Lesson Four-E-Commerce

Expected Learning Outcomes:

 Define e-commerce and discuss the impacts information technology is having on the business
world.
 Identify the IT resources businesses have at their disposal and how these resources are used.
 Discuss the advantages and disadvantages of e-commerce.
 Describe the challenges/threats/risks of e-commerce, as well as the ways of managing them.
Topics /Sub-topics:
 Meaning and History of e-commerce
 How e-commerce works?
 Types of E-Commerce
 Types of E-Commerce Revenue Modules
 Case Study of E-Commerce- Case of Amazon.com
 How to start an E-Commerce Business

 E-Commerce
Subtopics
 Advantages and disadvantages of E-commerce
 Direct to Customer (D2C) E-commerce
 Benefits of E-Commerce to an Economy
 Emerging Issues and Trends in E-Commerce.
 E-Commerce challenges and suggested solutions
Recommended Readings
 Ronald J. Ebert et al. (2013), Business Essentials, 9Th Edition, Person education Ltd, England. Pp
350-372.
 Laudon C. K. et al, (2004), Management Information systems- 8Th Edition, Prentice-Hall USA.
Chapter 4
Group Assignment Four
 Using appropriate examples, discuss the importance of E-commerce in modern business.
 E-Commerce-Introduction
• E-commerce (electronic commerce) is the buying and selling of goods and services, or the
transmitting of funds or data, over an electronic network, primarily the internet.
• The terms e-commerce and e-business are often used interchangeably. The term e-tail is also
sometimes used in reference to the transactional processes that make up online retail shopping.
• Online selling has changed tremendously since it began; the evolution and history of e-commerce is
fascinating – and it’s advancing at an even quicker pace today.
• E-commerce operates in different types of market segments and can be conducted over computers,
tablets, smartphones, and other smart devices. Nearly every imaginable product and service is
available through ecommerce transactions, including books, music, plane tickets, and financial
services such as stock investing and online banking. As such, it is considered a very disruptive
technology.
• As noted above, ecommerce is the process of buying and selling tangible products and services
online. It involves more than one party along with the exchange of data or currency to process a
transaction. It is part of the greater industry that is known as electronic business (ebusiness), which
involves all of the processes required to run a company online
 E-Commerce-Introduction
• In the last two decades, widespread use of e-commerce platforms such as Amazon and eBay has
contributed to substantial growth in online retail. In 2011, e-commerce accounted for 5% of total
retail sales, according to the U.S. Census Bureau. By 2020, with the start of the COVID-19
pandemic, it had risen to over 16% of retail sales.
• Ecommerce has helped businesses (especially those with a narrow reach like small businesses)
gain access to and establish a wider market presence by providing cheaper and more efficient
distribution channels for their products or services.
• The most popular example of eCommerce is online shopping, which is defined as buying and selling
of goods via the internet on any device. However, eCommerce can also entail other types of
activities, such as online auctions, payment gateways, online ticketing, and internet banking.
• eCommerce is the fastest growing retail market projected to hit $4.135 trillion in sales in
2020.Mobile commerce, or mCommerce, is a rapidly growing new avenue of eCommerce that’s
mostly driven by the expanding market and influence of smartphones and millennials’ comfort with
shopping online. In 2018, the mCommerce sector enjoyed a 39.1% increase in sales compared to
the previous year.
 History of E-Commerce
• Most of us have shopped online for something at some point, which means we've taken part in
ecommerce. So it goes without saying that ecommerce is everywhere. But very few people may
know that ecommerce has a history that goes back before the internet began.
• Ecommerce actually goes back to the 1960s when companies used an electronic system called the
Electronic Data Interchange to facilitate the transfer of documents. It wasn't until 1994 that the very
first transaction. took place. This involved the sale of a CD between friends through an online retail
website called NetMarket.
• The industry has gone through so many changes since then, resulting in a great deal of evolution.
Traditional brick-and-mortar retailers were forced to embrace new technology in order to stay afloat
as companies like Alibaba, Amazon, eBay, and Etsy became household names. These companies
created a virtual marketplace for goods and services that consumers can easily access.
• New technology continues to make it easier for people to do their online shopping. People can
connect with businesses through smartphones and other devices and by downloading apps to make
purchases. The introduction of free shipping, which reduces costs for consumers, has also helped
increase the popularity of the ecommerce industry.
 How does E-Commerce work?
• E-commerce is powered by the internet. Customers access an online store to browse through and
place orders for products or services via their own devices.
• As the order is placed, the customer's web browser will communicate back and forth with the server
hosting the e-commerce website. Data pertaining to the order will be relayed to a central computer
known as the order manager. It will then be forwarded to databases that manage inventory levels; a
merchant system that manages payment information, using applications such as PayPal; and a
bank computer. Finally, it will circle back to the order manager. This is to make sure that store
inventory and customer funds are sufficient for the order to be processed.
• After the order is validated, the order manager will notify the store's web server. It will display a
message notifying the customer that their order has been successfully processed. The order
manager will then send order data to the warehouse or fulfillment department, letting it know the
product or service can be dispatched to the customer. At this point tangible or digital products may
be shipped to a customer, or access to a service may be granted.
