By Stephanie Wells, founder of Formidable Forms, a drag & drop form builder for WordPress that empowers freelancers to create form-based solutions.
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E-commerce is the go-to option for many aspiring entrepreneurs. It’s generally perceived as a safe yet versatile industry with a lot of success stories.
However, you can’t estimate how deep the water runs while standing on the shore. The truth is, starting an e-commerce business is easier said than done.
A few years back, it was effortless to get started with an e-commerce business and make an easy living. But over the years, the e-commerce industry has gone through drastic changes.
The competition is more fierce no matter the niche you choose. And industry dynamics have become unforgiving. This has caused an increase in the challenges that e-commerce businesses face when getting started.
Here are six common challenges that new e-commerce businesses face.
1. Finding The Right Niche
The biggest and most common challenge faced by new e-commerce businesses is finding the right niche.
Entrepreneurs risk their financial security and ditch standard jobs to pursue their dreams. The goal for many is to turn their hobbies into careers. And frankly, there’s nothing wrong with that. You should do what you love and make a living from it.
However, it doesn’t always work that way. A niche that aligns with your interests may not be a profitable one. And that’s the first roadblock most e-commerce businesses face at the start.
And the problem doesn’t end here. The struggle has just begun. The next step is exploring a niche worth targeting. And that’s not an easy thing to do.
You have to analyze the demand, competition, market trends and volatility of consumer preferences. So research is the key. And you would be doing a lot of it to find a suitable niche to target.
2. Finding The Right Products
Another common challenge faced by new e-commerce businesses is finding the right products to sell.
Even if you’ve chosen a fitting niche to target, finding the right products is a totally different ball game.
The demand in the e-commerce industry is more volatile than ever before. That’s why we see hyped products every other day. However, such trends are often short-lived. And after a few days, the products are no longer in demand.
This makes it difficult for you to make the right call. Even if you have found the right products, the ever-changing market conditions often make you second-guess your own decisions.
3. Sourcing The Products
The third most common challenge faced by new e-commerce businesses is sourcing the selected products.
Most e-commerce businesses have to make do with a limited budget when getting started. This makes it difficult for them to source the selected products due to the cost of warehousing.
That’s why most e-commerce businesses resort to dropshipping as it allows them to fulfill their orders without having to keep the products they sell in stock.
But, even if you choose to go with dropshipping, finding reliable third-party suppliers can be extremely difficult.
4. Targeting A Relevant Audience
When you’ve just started an e-commerce store, finding a relevant audience can be challenging. A few years back, people readily made impulsive buying decisions and purchased things on a whim. And this made targeting easier for e-commerce businesses.
Back then, e-commerce stores invested heavily in paid marketing campaigns and leveraged social media for conversions. However, a lot has changed since then.
Now, most people research products online and seek reviews before making a purchase decision. They consider multiple options and choose one that best serves their needs. And that has made it a bit more difficult for new e-commerce stores to target a relevant audience.
E-commerce businesses that have been operating in the industry for quite some time now have gotten acquainted with pinpoint targeting tactics through trial and error. But new entrants generally grapple with targeting challenges due to limited knowledge and industry exposure.
5. Increasing Store Visits
There are a number of reasons that make it challenging for new e-commerce businesses to increase their store visits.
For starters, people generally find it difficult to trust new e-commerce stores. They’d prefer purchasing products from familiar stores as there’s minimal risk involved. And the second most important constraint worth mentioning is the budget.
An e-commerce store can increase its traffic either organically or by running paid advertisements.
Getting traction organically demands time. You have to consistently produce relevant and helpful content for your audience to get noticed. It may take weeks or even months for you to move the needle. On the other hand, paid advertisements often require a hefty investment.
These factors make it difficult for new e-commerce businesses to increase visits to their respective stores.
6. Cart Abandonment
Even after an e-commerce store overcomes all aforesaid hurdles, one challenge still remains, and probably a critical one.
It’s common for people to visit an e-commerce store, add products to their cart and leave without completing the purchase. That’s cart abandonment. And it’s a burning issue in the e-commerce industry.
There are multiple reasons that may lead to an individual exiting your site without completing a purchase. But you don’t know which one applies to your scenario. And that makes it even more difficult to overcome this challenge.
In most cases, e-commerce stores reach out to visitors who abandoned their carts by sending retargeting emails. They ask their potential customers to reconsider their decisions in exchange for different offers such as discounts, cashback, loyalty points and more.
Sometimes it works; sometimes it doesn’t. There’s no sure-shot way to overcome this challenge, especially when you’ve just gotten started. So it’s going to be a hit or miss for you to the point when you’ve gathered enough data to come up with a stellar retargeting strategy.
It’s A Wrap
Over time, businesses learn to overcome these challenges as they gain more industry exposure. But not all are able to make it as these challenges have led many to their demise. So it’s best to acknowledge and be prepared for them before you get started.