, especially for smaller companies.

When your e-selling scope is global, trending and forecasting are a big challenge. You might come across instances where a commodity is highly in demand, but you won’t be able to find a reliable supplier at that time.

Managing such issues at critical times with good output is a big win. The best way is to equip your site with trending and forecasting tools. Read your target customers well before advertising the products to them.

What’s your take on this?

Do you have any of your own experiences and observations to share with us? Feel free to do so in the comment section below.

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