 Types of E-Commerce
• Business-to-business (B2B) e-commerce refers to the electronic exchange of products, services
or information between businesses rather than between businesses and consumers. Examples
include online directories and product and supply exchange websites that let businesses search for
products, services and information and initiate transactions through e-procurement interfaces. A
Forrester report published in 2018 predicted that by 2023, B2B e-commerce will reach $1.8 trillion
dollars and account for 17% of U.S. B2B sales.
• Business-to-consumer (B2C) is the retail part of e-commerce on the internet. It is when
businesses sell products, services or information directly to consumers. The term was popular
during the dot-com boom of the late 1990s, where it was novelty.Today, there are innumerable
virtual stores and malls on the internet selling all types of consumer goods. Amazon is the most
recognized example of these sites. It dominates the B2C market.
• Consumer-to-consumer (C2C) is a type of e-commerce in which consumers trade products,
services and information with each other online. These transactions are generally conducted
through a third party that provides an online platform on which the transactions are carried out.
Online auctions and classified advertisements are two examples of C2C platforms. EBay and
Craigslist are two well-known examples of these platforms. Because eBay is a business, this form of
e-commerce could also be called C2B2C -- consumer-to-business-to-consumer. Platforms like
Facebook marketplace and Depop -- a fashion reselling platform -- also enable C2C transactions.
 Types of E-Commerce
• Consumer-to-business (C2B) is a type of e-commerce in which consumers make their products
and services available online for companies to bid on and purchase. This is the opposite of the
traditional commerce model of B2C.A popular example of a C2B platform is a market that sells
royalty-free photographs, images, media and design elements, such as iStock. Another example
would be a job board.
• Business-to-administration (B2A) refers to transactions conducted online between companies
and public administration or government bodies. Many branches of government are dependent on
various types of e-services or products. These products and services often pertain to legal
documents, registers, social security, fiscal data and employment. Businesses can supply these
electronically. B2A services have grown considerably in recent years as investments have been
made in e-government capabilities.
• Consumer-to-administration (C2A) refers to transactions conducted online between consumers
and public administration or government bodies. The government rarely buys products or services
from individuals, but individuals frequently use electronic means in the following areas:Social
security. Distributing information and making payments.,Taxes. Filing tax returns and making
payments.Health. Making appointments, providing test results and information about health
conditions, and making health services payments.
• What is M-Commerce?
 Types of E-Commerce Revenue Models
• In addition to crafting what type of ecommerce company a business wants to be, the business must
decide how it wants to make money. Due to the unique nature of ecommerce, the business has a
few options on how it wants to process orders, carry inventory, and ship products.
Drop Shipping
• Often considered one of the easier forms of ecommerce, drop shipping allows a company to create
a digital storefront, generate sales, then rely on a supplier to provide the good. When generating the
sale, the ecommerce company collects payment via credit card, PayPal, cryptocurrency, or other
means of digital currency. Then, the ecommerce store passes the order to the dropship supplier.
This supplier manages inventory, oversees the warehouse of goods, packages the goods, and
delivers the product to the purchaser.
White Labeling
• White label ecommerce companies leverage already successful products sold by another company.
After a customer places an order, the ecommerce company receives the existing product,
repackages the product with their own package and label, and distributes the product to the
customer. Although the ecommerce company has little to no say in the product they receive, the
company usually faces little to no in-house manufacturing constraints.
 Types of E-Commerce Revenue Models
Wholesaling
• A more capital-intensive approach to ecommerce, wholesaling entails maintaining quantities of
inventory, keeping track of customer orders, maintaining customer shipping information, and
typically having ownership of the warehouse space to house products. Wholesalers may charge
bulk pricing to retailers or unit prices for consumers. However, the broad approach to wholesaling is
to connect to buyers of large quantities or many smaller buyers of a similar, standardized
product.Products sold in bulk. Wholesale products are usually sold to a retailer, who then sells the
products to consumers.
Private Labeling
• Private labeling is a more appropriate ecommerce approach for companies that may not have large
upfront capital or do not have their own factory space to manufacture goods. Private label
ecommerce companies send plans to a contracted manufacturer who makes the product. The
manufacturer may also have the ability to ship directly to a customer or ship directly to the company
receiving the order. This method of ecommerce is best suited for companies that may receive on-
demand orders with short turnaround time but are unable to handle the capital
expenditure requirements.
 Types of E-Commerce Revenue Models
• Subscriptions:Ecommerce companies can also leverage repeating orders or loyal customers by
implementing subscription services. For a fixed price, the ecommerce company will assemble a
package, introduce new products, and incentivize locking to a long-term agreement at a lower
monthly price. The consumer only places an order once and receives their subscription order at a
fixed cadence. Common subscription ecommerce products include meal prep services, agriculture
boxes, fashion boxes, or health and grooming products.A popular D2C model, subscription services
are the recurring purchases of products or services on a regular basis.
• Digital products:Downloadable items like templates, courses, e-books, software, or media that
must be purchased for use. Whether it’s the purchase of software, tools, cloud-based products or
digital assets, these represent a large percentage of ecommerce transactions.
• Services: These are skills like coaching, writing, influencer marketing, etc., that are purchased and
paid for online.
• Crowdfunding: Crowdfunding allows sellers to raise startup capital in order to bring their product to
the market. Once enough consumers have purchased the item, it’s then created and shipped.
