The barrier for entry for eCommerce businesses is much lower. All you need is a domain name, hosting, and a product, and you’re good to go. Some start out with even less than that. But the fact remains that a lot of eCommerce businesses end up failing. Some fail because of poor execution or because they’re in the wrong niche. Others fail because they weren’t ready for the real challenges that come with running this type of business. Let’s take a look at some of the major challenges eCommerce businesses have to face.
Customer retention is one of the biggest challenges in this industry. People have very short attention spans online, and if you have a product that hundreds of other stores have, or that can easily be found on AliExpress, you’ll have trouble keeping clients.
One of the things you can do is set up a CRM system and follow up with your top customers. You should also have a newsletter and keep things interesting with flash sales, exclusive discounts, and freebies. You’ll need to keep a close eye on abandoned carts as well and have an automatic follow-up system to retain some of those clients.
It’s surprising to see how many people in this business still have a “build it and they will come” mentality. Others think that all they need is a social media page and they can get free advertising for their business. In reality, you have to pay either with time, effort, or your money to make things work.
You can go the hard way and do everything yourself. While it’s true that you can do a lot on your own, like creating content or doing some SEO stuff, you are bound to make mistakes. You may also underestimate how time-consuming it is and the kind of expertise it takes.
In eCommerce, paid advertising is usually the way to go. PPC in particular is one of the most powerful tools you can use in eCommerce. Things like Facebook and YouTube ads can also work, and you’ll have to pay if you want to build a real SEO strategy that will pay dividends for years.
All of this costs money, however, but you should know that lenders are much more likely to approve a loan for marketing reasons since they know it has the potential of bringing profits. There are several deals available from business lenders and they will be more open to approving a loan if you have a valid reason and can show exactly what you’re going to spend the money on. They will also look at your business as a whole and not just your credit to assess your ability to repay.
One of the biggest tragedies in eCommerce is when a business owner has an expensive and seemingly beautiful website that fails to convert, which can actually lead to cash flow problems when attempts are made to fix the problem. What’s so tough is knowing what isn’t working. Is it the design itself, or the pricing? Does the site have navigation issues? Or is it the checkout process?
These are things only someone with a deep understanding of web analytics will be able to decipher, and if you don’t have this expertise, you’ll need to find it elsewhere.