Ecommerce:

It is known as electronic commerce or internet commerce, refers to the buying and selling of
goods or services using the internet, and the transfer of money and data to execute these
transactions. Ecommerce is often used to refer to the sale of physical products online, but it can
also describe any kind of commercial transaction that is facilitated through the internet.

Whereas e-business refers to all aspects of operating an online business, ecommerce refers
specifically to the transaction of goods and services.

There are at least four dimensions to the challenges facing ecommerce in today’s crowded online
marketplace. The major challenges of ecommerce include:

1. Economic challenges:

The economic challenges facing ecommerce merchants include the costs related to establishing
an ecommerce business, the number of competing online merchants, issues connected with
infrastructure upgrades, and the availability (or shortage) of skilled staff. Researchers point out
that it’s estimated up to 90 percent of Internet host computers reside in high-income countries
that are home to only 16 percent of the world’s population.

2. Technological challenges:

According to industry analysts, the primary technology-related challenges facing ecommerce

businesses include security concerns, bandwidth availability, and integration with existing
protocols. One of the realities of the explosive popularity of ecommerce is that it has also
become a more attractive target for criminals; put simply, more overall ecommerce activity also
means greater security concerns. In addition, with each new high profile ‘hacking’ incident,
consumer confidence in online retailing takes a ‘hit’ and further raises the importance of
ecommerce security. In addition, another challenge resulting from increased ecommerce activity
is growing concern about the reliability of network infrastructure. Integrating Internet software
with preexisting applications and databases presents another technology-related challenge;
ecommerce technology continuously evolves, and integrating that new technology is not always
an easy—or inexpensive—task.

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 3. Social challenges:

In recent years, consumers’ concern over issues such as privacy, and sharing personal
information has grown exponentially. Additionally, there are cultural differences that come into
play when growing an ecommerce business beyond its native region. Unlike traditional
merchants who were easily able to use language and marketing methods that played well with
their target audience, online sellers have to take into consideration the fact that there are many
linguistic, cultural and social differences in their extended customer base. Any one of those
differences has the potential to create stumbling blocks for ecommerce companies in their efforts
to develop long-term ‘relationships’ with a broad customer base.

4. Legal challenges:

Although it may seem as though ecommerce has been in existence for a very long time, the
reality is that it remains a relatively new industry with many unresolved legal issues, including
those pertaining to intellectual property rights. Then there are legal issues pertaining to taxation:
as noted in our previous blogs—and covered extensively in business media in recent months—
the recent Supreme Court decision ruled that states can collect online sales taxes on
businesses that are not physically located within their boundaries has the potential to
dramatically impact the bottom line of ecommerce companies nationwide. One of the prime
drivers of that decision—and states’ desire to tax ecommerce—has been the industry’s
phenomenal success; one of the ‘down sides’ to increased market share, is that ecommerce
companies have become a more desirable taxation ‘target’ for states seeking to increase their tax
base.

Overall Challenges:

1. Cyber security:

Victor Conjoint, chief information officer and co-founder at Proven Data, knows that small e-
commerce sites need the proper cyber security practices and tools in place.

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 2. Competition:

Competition comes in many forms for small businesses, especially in the e-commerce space.
You have to keep up with competitive pricing, products and service.

"As a small business, you can overcome price competition by having a very clear company
value proposition that consumers can't get elsewhere," said Calloway Cook, founder
of Illuminate Labs.

3. Order fulfillment:

Not everything has to fall on the back of the small business owner. You could be inundated with
more orders than you are prepared to handle on your own.

"Order fulfillment should be outsourced to a third-party fulfillment company whenever possible

for increased efficiency," Cook said.

4. Customer experience:

As a primarily e-commerce business, or a business that has an e-commerce site as a secondary

means of selling its products, figuring out how to offer your customers the same experience they
would get in a brick-and-mortar store can be challenging.

5. Quality website traffic and visitor conversion:

Building, designing and running an e-commerce website is hard, but receiving quality converting
traffic is even harder, according to Lisa Chu, owner of Black n Bianca. Philip McCluskey,
commercial director at one earth, said that average conversion rates globally are less than 3%,
making driving relevant traffic to your site a sticking point.

6. Visibility:

How are you supposed to get quality traffic to your site and turn visitors into customers if people
can't find your site to begin with? It's a big issue for e-commerce businesses, and one that could
make or break a business.

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 7. Return/refund policy:

Having a good return/refund policy could be the difference between success and failure. That
sounds extreme, but it's true.

"If you want your brand to stand tall, then customer satisfaction should be the first priority, and
whatever you're selling should be the same as what's advertised," said Syed Ali Hasan, digital
marketing manager at Film Jackets.

8. Finding the right market:

"The first step of any business is to find product/market fit, and e-commerce is no different," said
Rub right. "Product-market fit is the degree to which a product satisfies market demand. The
easiest way to find that fit quickly is to build a product that solves a problem you have."

9. Making/increasing sales:

Once you have your products figured out, your website set up and your marketing set, the next
step is making sales! It seems like a no-brainer; however, it's not always that straight forward.

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