 A Case Study of Amazon.com
• Amazon is a behemoth in the ecommerce space. In fact, it is the world's largest online retailer and
continues to grow. As such, it is a huge disrupter in the retail industry, forcing some major retailers
to rethink their strategies and shift their focus.
• The company launched its business with an ecommerce-based model of online sales and product
delivery. It was founded by Jeff Bezos in 1994 as an online bookstore but has since expanded to
include everything from clothing to housewares, power tools to food and drinks, and electronics.
• Company sales increased by 38% in 2020 from the previous year, totaling $386.1 billion compared
to $280.5 billion in 2019. Amazon's operating income also jumped to $22.9 billion for the 2020 fiscal
year from $14.5 billion in 2019. Net income rose from $11.6 billion in 2019 to $21.3 billion by the end
of 2020.
• As the world adapted to the constraints of COVID-19, ecommerce capitalized on the opportunity to
further distance itself from in-store shopping. In 2021, Amazon's net income rose to $33.4 billion,
and it ended the year with over $42 billion of cash on hand.7 Amazon has stated as a result of the
pandemic, the company recognized three years' worth of forecasted growth in about 15 months.
 How to Start an ECommerce Business
• There is a logical order in how you would go about building an ecommerce website. Although setting
up an actual online store would probably take less than a day, researching, building, launching and
growing a profitable eCommerce business is a multi-layered process involving a number of steps
and decisions.
Choosing and sourcing a product
• The first step to starting an eCommerce business is deciding what products you’re going to sell.
Finding a profitable idea can be hard work, so be prepared to do some serious digging and thinking.
It’s essential that you choose products with healthy margins that will allow you to turn a profit and
scale the business in the future. Once you know what you want to sell, you’ll need to decide how
and where you’re going to source the products. The four main methods of sourcing products and
inventory are making, manufacturing, wholesale and dropshipping.
Conducting research and planning ahead
• Your product idea will dictate which aspects of the market you need to research, but some of the
most important areas to look into will be your competition, pricing strategy, and your unique value
proposition. At this point, it is also a good idea to draft a business plan that will help you visualize
your growth strategy and identify any potential threats or obstacles.
 How to Start an E-Commerce Business
Getting your brand right
• Now that you have a promising product idea and a clear overview of the market, it’s time to start
thinking about the key elements of your store, such as your brand name, domain name, brand
guidelines, and your logo. Getting your brand right from the start can help accelerate the growth and
conquer the hearts of potential customers. Before turning your attention to building the store, you
should spend some time studying the basics of SEO, so that your business gets off to a good start.
Deciding how you will sell
• The actual setting up of your online shop can be achieved in two ways:
• You can build an eCommerce store from scratch – this means either developing it yourself or
hiring a freelancer/agency to do it for you. It can take longer and cost more, but building a custom
online store will guarantee 100% customization and give you the power to make all the decisions.
• You can use an off-the-shelf eCommerce platform like Shopify, which makes building an online
store a quick and easy process. However, it will also mean less customization, as you will need to
choose from an existing pool of themes and tools provided by the platform. If you opt to run a
dropshipping business, eCommerce solutions like Oberlo will allow you to get the store off the
ground and start selling in as little as few hours.
 How to Start an E-Commerce Business
Before launching.
• At this stage, you’ll be itching to get the store out into the World Wide Web. However, make sure
you’re well prepared to measure the success of your launch – defining your key performance
indicators upfront will help you track your progress and performance and fix any issues as they
emerge. Other important things to take care of include setting up your social media profiles, getting
your email marketing ready, installing Google Analytics, doing keyword research, defining your
shipping strategy and finalizing the launch promotion plan. Yes, that’s a lot of work, but a good start
is half the job done. When you complete the checklist, try running your store through the Shopify
store grader to catch errors if there are any.
After launching.
• Welcome to the grind! This is where the real work begins. Having launched your online store, you
should immediately move on to the promotion phase. Marketing your store and optimizing
conversions will be your daily bread and butter from now on. You should also experiment with
regularly expanding or refreshing your inventory. It is a particularly easy thing to do for dropshippers,
as they can import new dropshipping products in minutes, but it should remain a priority even if
you’re manufacturing or making the products yourself. Staying ahead of the curve will take some
testing.
 Advantages of E-Commerce
• Benefits of e-commerce include its around-the-clock availability, the speed of access, the wide
availability of goods and services, easy accessibility and international reach.
Availability. Aside from outages and scheduled maintenance, e-commerce sites are available 24/7,
enabling visitors to browse and shop at any time. Brick-and-mortar businesses tend to open for
a fixed number of hours and may even close entirely on certain days.
Speed of access. While shoppers in a physical store can be slowed by crowds, e-commerce sites run
quickly, which is determined by compute and bandwidth considerations on both the consumer
device and the e-commerce site. Product and shopping cart pages load in a few seconds or less. An
e-commerce transaction can comprise a few clicks and take less than five minutes.
Wide availability. Amazon's first slogan was "Earth's Biggest Bookstore." It could make this claim
because it was an e-commerce site and not a physical store that had to stock each book on its
shelves. E-commerce enables brands to make a wide array of products available, which are then
shipped from a warehouse or various warehouses after a purchase is made. Customers will likely
have more success finding what they want.
 Advantages of E-Commerce
Easy accessibility. Customers shopping a physical store may have difficulty locating a particular
product. Website visitors can browse product category pages in real time and use the site's search
feature to find the product immediately.
