Common Pitfalls of starting small ecom business

E commerce is the one of the hottest trends in technology. Easy availability of internet, high recall of top merchants such as Amazon and Ebay and umpteen choices on many platforms makes a E Commerce setup a lucrative opportunity. And you would be tempted to think that it is all No Guns and All roses in there.

Just slap a website or open a store in large marketplaces and you are coasting to making moolah. Unfortunately , the price of ease may be good for the end user but the price is often too high for businesses running these e commerce stores. This is not to discourage anyone but to make them aware of the pitfalls before you decide to throw the money at your venture. A little caution goes a far way.

So, you ask , what is it that can hurt your E Commerce business. Well, let us list a few items out for you.

Intense Competition:

• How may Ecom sites worldwide
  • https://seo.ai/blog/how-many-ecommerce-sites-are-there-in-the-world
• Pricing pressure
• E Commerce’s advantage that it is easy to sign up and start selling hides an important problem. That there is always someone who would be willing to sell at a lower price point.
• Large size companies

In categories, where the big players rule, small players often find it difficult to attract and retain customers.

• Long time to achieve Network effect
  • One of the biggest problem of any marketplace is that there needs to be enough sellers and there needs to be enough buyers to make a decent amount of sales. The giant marketplaces often has both. However, for am small player, achieving network effect is not easy.
• Unfair trade practices of giants
  • Big players rarely play fair. If your products are profitable they might undercut you or create their own private labels to outsell you. However , they might give you an option to sell your stuff with cobranding as well
• Capital requirement for advertising
  • If you are selling on large marketplaces, marketing is easier because the recall value of the website is higher. However, there too the competition may be intense and you may be asked to run paid ads .
  • If you own the website, all marketing and advertising expenses come out of your pocket

• Logistics and Delivery Issues:
  • Warehousing
    • Warehousing of products is a capital and on going expense. You need a suitable place with adequate safeguards in place to make sure that your product is available when ordered
  • Costs
    • As stated, the costs of warehousing is huge and often needs specialized skill to store your products. You also need to be mindful of cost of perishables and methods of disposing them in case you are selling perishable goods
  • Timely delivery
    • Customer expects your products delivered on or before time. A delayed order is lost reputation for your business and source of frustration for your customer.
  • Handling of returns
    • E Commerce industry suffers from repeated returns issues. You may need to design policies around return and vet them legally in order to make sure returns are handled with care and without affecting your business severely
  • Fulfilment
    • Sometimes order fulfilment is a costly operation requiring you to contact a vendor to supply an ingredient or a raw material. You need to have contracts in place that when you customer places your order, you vendor has raw materials to fulfil them.
• Payment Frauds and Security Threats:
  • Data breaches
    • Data breaches occur regularly even at large secured sites too. Data breaches refer to exposure of data not only related to purchase but also customer personal information such as addresses, phones , names etc. They can cause embarrassment to the customers and is fraught with legal issues.
  • Phishing
    • Phishing refers to using a similar looking page or URL in order to trick a customer into revealing their email and password. This information can then be used to glean further insight into customer.
  • Credit card frauds
  • Technical issues
• High Return Rates:
  • Issues related to mislabelling
  • Customer fraud
  • Damages
  • Frequent returns
• Customer Trust and Retention:
  • Identity theft
  • Credit card frauds
  • Lack of responsive customer service
  • Not good service guarantee
  • Fear of online transactions
• Regulatory Compliance:
  • Complex laws
  • GDR
  • Taxation
  • Liability
  • Data Privacy and Security
• Technology Challenges:
  • Data breaches
  • Platform scalability
  • Websites for multiple devices
  • Integrations with vendors.