By 2025, slightly over 80% of the U.S. population will be making online purchases, and trade pundits expect the market to grow by over 13%, according to Statista. However, the online marketplace isn't as straightforward as posting a few pictures and seeing sales. There are some unique challenges e-commerce businesses face.
Let's dive into the 10 biggest barriers you're likely to face as an online business owner, along with tips from experts about how to resolve these issues and run your online store with the most efficiency.
1. Building a Website
Your website is the heart of your virtual business. It needs to be visually appealing, user-friendly, optimized, and virus-free.
Use a website builder that supports e-commerce operations, such as shopping carts and various payment methods (options below).
Secure a custom domain name for your website that's easy to remember, and make sure it matches well with your business name.
Place accurate and sufficient CTA (call to action) buttons that drive conversions.
Provide high-resolution images and clear descriptions for products and services provided.
Ensure quick loading timely through Google Page Speed Insights.
Test ease of purchase, website layout, and overall navigation for users by measuring how long it takes to find a product.
All this can be overwhelming, especially if you aren't tech-savvy. To get your online business up and running quickly and effectively, consider using an e-commerce website builder. Here's how the most popular website builders for online stores stack up against each other.
You can also opt to work with a designer if your budget permits to get your website up and live. Otherwise, follow these e-commerce website-building steps to get started on your own.
2. Getting Organic Traffic
How does your online business get found online? Organic traffic is increasingly difficult to come by. Joshua Feinberg, a business development strategist and e-commerce growth consultant for small businesses at SP Home Run, shares that "the best way to get traffic for an e-commerce business is to prioritize where your most important buyer personas already hang out."
Based on where your customers spend their time, you can opt to increase traffic via a strong search engine optimization (SEO) strategy, email marketing, or social media. Let's start with SEO.
SEO is all about ensuring your website has the right keywords, titles, and descriptions so your online business ranks the highest. Understand the right keywords by studying competitor websites and using keyword search engines.
A few resources that can help you improve your SEO are:
Resources to Boost Your SEO Game
Google Keywords Planner: This helps you identify top-ranking keywords for your business that you can use to create page titles, product captions, tags, and blog posts.
Plug In SEO: This app will scan your website and identify all the areas that can be improved so you'll rank higher on search results.
Pixlr: Photo optimization tool that will reduce photo size and select the correct format so they load faster.
Build your credibility by offering expertise and knowledge through blogs, videos, infographics, or downloadable ebooks. Your audience could have questions pertaining to product usage or trends, and you could address those through your blog or vlog.
If you're considering blogging for your virtual business, offer to do some guest blogs on industry-relevant groups on Meta and LinkedIn. This will increase your brand's reputation as an industry leader and provide increased opportunities for backlinks to your website.
Social Media Marketing
An excellent way to increase your online presence, awareness, and visibility is to compliment your e-commerce shop with a social media account. Social media's double-digit annual growth makes it one of the fastest ways to spread the word about your store. Instagram Shopping, Pinterest, and Facebook Marketplace allow you to have a direct product link to your website.
Influencer marketing is a budget-friendly option to generate organic traffic to your website. An increasing number of customers are seeking and trusting recommendations from influencers, so go ahead and collaborate with a micro or nano-influencer to generate great word of mouth for your e-commerce brand. You can search for influencers via HypeAuditor, Upfluence, or Influence.co.
3. Securing Your Data
Security is crucial to starting an online business for you and your customers. According to CNBC, 40% of small business owners worry they could fall victim to cyber crimes in the next 12 months.
An e-commerce site is open to a variety of threats — password stealing, credit card data breach, phishing, and payment misdirection. Any of these attacks can cost you money and hamper your customer trust and loyalty. Fear over data security can also impact your virtual business's growth potential.
Below, we highlight security measures that will aid you in keeping your data safe and make you part of the exclusive 14% of small business owners who know how to defend themselves against cyber attacks.
While browsing e-commerce website builders, look into their safety measures. Do they have an SSL certificate? An SSL (Secure Lockets Layer) certificate is the most basic form of online protection that blocks hackers.
Use a third-party payment portal that's compatible with your e-commerce website builder. Popular payment gateways like PayPal, Stripe, and Authorize.net are known for their robust security measures.
Encourage customers to create strong passwords.
Run timely updates on software and apps.