International reach. Brick-and-mortar businesses sell to customers who physically visit their stores.
With e-commerce, businesses can sell to anyone who can access the web. E-commerce has
the potential to extend a business's customer base.
Lower cost. Pure play e-commerce businesses avoid the costs of running physical stores, such as
rent, inventory and cashiers. They may incur shipping and warehouse costs, however.
Personalization and product recommendations. E-commerce sites can track a visitor's browse,
search and purchase history. They can use this data to present personalized product
recommendations and obtain insights about target markets. Examples include the sections of
Amazon product pages labeled "Frequently bought together" and "Customers who viewed this item
also viewed."
Convenience: Ecommerce can occur 24 hours a day, seven days a week. Although ecommerce may
take a lot of work, it is still possible to generate sales as you sleep or earn revenue while you
are away from your store.
 Advantages of E-Commerce
Increased selection: Many stores offer a wider array of products online than they carry in their brick-
and-mortar counterparts. And many stores that solely exist online may offer consumers
exclusive inventory that is unavailable elsewhere.
Potentially lower start-up cost: Ecommerce companies may require a warehouse or manufacturing
site, but they usually don't need a physical storefront. The cost to operate digitally is often less
expensive than needing to pay rent, insurance, building maintenance, and property taxes.
International sales: As long as an ecommerce store can ship to the customer, an ecommerce
company can sell to anyone in the world and isn't limited by physical geography.
Easier to retarget customers: as customers browse a digital storefront, it is easier to entice their
attention towards placed advertisements, directed marketing campaigns, or pop-ups specifically
aimed at a purpose.
 Disadvantages of E-Commerce
• These include sometimes limited customer service, consumers not being able to see or touch a
product prior to purchase and the wait time for product shipping.
• Limited customer service. If customers have a question or issue in a physical store, they can see
a clerk, cashier or store manager for help. In an e-commerce store, customer service can be limited:
The site may only provide support during certain hours, and its online service options may be
difficult to navigate or not answer a specific question.
• Limited product experience. Viewing images on a webpage can provide a good sense about a
product, but it's different from experiencing the product directly, such as playing a guitar, assessing
the picture quality of a television or trying on a shirt or dress. E-commerce consumers can end up
buying products that differ from their expectations and have to be returned. In some cases, the
customer must pay to ship a returned item back to the retailer. Augmented reality technology is
expected to improve customers' ability to examine and test e-commerce products.
• Wait time. In a store, customers pay for a product and go home with it. With e-commerce,
customers must wait for the product to be shipped to them. Although shipping windows are
decreasing as next-day and even same-day delivery becomes common, it's not instantaneous.
 Disadvantages of E-Commerce
• Security. Skilled hackers can create authentic-looking websites that claim to sell well-known
products. Instead, the site sends customers fake or imitation versions of those products -- or simply
steals credit card information. Legitimate e-commerce sites also carry risk, especially when
customers store their credit card information with the retailer to make future purchases easier. If the
retailer's site is hacked, threat actors may steal that credit card information. A data breach can also
lead to a damaged retailer reputation.
• Limited customer service: If you shop online for a computer, you cannot simply ask an employee
to demonstrate a particular model's features in person. And although some websites let you chat
online with a staff member, this is not a typical practice.
• Lack of instant gratification: When you buy an item online, you must wait for it to be shipped to
your home or office. However, e-tailers like Amazon make the waiting game a little bit less painful by
offering same-day delivery as a premium option for select products.
• Inability to touch products: Online images do not necessarily convey the whole story about an
item, and so ecommerce purchases can be unsatisfying when the products received do not match
consumer expectations. Case in point: an item of clothing may be made from shoddier fabric than
its online image indicates.
• Reliance on technology: If your website crashes, garners an overwhelming amount of traffic, or
must be temporarily taken down for any reason, your business is effectively closed until the
ecommerce storefront is back.
 Disadvantages of E-Commerce
• Higher competition: Although the low barrier to entry regarding low cost is an advantage, this means other
competitors can easily enter the market. Ecommerce companies must have mindful marketing strategies and
remain diligent on SEO optimization to ensure they maintain a digital presence
• A few examples of e-commerce marketplace platforms include the following:
Alibaba,Amazon,Chewy,eBay,Etsy,Overstock,Newegg,Rakuten,Walmart Marketplace,Wayfair
• In Numbers
• Despite the growth of online retail, many shoppers still prefer brick-and-mortar. Forrester Research projected
that most retail sales will continue to come from physical stores, estimating that they will still account for 72% of
U.S. retail sales in 2024.
• Adoption of new tech also plays a part in the growth of online retail. A 2021 study from Juniper Research
predicted e-commerce transactions made via voice assistant will grow by more than 320% to $19.4 billion by
2023 from $4.6 billion in 2021.
• A consistent example of the impact e-commerce has had on physical retail is the post-Thanksgiving Black Friday
and Cyber Monday shopping days in the United States. According to the National Retail Foundation's 2021
Thanksgiving Weekend Consumer Survey, conducted by Prosper Insights and Analytics, 88 million shoppers
made online purchases on Black Friday compared to 66.5 million in-person purchases. On Cyber Monday, there
were 77 million online purchases and 20.3 million in-person purchases.
