The emergence of e-commerce as a mainstream business solution has brought about a paradigm shift in the way customers transact and businesses operate. The availability of everything from essentials and luxury B2C goods to complex B2B products on e-commerce stores eliminates the need for customers to visit the brick and mortar stores. The e-business segment is also a great play field for businesses owing to its numerous benefits such as ease of setting up digital presence, low cost marketing and wider access to audience.
What is e-commerce?
E-commerce stands for Electronic Commerce and refers to the use of the internet to offer online business services and facilitate transitions between and among individuals as well as companies.
Transformation of e-commerce Till 2017
The early 90s witnessed the commercial launch of internet and e-commerce. However, e-commerce growth rate picked up when Amazon, Google and PayPal launched their e-commerce businesses in the mid to late 90s. Now, there are 966 million websites in the world today, and 40% of global internet users buy products online. While B2C really fuelled the growth of e-commerce thereafter, B2B online stores started emerging only between 2001 and 2005. Surprisingly, B2B e-commerce sales are now double the B2C as of today.
Technology wise, most e-commerce sites are now shifting towards mobile responsive sites as the number of smartphone users continue to grow. The latest technology in e-commerce, such as big data, predictive analytics and artificial intelligence are influencing e-commerce heavily to offer personalization to the customers.
Local e-commerce is another trend that is shaping up e-commerce in a big way. Most local business owners feel that e-commerce is not for them as do not operate out of their home city or country. However, since customers are going online to search local businesses and deals, the importance of local e-commerce is growing.
Challenges in E-commerce Business
While e-commerce industry is growing by leaps and bounds, there are various challenges that 2017 will bring:
- E-business security
If your e-commerce website does not use a secure gateway, personal information of customers, including their credit card details stands compromised. The recent WannaCry ransomware attack that affected more than 200,000 computers across different sectors in 150 countries bears testimony to the vulnerability of the e-commerce space as far as security is concerned.
Updating e-commerce technology at regular intervals and giving appropriate authorization access are the right ways to handle security breaches.
- Lack of trust
There is no touch and feel factor in e-commerce concept and process or a physical way to ensure if the website is authentic. The customers are apprehensive about the genuineness of products, delivery mechanism and payment.
The best way to earn customer trust is to:
- update the company’s physical address
- maintain regular and timely communication
- display transparency with respect to how the e-commerce model works on your site
- Attracting target audience
Nowadays, instead of searching a product on Google, people directly open an e-commerce website. This increases traffic on the website, but doesn’t necessarily increase the turnover of the store. They also look for recommendations and product reviews before buying, which may further delay their buying decision. They also have unlimited choices to explore and can easily switch their loyalty for better deals. It is a challenge for e-commerce stores to convert these leads to become profitable.
In order to attract customers, it is important to run targeted marketing campaigns based on demographic, geographic and psychographic segmentation. Having an eye-catching store design, displaying customer testimonials and offering excellent customer services will also go a long way in luring the customers to your site.
- Sales productivity and customer service take a hit
How to improve sales productivity and ensuring superior customer services are other two major challenges associated with online stores.
Your business is online, but it still needs sales force to market the brand and products. There are a bevy of back-office and front-office functions to be executed. Using tools such as CRM and ERP can streamline the sales processes to a considerable extent.
As far as customers are concerned, treat them as the king, or else they will go to your competitor. Make sure their shopping experience is seamless, goods are delivered as scheduled, and all their queries and grievances are addressed promptly.
- Branding and positioning
A recent survey conducted by Profitero shows that almost 50% percent of brands consider themselves “novices” or “amateurs” at e-commerce. They don’t know how to differentiate their brand from the competitor. With several companies offering services in the same segment (for example, fashion and IT products), e-commerce is a buyer’s market and customers hold the reigns in their hands. So, you need to brand your digital store uniquely. The first step towards branding is identifying your USP. The next step is to marketing your USP in a way that stays stamped on their perceptions.
- Retaining customers
No matter how great your product or service is, customers have a tendency to leave if they get better offers or experience on other online stores. Acquiring new customers is important, but so is retaining the old ones. They are not only loyal to your brand, but also recommend your products by sharing reviews on the social media. Moreover, they bring more business at lower cost.
Did you know it is six times more expensive to win a new customer than retaining an existing one? Or, that the probability of selling to an existing customer is up to 14 times higher than the probability of selling to a new customer? So, nurturing the existing customers through exclusive loyalty programs and building long term relationship can address this challenge effectively.
2017 is the year of numerous e-commerce challenges, but remember that challenges bring opportunities along with them. It all now depends on how prepared you are to step into the e-commerce battlefield.
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