Invest in an e-commerce firewall solution like Astra Security, SiteLock, or Quttera. These tools will scan your website for malware and other vulnerabilities.
Monitor how much you download and integrate into your website as plugins or apps, as many may not be fully secure or optimized to work with your website builder or hosting site.
Back up your data regularly.
4. Standing Out in a Competitive Marketplace
One of the biggest barriers to e-commerce is the crowd and competition. A Morgan Stanley study forecasts e-commerce to grow to $5.4 billion by 2026. Unfortunately, this means potential customers have even more options to go somewhere else.
Leo Ye, Forbes 30U30 member and co-founder and CEO of CUBO, recommends tells aspiring business owners to "differentiate yourself by ensuring your website looks professional and is suitably optimized for the current Google algorithm."
He further adds that offering a unique, cost-effective product or service and/or targeting a smaller customer base could help you stand out. You might also consider offering free shipping or same-day delivery and an attractive return and refund policy.
To stay ahead of the pack, stay abreast of competitors and industry leaders by checking their new services or products, marketing strategies, and customer reviews. It'll give you a handle on what's working and what you might be able to do to outshine the competition.
5. Choosing the Right E-Commerce Business Model
It's essential to select the right business model for your e-commerce store before you jump into selling your product or service. An e-commerce business model describes how your online store sells its products or services.
The type of business model you pick can help you keep your e-commerce afloat and bring in sustainable revenue.
There are four business models an e-commerce business can choose from:
Type of Business Model
Business to Business (B2B)
Sold directly to another business
Longer decision-making processes
Larger ticket values on orders
More reoccurring purchases
Examples: manufacturing materials, clothing, car parts, and semiconductors
Business to Consumer (B2C)
Sold directly to end-user
Shorter decision-making processes
Supported by influencer marketing and social media campaigns
Examples: clothing, grocery, gym memberships
Customer to Business (C2B)
Consumer-provided goods or services sold to business
Typically has no investment or customer service
Requires high-volume traffic
Example: affiliate or influencer marketing
Customer to Customer (C2C)
Commonly known as online marketplaces
Exchange of goods and services
Money earned by charging transaction or listing fees
Examples: Craigslist, eBay, Etsy
Selecting the right business model allows you to leverage growth. Here are some questions to consider when choosing a business model:
What are you selling? Digital, physical products? Unique services?
Where are your customers? What are their expectations?
How will you get your products or services to your customers?
A B2B business model might make sense if you have a large ticket physical product like raw materials for manufacturing a piece of equipment. If you are a freelancer providing services to other small businesses, then the C2B business model might be ideal for you.
6. Finding the Right Tools
Starting an online business requires more nuanced tools than a standard website. These tools must be smooth and efficient, as they will be responsible for automating repetitive tasks, reducing the occurrence of man-made errors, and allowing you to focus on high-priority tasks. These tools should provide you with valuable data you can use to make strategic decisions.
Chinmay Daflapukar, a digital marketing associate at Arista Systems, recommends e-commerce businesses use a content management system (CMS) like WordPress or Joomla to keep their content game manageable and consistent.
If your website builder doesn't offer inventory management, or if you're planning to run your shop across multiple platforms like Amazon and eBay, consider inventory management tools like Zoho Inventory, Expandly, or Skubana.
Given that our recent small business survey found that 58% of small business owners didn't have the tools they needed for success when they first started their business, we decided to put together a list of affordable and user-friendly tools that are beneficial to any online e-commerce business.
Keep these pointers in mind while you browse tools for your online business:
Know the exact purpose of the tool and how you're going to use it.
Stay within your budget.
Read external customer reviews.
Test the software through a free trial or product demo.
7. Constantly Changing Customer Expectations
Another prevalent e-commerce challenge is the rapidly evolving customer expectations. Jamie Irwin, an e-commerce growth expert at James and James Fulfillment, states, "Today, we live in an era where customer experience is paramount. Unfortunately, smaller merchants face a formidable obstacle in meeting customers' ever-changing needs."
Things that will elevate user experience and ensure you're meeting your customers where they need you are:
Having a clean, professional-looking, fast-loading, and mobile-optimized website.
Providing 24/7 customer service through automated chatbots.
Staying in touch with customers via a method they prefer, which could be email, sms, social media, or feedback calls. Keep them updated on sales deals, new products/services, and special discounts.