• Along with physical retail, e-commerce is transforming supply chain management practices among businesses,
as distribution channels become increasingly digitized.
 Direct to Customer E-Commerce
• DTC is breaking barriers and driving BIG results in e-commerce
• Direct to consumer e-commerce is the newest model of ecommerce. D2C means that a brand is
selling directly to their end customer without going through a retailer, distributor, or wholesaler.
• Direct to consumer (D2C or DTC) has seen a massive surge since the advent of the pandemic, as
brands who didn’t embrace D2C e-commerce were caught scrambling to adapt.From Consumer
Packaged Goods (CPGs) to wholesale to automotive and more, every industry is now paying
attention, hoping to better engage customers and deliver what they want.
• Subscriptions are a popular D2C item, and social selling via platforms like InstaGram, Pinterest,
TikTok, Facebook, SnapChat, etc. are popular platforms for direct to consumer sales.
• DTC business models are being adopted by consumer brands that are hoping to improve their
bottom lines with a direct-to-consumer (D2C) strategy, including:
• 1.Direct sales
• 2.D2C with redirection to the channel
• 3.Marketplaces
• 4.Social commerce
• 5.D2C with retailer support
 Benefits of ECommerce
• There is a reason why eCommerce has demonstrated such explosive growth in the past couple of
years. Indeed, with the internet becoming an essential requirement of everyday life, businesses are
learning to take advantage of the numerous benefits of eCommerce, the most notable of which
include:
• Convenience: Online commerce makes purchases simpler, faster, and less time-consuming,
allowing for 24-hour sales, quick delivery, and easy returns.
• Personalization and customer experience: E-commerce marketplaces can create rich user
profiles that allow them to personalize the products offered and make suggestions for other
products that they might find interesting. This improves the customer experience by making
shoppers feel understood on a personal level, increasing the odds of brand loyalty.
• Global market. Customers from around the world can easily shop e-commerce sites – companies
are no longer restricted by geography or physical barriers. A physical store will always be limited by
a geographical area it can serve. An online store, or any other type of eCommerce business for that
matter, has the whole world as its market. Going from a local customer base to a global market at
no additional cost is really one of the greatest advantages of trading online. In 2018, 11.9% of global
retail sales came from online purchases and this is only set to increase year on year.
 Benefits of ECommerce
• Around-the-clock availability. Another great benefit of running an online business is that it is
always open. For a merchant, it’s a dramatic increase in sales opportunities; for a customer, it’s a
convenient and immediately available option. Unrestricted by the working hours, eCommerce
businesses can serve customers 24/7/365.
• Reduced costs. eCommerce businesses benefit from significantly lower running costs. As there’s
no need to hire sales staff or maintain a physical storefront, the major eCommerce costs go to
warehousing and product storage. And those running a dropshipping business enjoy even lower
upfront investment requirements. As merchants are able to save on operational costs, they can offer
better deals and discounts to their customers.Since brick and mortar is no longer required, digital
sellers can launch online stores with minimal startup and operating costs.
• Inventory management. eCommerce businesses can automate their inventory management by
using electronic tools to accelerate ordering, delivery and payment procedures. It’s saving
businesses billions in operational and inventory costs.
• Targeted marketing. With access to such a wealth of customer data and an opportunity to keep an
eye on customer buying habits as well as the emerging industry trends, eCommerce businesses
can stay agile and shape their marketing efforts to provide a better-tailored experience and find
more new customers. Just consider for a moment that you have a chance to address thousands of
your customers by their first name; that is something already.
 Benefits of E-Commerce
• Serving niche markets. Running a niche brick-and-mortar business can be tough. Scaling a niche
product to become popular is effortful. By tapping into a global market, on the other hand,
eCommerce retailers can build a highly profitable niche business without any further investment.
Using online search capabilities, customers from any corner of the world can find and purchase your
products.
• Working from anywhere. Often, running an eCommerce business means that you don’t need to sit
in an office from 9 to 5 or suffer through a commute day-in and day-out. A laptop and a good internet
connection is all it takes to manage your business from anywhere in the world.
 E-commerce Challenges and Suggested Solutions
1. Cyber & Data Security
When it comes to eCommerce, one of the biggest challenges faced is security breaches. There is a lot
of information/data that is involved while dealing with eCommerce and a technical issue with data can
cause severe damage to the retailer’s daily operations as well as brand image. 
• Solution:Be vigilant and always back up your data. Post that, you can install security plugins onto
your website to prevent it from getting hacked. There are several plugins out there, pick one that
works best for your eCommerce website.
2. Online Identity Verification
When a shopper visits an eCommerce site, how would the retailer know if the person is who they say
they are? Is the shopper entering accurate information? Is the shopper genuinely interested in the
eCommerce products? If you do not have the accurate details or information, how do you proceed?
Well, it does become tricky. The solution would be to invest in online identity verification.
• Solution:There are different ways to incorporate online identity verification. Some examples include
biometrics, AI, single sign on, one time password, two-factor authentication and so on.
 E-commerce Challenges and Suggested Solutions
3. Attracting the Perfect Customer
• Shoppers have a myriad of options to choose from these days. If they are looking to buy a handbag, they do
some thorough research before finalizing on one. If shoppers have several options, how do you make sure they
pick you? How do you go about finding that perfect customer that wants your product, at your rate and to the
places you can ship?
• Solution: Partner with companies that help you target your customers. Digital marketing is preferred over
traditional marketing because they can target your ideal customer. While this might not happen overnight, with
A/B testing, finetuning and analysis – your products could be showing up to potential customers on different
social media platforms.
4. Customer Experience
• Customer experience or user experience is key to a successful eCommerce website. Shoppers expect a similar
if not same experience as one they would get in a brick and mortar store. The flow of the website, the
segmentation of the website and the retail personalization of products based on the shopper’s preferences are
imperative. 
• Solution: There are several ways to improve the user experience. The most important would be to have a clean
and simple website so that shoppers can navigate through easily. The next point would be to have clear CTAs
(call to action) so that the shopper knows exactly what to do. Here is a post that shows you 10 ways to improve
user experience.
 E-commerce Challenges and Suggested Solutions
5. Customer Loyalty
• Here are two facts that show the importance of customer loyalty:(a) It can cost up to 5 times more to acquire a
new customer than retaining an existing one and (b) the success rate of selling to a current customer is 60-70%
compared to only 5-20% success rate of selling to a new customer.The above two facts are testament to how
important customer retention or loyalty is. Once a customer makes a purchase or utilizes a service from a
retailer, they have to make sure that they keep this customer for life. But how is this possible?
• Solution:These are a few different methods that can be used to retain customers. The first would be to have
excellent customer service – a customer is happy to have purchased a great product, but they are ecstatic when
the customer service is on point. The next step is to keep in touch with the customer via a method that they like
– be it an email, SMS or blog posts – be sure to find out what works best for your customer. The last point would
be to let them know about new products, sales promotions and special coupon codes for being such loyal
customers.
6. Converting Shoppers into Paying Customers
• One of the biggest ecommerce challenges is to convert visitors into paying customers. An eCommerce website
might have a lot of traffic, a lot of clicks and impressions but they aren’t making the sales they anticipated. What
can they do to get more sales?
• Solution:The first and foremost would be to understand why your shoppers aren’t converting – are you targeting
the right audience? Is your mobile website working seamlessly? Do your online platforms face technical
challenges all the time? Does your customer base trust you? Do you personalize your website for your
customers? Always think from a shopper’s perspective and see if you are doing everything possible to make
them paying customers. ...
 E-commerce Challenges and Suggested Solutions
7. Competition & Competitor Analysis
• Have you heard of a Jam Experiment? Well it has quite a controversial conclusion, which is – the less you offer
customers the more likely they are to actually purchase something. A lot of people these days are fatigued by all
the options that are out there. A simple search (personalized search) for something like headphones will give
you thousands of options – how does one make a choice? From a retailer’s standpoint, how do they stand out
from the crowd? How do they bring shoppers to their website, instead of buying a similar product from their
competitors?
• Solution:Always do a thorough analysis of your competitors. Find out what products they are selling, how they
are generating leads and how they keep in touch with their customers. The next step would be to make sure you
stand out – be it the colors you use, the topnotch functionality of your website or amazing user experience. And
finally, offer services or products that are unique and relevant to your customer base.
8.Growing Competition
• A recent survey found that before the global pandemic, only 7% of grocers worldwide had eCommerce
channels.During the peak of the pandemic, eCommerce shares of grocery retail grew to 10%.What does this
mean for you as a retailer? eCommerce competition is fierce and to make your brand stand out, you should start
investing in eCommerce channels.
• The solution:Prioritize partnering with manufacturers less likely to sell products directly: To avoid having your
retail partner become your competitor, team up with smaller brands or brands focused on producing and
delivering goods to shops rather than selling them directly. Offer your products at lower prices or with additional
benefits: If you can afford such incentives, it can help funnel customers to your store, instead of sending them to
your manufacturer.
 E-commerce Challenges and Suggested Solutions
8. Price & Shipping
• We have all heard of customers that prefer to purchase products from places that have free shipping.
eCommerce giants like Amazon provide such attractive shipping deals that customers seldom want to look at
other places. How does one bring down costs for shipping? 
• Solution:While all eCommerce sites cannot completely get rid of shipping costs, always look to find options that
work for your customer base. Would a subscription reduce the cost of shipping? Would a certain time of the
month give them lower shipping costs? Or is there a carrier that is reliable but offers a cheaper rate? Be sure to
do your research and find the best possible solution for your shoppers.
9. Product Return & Refund Policies
• According to ComScore, more than 60% of online shoppers say that they look at a retailer’s return policy before
making a purchase. When an eCommerce site says “no returns or refunds” it makes a shopper nervous and less
likely to trust the retailer. When shopping online, customers want the flexibility of making a mistake that doesn’t
cost them. 
• Solution:Customer satisfaction is the most important factor for any retailer. Therefore having a flexible return
and refund policy not only helps with customer satisfaction with it also helps with customers making purchases
without being nervous. 
 E-commerce Challenges and Suggested Solutions
10. Choosing the Right Technology/Partners To Fix Your eCommerce Challenges
• Choosing the right technology or partner will make or break your business. A retailer’s growth might
be stunted because their technology is limiting them or because they have hired the wrong agency
to help them manage their projects. There are a lot of aspects that need to be in place for a
successful retail business, but a good technology foundation is crucial. 