Individualizing the webpage through e-commerce personalization tools. Popular e-commerce personalization apps you can research and compare are Insider, Bloomreach, and edrone.
Conducting frequent (could be once or twice a year) user testing to ensure the experience is consistent but yet evolving to meet customer needs. Free user testing tools include Google Analytics, Mouseflow, and Crazy Egg.
Irwin further recommends virtual businesses study their customer purchase pattern, such as with Google Analytics. This will help you create an experience where your customers feel acknowledged from their very first interaction with you.
8. Evolving Skill Set
What it took to run an online business a few years ago is no longer relevant. The market is constantly changing, and this requires aspiring online business owners to upgrade their skill sets.
Feinberg recommends"business owners invest time each week, or at least each month, to keep their skills sharp. Big changes are coming to Google Analytics that impact every e-commerce business."
Another way to tackle this challenge is to identify where your strengths lie and outsource areas where you could use an extra pair of helping hands (or tools). That'll make it easier for you to play to your strengths and develop expertise in that realm.
9. Mirroring Brick-and-Mortar Experience
A prevalent challenge faced by e-commerce businesses is allowing customers to get as close and personal with the product. Today, even with a greater number of customers being receptive to online purchases, they're still seeking an experience that's immersive and similar to what they would get if they walked into a store.
To mirror a brick-and-mortar experience, add virtual classes and product demonstrations to your online business.
For clothing products, you can upload videos or user-generated images that show how the actual outfit would look on different people. You can also consider integrating augmented reality (AR) into the shopping experience. Shopify AR can help you create that in-person shopping feeling.
10. Managing Shipping and Returns
High shipping rates, vague or slow delivery timelines, and no return policy are conversion killers. It's no wonder that 53% of e-commerce retailers find shipping and logistics processes challenging. We can thank Amazon Prime for this challenge.
Luckily, many e-commerce builders offer integrated shipping and delivery for a minimal fee. Read Wix's instructions on how to set up shipping and pickup for your e-commerce business to see an example.
To keep your customers from walking away, consider the following:
Provide clear information on shipping options, including expected delivery time and pricing for each.
If you don't have the margin for free shipping, offer a special shipping code for first-time customers or when minimal product value is met.
Partner with competitive shipping companies such as USPS, UPS, or FedEx. Check out regional carriers like OnTrac, United Delivery Service, and Lone Star Overnight, which might be more affordable.
Consider same-day, local pick-up from (if possible).
FAQs About E-Commerce Businesses
In e-commerce, there's a lot that needs your attention. We've rounded up some common questions asked by other e-commerce entrepreneurs that can help you as you set up your business.
Should I Have a DBA for My E-Commerce Business?
It depends. Are you happy with the name that you are currently operating under? If so, then you won't need a DBA (doing business as) certificate. If you're operating as a sole proprietor, your business name is your legal name. If you want to run your business with a different name, then you'll need a DBA.
Another scenario where you might require a DBA is if your website domain name is different from your legal business name and you're using the website domain name as part of your brand marketing.
Incfile can help you secure a DBA and get your business up and online in no time.
What Are the Two Main Limitations of E-Eommerce?
While e-commerce does bring its fair share of advantages, there are some limitations. The first one is that customers can't physically try the product. No matter how many details or pictures your online shop provides, it will never be able to replicate the physical experience of walking into a store and getting your hands on a product.
Another limitation is the slightly longer delivery times. The majority of customers prefer shopping in-store because they can get their hands on the product immediately. Expectations of faster delivery times are on the rise, and this can be hard to deliver for an up-and-coming business.
Solve E-Commerce Challenges With Incfile
Incfile has helped over 1,000,000 entrepreneurs conquer difficult challenges in their startup journeys. Don't know where to start on your e-commerce adventure? Check out our start-a-business guides and let Incfile help you chalk out your idea, pick the right business structure and name, and even offload your bookkeeping and accounting.
The online marketplace offers immense opportunities, but it isn't without its own set of challenges or barriers. If you're feeling in the deep about starting your online business and all that you need to do, reach out to Incfile.
Swara Ahluwalia is a freelance content writer with experience in the technical, B2B and SaaS domain. She also has curated content for various lifestyle brands. In her downtime, you will most likely find Swara training for her next marathon or spending time with her two daughters.