• Solution:Partner with Vue.ai, a unified Visual AI platform that is redesigning the future of retail
commerce to fix all your eCommerce challenges. Using image recognition and data science, Vue
helps retailers generate product, and customer intelligence, and combine these with market
insights, to power growth.
• Nothing has propelled eCommerce like the conditions of 2022. While there have been a lot of
exciting and positive changes, there are still online businesses that struggle with the challenges that
eCommerce brings. The above mentioned solutions are fixes that can help any eCommerce
business move closer to their ideal customers and targeted sales. 
 E-commerce Challenges and Suggested Solutions
11. Customer Support 
• With the scale of eCommerce increasing rapidly and with the rising number of users facing
everyday issues with eCommerce services, Customer support has been augmented with chatbots
which enable faster processing and response to tickets. However, many customers find themselves
feeling uncomfortable or dissatisfied with automated responses from chatbots.
• Solution:The solution to this eCommerce challenges is fairly simple – eCommerce companies
should utilize a combination of technology and human assistance to deal with customer support by
tagging specific issues that require human assistance and distinguishing the queries that can be
handled by a chatbot. 
12. Cross-border eCommerce
• A lot of eCommerce sites tend to stagnate due to the lack of interaction with customers outside their
geographical and linguistic range. Users that do not speak the primary language used on the site
tend to look for other retailers that can offer them a better user experience. Moreover, the
differences in pricing, tax rates, etc., deter users from purchasing across borders.
• Solution:Implementing a multi-lingual site that is translated for customers that do not speak the
primary language of your site can make a huge difference in attracting customers and also
improving your conversion rates. Using technology to enable an easy conversion of currencies and
taxing the products appropriately will also significantly contribute to growth.
 E-commerce Issues and Trends during Covid 19 and
beyond
• Thanks to the global COVID-19 pandemic, the world saw an uptick in eCommerce and a shortage in supplies,
putting pressure on retail owners around the world.Here are the challenges of eCommerce that were amplified
by the pandemic, and may be sticking around for some time:
1.New Technologies
• A significant challenge of eCommerce is the fact that online shoppers have to purchase products without the
ability to physically examine them first. To ease anxious online shoppers, many brands are looking into new
technologies such as augmented reality (AR) and virtual reality (VR) to gain a competitive advantage over this
challenge of eCommerce.
• Augmented reality allows eCommerce brands to show customers what a product would look like in their real
space (think visualizing a sofa in your room), while virtual reality can help showrooms for example, to enable
customers visualize the product in a virtual setting but from the comfort of their home.This visualization tool often
solidifies a customer’s decision to make a purchase, as it increases their confidence in the product.
• The solution:Create a VR shopping experience: Hire a team of web developers to integrate an interactive VR
experience on your site. Whether it’s an image your customer can spin around with the movement of their
mouse to see all angles of the product, or an interactive video on your site, a VR shopping experience can build
a more immersive shopping experience for your customers and increase conversion. From setting realistic
marketing budgets to providing a safer data privacy experience for your consumers, here are the top challenges
of eCommerce you should anticipate in 2022.
 E-commerce Issues and Trends during Covid 19 and
beyond
2.Marketing Budgets
• Digital marketing has long been a more affordable form of advertising, compared to traditional
marketing.However, it appears that traditional marketing has run its course, as marketers begin to
realize how effective digital marketing is in the growing online market. With PPC costs and social
media ads increasing their rates, digital marketing has become more expensive.
• Here are the current digital marketing rates:
• Pay-per-click (PPC) costs range from $9,000 to $10,000 per month for small and medium-sized
businesses
• In 2022, businesses are predicted to spend more than $56 billion on social media ads
• Organic reach decline saw a 5% drop from Q4 2019 to Q4 2020
• The solution:Target specific audiences: Targeting specific audience segments increases your
chances of higher conversion rates and ensures you’re not wasting time or money on consumers
who aren’t interested.Monitor your marketing analytics: Be very thorough in tracking your marketing
analytics and follow how efficient your digital marketing campaigns are. If something’s not working,
analyze it and make a change to improve it.
 E-commerce Issues and Trends during Covid 19 and
beyond
3.Providing An Omnichannel Experience
• Knowing that multi-channel shoppers spend three times more than single-channel shoppers is a
strong incentive to overcome this eCommerce challenge.With desktop and mobile devices,
eCommerce stores, live chats, forums, Facebook, Instagram and other social media pages, the
modern shopper has a large number of touch-points they can reach out through.
• So how can you ensure you’re reaching your target audience on the right platforms, and providing
an omnichannel experience?
• The solution:
• Identify the most important channels for your customers and optimize them: Where does your target
audience hang out? There’s no reason to waste time or money on Facebook, for example, if your
target market prefers TikTok and Snapchat. Identify which platforms you need to optimize to reach
your consumers on, as well as what your consumers prefer as far as customer service. This might
be chatbots, live call centers, text message CS agents or others. (If your social strategy needs a
boost, check out our guide on how to create a social media branding strategy!)
 E-commerce Issues and Trends during Covid 19 and
beyond
4. Zero-Party Data
• Consumers want data privacy more than ever, and in 2021, Apple’s iOS 14 privacy update has revolutionized
the data privacy game.How? By no longer allowing social media platforms like Instagram and Facebook to
gather privacy data from Apple devices such as iPads and iPhones.Apple’s iOS 14 update asks for the user’s
consent if they want their installed social media apps to acquire their private data. But how can you build a
stronger relationship with your customer while maintaining their trust if you give them this option? By asking for
zero-party data or their permission to voluntarily share their data with you.
• The solution:Collect zero party data: Zero party data is collected through website activity, subscription
information, customer profiles and online quizzes. Once you have your customer’s permission to collect their
data, you can use it for targeted marketing and to create customized product suggestions.
5.Logistics
• A disruption in manufacturing, the temporary halt in the flow of finished goods and raw materials and a shortage
of chips used in the automotive industry, gaming consoles and more are the results of the nationwide lockdowns
imposed by the global pandemic. With more than 169 industries affected by the global supply chain issue,
including the warehousing industry as one of the sectors largely affected, how can your business survive this
eCommerce challenge?
E-commerce Issues and Trends during Covid 19 and beyond
The solution:Track your inventory: With supply chain disruptions, it’s important to know what products you
have in stock and what products need replenishing to avoid last minute restocking of your popular items.
You can utilize different inventory tracking methods such as cloud-based software, inventory management
systems and third-party logistics for real-time data available around the clock. Stay informed: Stay up-to-
date with the current news and trends in your industry. While supply chain disruptions can happen anytime,
you can often predict when they’re about to happen and create a plan to help minimize the disruption. Pro
tip: Some eCommerce brands were not only able to survive, but thrive during the pandemic.
6.Labor Shortage
• A continuing problem that’s been aggravated by the pandemic is the current labor shortage.According to
the U.S. Bureau of Labor Statistics, 4.4 million Americans left their job last February 2022, with retail
being the top industry affected. The eCommerce industry is at risk of labor challenges because of high
employee turnover rates, global supply chain issues and the remote work movement.
• The solution:Improve your recruiting process: You can efficiently improve your recruiting process by
asking for employee referrals, ensuring your job descriptions are detailed and streamlining your
application process to hire the right candidates who are looking for a long-term position.
• Create a healthy workplace and offer benefits: A recent Gallup study found that only 34% of employees
are engaged at work. By improving your work environment and offering employee benefits, your workers
will feel more valued and satisfied, decreasing the chances of them leaving your business.
E-commerce Issues and Trends during Covid 19 and beyond
7.Growing Competition
• A recent survey found that before the global pandemic, only 7% of grocers worldwide had
eCommerce channels.During the peak of the pandemic, eCommerce shares of grocery retail grew
to 10%.What does this mean for you as a retailer? eCommerce competition is fierce and to make
your brand stand out, you should start investing in eCommerce channels.
• The solution:
• Prioritize partnering with manufacturers less likely to sell products directly: To avoid having your
retail partner become your competitor, team up with smaller brands or brands focused on producing
and delivering goods to shops rather than selling them directly.
• Offer your products at lower prices or with additional benefits: If you can afford such incentives, it
can help funnel customers to your store, instead of sending them to your manufacturer.Walmart’s
mobile app allows you to search and purchase their products with just a tap of your finger
E-commerce Issues and Trends during Covid 19 and beyond
8.Customer Loyalty
• Customer loyalty is a very fickle thing. Without customer loyalty, your business may struggle since acquiring a
new customer is five times more costly than retaining an existing one.Customer loyalty is a matter of brand
integrity and mutual trust between a seller and a customer. Since there is no face-to-face interaction in an
eCommerce store, the development of trust and loyalty takes more time and effort.
The solution:“Your culture is your brand”: Customer loyalty is the result of great customer service, so you need to
make sure your customers are satisfied with the entire process of purchasing online, from browsing your store
casually, to ordering online and receiving their purchase. Adjust customer service and other processes based on
feedback from your consumers.
• Integrate a live chat: Having a live customer support specialist that can reply promptly to your customers’
queries in a kind and reassuring way increases trust and makes your brand trustworthy and reliable in the eyes
of shoppers.
• Be transparent: Since eCommerce stores lack a human connection, you need to create one. Display
testimonials and reviews from happy shoppers, ensure your contact details are readily available and offer an
engaging user journey through UX, targeted messaging
• Use loyalty programs: Multi-tiered programs that reward returning customers with points, discounts and
coupons are a great customer service tool that fosters loyalty and engagement and keeps customers coming
back.
• Publish blog articles: Content marketing such as informative blog posts relevant to your audience can help
build trust and boost your credibility. While it isn’t necessary, a blog can help drive traffic to your website and
improve your ranking on search engine result pages (SERPs).
Brand Reputation Management As An eCommerce Challenge
• Brand reputation management requires constant observation on how your customers distinguish
your brand while taking strategic action to improve your brand’s image.
• Case study of KFC UK in 2018.
• KFC’s UK operations faced a chicken crisis on February 16, 2018. They started running out of
ingredients including their coveted “finger lickin’ good” chicken and just a week after, hundreds of
branches were forced to shut down.
• Of course, this shortage of supply in chicken had the nation concerned. Will they be living in an era
where Colonel Sander’s famous 11 spiced chicken ceased to exist?
• To respond to the outrage, KFC released a cheeky campaign to address the chicken
crisis: rearranging the letters of KFC to FCK.
• KFC took this unfortunate event and turned it around to highlight that they are a brand of
transparency and humility.
• The lesson? Building trust through transparency is key to building a sustainable ecommerce
business.
• Task: