Overcoming E-Commerce Growth Challenges - Accion Opportunity Fund
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Overcoming E-Commerce Growth Challenges

Many businesses face e-commerce growth challenges. How can you grow your e-commerce business while competing with a global market?

Business owner working on her e-commerce growth challenges
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Overcoming E-Commerce Growth Challenges written by Desha Elliott

E-commerce Opportunity

E-commerce businesses have served as low-cost, minimal technical skills needed, entrepreneurship entry points. Selling online is even listed by Forbes as one of the best businesses to start with little investment. E-commerce growth is essential in today’s fast-paced digital economy. With the global online shoppers reaching over 2 Billion shoppers and 6.3 Trillion in sales for 2024, businesses that capitalize on e-commerce opportunities can significantly expand their reach. For entrepreneurs within and outside the e-commerce industry, the potential to scale a business beyond traditional retail channels is immense. However, navigating the complexities of online retail can be daunting. This article explores the importance of growth, common e-commerce growth challenges that come with it, and solutions using a real-world example. Let us meet Jill, the owner of Beauty Blip. Jill’s story is based on a true business owner story, but names have been changed to protect business owner privacy.

Meet Jill

Entrepreneurs can relate to of Beauty Blip, an organic beauty care and holistic wellness business. Excited by the solutions she created for her skin needs, she wanted to expand her sales channels outside of pop-up shops and farmer’s markets. Jill also wanted to increase sales on her e-commerce site and introduce new products into the market. By participating in free business coaching through Accion Opportunity Fund, Jill was able to gain actionable steps and to address her business’ e-commerce growth challenges.

Commercializing your business online is no longer optional but a necessity for business growth and sustainability. Whether your business began in pop-up shops, traditional brick-and-mortar stores, or a digital-first approach, building and scaling an online presence is critical. E-commerce has revolutionized consumer behavior, allowing businesses to reach audiences far beyond a physical location. Jill could have chosen to keep her holistic wellness business local, but by embracing e-commerce, she was able to access a global customer base. While this expansion offers exciting opportunities, it also brings logistical and operational challenges that can overwhelm small business owners.

E-commerce Business Challenges

Here are some of the most common hurdles:

  1. Customer Acquisition and Retention: Getting new customers is expensive and keeping them can be even harder. The customer’s path to learn, trust, purchase, refer, and return to your business requires critical investment at every step of the funnel. One recommendation to keeping the attention of customers already in the sales pipeline is to send regular email notifications of product usage stories and testimonials,
  2. Managing Logistics and Inventory: Supply chain issues can lead to delays, out-of-stock products, or excessive storage costs. This process becomes harder to keep under control the less that the business owner owns and controls the supply chain cycle. Business owners should consider the space capacity, costs, and turnaround time for their storage space/fulfillment centers.
  3. Website Performance: A slow or unresponsive website drives potential customers away. In the United States, weekly, 30% of shopping is done online, providing a basis for seamless and enticing e-commerce website performance. One recommendation is to do a load speed test to see if there is something on the site that is slowing it down from working.
  4. Marketing and Advertising Costs: While digital ads can boost sales, they can quickly become costly if not managed effectively. Clear understanding internally and externally of the values, product, and customer minimizes ineffective spending in this area. One recommendation is to review the details of your favorite competitor ad online. Review this ad to examine attractiveness (copy or visuals) and how many engage with the ad. Compare this to your created ads and start to get pricing for the engagement and ad creation from the media platform and marketing providers.
  5. Pricing Strategy: Setting the right price can make or break a business. The ideal strategy in pricing is a culmination of understanding product costs, customer acquisition, and the business’ competitive advantage. Entrepreneurs can review their competitors’ prices online and compare them with the cost of their product to get a sense of pricing for their products.

Let us address each of these challenge areas using Jill’s business as an example, providing best practices for e-commerce growth along the way.

Customer Acquisition and Retention

Consumer spending online has been spurred by increased internet accessibility and the growth of mobile shopping. But this expanding market comes with increased competition for digital shelf space and visibility. Platforms like Amazon, Etsy, and Shopify make it easier for businesses of all sizes to sell online, but they also make it difficult to stand out. As Jill discovered, success in e-commerce requires more than just having a product available online; it demands smart strategies to differentiate her brand from the competition and connect with the right audience. Jill began placing her products on some of the most popular e-commerce platforms but became frustrated with the competition from comparable products on the platform. She lamented how difficult it was for customers to find her product. Based on expert recommendations, Jill created her own website to minimize online shelf competition, but she was still having trouble with sales. Jill was experiencing the challenges of having to acquire new customers and then creating incentives for them to return the product. The cost to acquire customers either on another e-commerce platform or through your website varies, but without implementation, customers may never find or return to your product. Jill needed to:

  • Research e-commerce customer needs: Clearly research the ideal customer who would benefit the most from your product. By uncovering your customer’s needs, social media habits, and product expectations, you can uncover the marketing tools that will be most effective in customer acquisition for your business. Jill was able to identify the customer-persona that benefited from the product the most. Jill was even able to get feedback from her traditional retail clients to understand what would inspire them to purchase her products online. Learn more about finding your target customer or target market
  • Personalization in e-commerce: Once you know the behaviors and needs of your customers, you can identify the right product description, and messaging (on the selling platforms and social media), and use language that feels authentic, trustworthy, and appealing to your target market. Jill had language that originally appealed to those who would only consider her products for cleaning maintenance, versus beauty revitalization. Shifting the messaging, graphics, and visible benefits of her product meant she was able to attract customers who would appreciate her product the most.
  • Reasons for e-commerce customer retention: Appreciation for the customer does not end at purchase. Once a business owner identifies the customer as someone willing to join their community and be fans of their product, they then need to keep their new community member engaged. Engagement can range from thank you messages after the purchase, feedback on a product or experience, responding to customer communication, and creating incentives to preorder or stock up on a product. Offering excellent customer service was also a priority for Jill. By responding quickly to customer inquiries and addressing issues proactively, she was able to build strong relationships with her customers and encourage repeat business.

Knowing what customer to target, personalizing the added value of your product for that target customer, and maintaining engagement are key factors for a successful customer acquisition and retention strategy.

Managing Inventory and Logistics

Managing efficient logistics and inventory is critical for growth and to overcome e-commerce growth challenges. Before Jill started her business, she was inexperienced in e-commerce inventory management since her business began selling through more traditional retail channels. Initially, she handled fulfillment in-house, but as orders grew, it became clear that this approach was no longer sustainable. By expanding to e-commerce Jill learned the importance of using inventory management software to track her stock levels in real-time, which helped prevent out-of-stock issues and increase customer ratings. Before addressing this issue, customers would complain about delayed orders and their favorite items being out of stock. Jill had difficulty navigating her physical inventory, too. Business advising through AOF helped Jill to better understand her:

  • Supply chain needs
  • The true costs of logistics and inventory service providers
  • How to tailor her customer’s expectations for shipping/receiving

By optimizing her supply chain and packaging processes, Jill reduced shipping costs and improved delivery times. The next section will cover how Jill handled inventory management during peak season. Jill decided to choose a local 3PL provider that was recommended by other entrepreneurs in her community.

E-Commerce Holiday Fulfillment Challenges

Jill also began to encounter issues with shipping delays and inventory management, particularly during peak holiday seasons. To solve these problems, Jill partnered with a third-party logistics (3PL) provider. This move allowed her to streamline her operations, ensuring timely deliveries and accurate inventory tracking. These operational improvements played a significant role in ensuring that Jill’s business could handle increased order volumes during periods of growth and peak seasons. For more on how to manage an effective supply chain in e-commerce during peak seasons or times of uncertainty, click here.

Managing shipping and fulfillment is another common pain point, but outsourcing logistics or implementing software solutions can streamline your process, reduce costs, increase customer satisfaction, improve customer experience, and free up time for you to focus on other key areas of the business.

Website Performance

Website performance is another common challenge for e-commerce businesses. Jill’s initial website had slow loading times, which negatively impacted the customer experience of her site. Through advising sessions with an expert business coach, Jill identified where buyers were leaving her site before completing their purchases. To address this issue, Jill optimized her website by compressing images, leveraging caching tools, and removing unnecessary plugins with the help of an external website expert. These improvements reduced load times and improved her site’s mobile responsiveness, which decreased her bounce rate and increased overall sales.

Jill’s coach also discovered that her website was appearing at the top of search engine results. Jill worked with an adviser on her SEO strategies to improve her visibility on search engines by using targeted keywords related to holistic wellness and natural oils. Additionally, she invested in content marketing by writing blog posts about the benefits of her products, which helped drive organic traffic to her site.

A key to overcoming common e-commerce growth challenges is improving conversion rates. Driving traffic to your website is only half the battle—converting visitors into paying customers is the key to success. Jill used several tactics to increase conversions:

  • Offering time-sensitive promotions
  • Providing free shipping during her product launch
  • Optimizing her checkout process to minimize the number of clicks needed to complete a purchase, which helped reduce cart abandonment rates

Implementing these changes significantly improved her overall sales performance. These website additions increased the time customers stayed on the website and how much they purchased.

Marketing and Advertising Costs

To be successful, Jill also adjusted which social media platforms she used to share information about her products. Initially, Jill relied heavily on Instagram ads to boost visibility for her products. However, as she searched through the analytics, and learned which platforms her customer used to learn about the product she was selling, she recognized the need to diversify her marketing efforts. She began using a combination of email marketing, influencer partnerships, and search engine optimization (SEO) strategies to attract a broader audience. By analyzing website traffic and customer behavior, Jill identified which marketing strategies were most effective and adjusted accordingly. You can learn more about SEO essentials here.

As Jill’s business grew and scalability became a top priority, Jill realized her manual marketing strategies were becoming inconsistent. Reviewing customer feedback with her business advisor showed that her target market responded well to emails. However, Jill struggled to consistently set up email campaigns. Once she realized how important emails were to her target customer, Jill prioritized the search for an email marketing tool. She implemented an email automation system that sent out welcome emails, promotions, and follow-ups without her manual intervention. This not only saved her time but also improved the consistency of her customer communication, while reaching customers the way they wanted to be reached.

Customer acquisition costs can be high, and researching may seem tedious, but by focusing on your customer needs and preferences, you can build a loyal customer base. Jill’s monthly newsletter, which offered wellness tips and exclusive discounts, kept her customers engaged and returning for more. What marketing tactics are best for your target audience?

Effective Pricing Strategy

Jill and her advisor reviewed a mix of methods that included:

  • The cost of product creation
  • The current competitive landscape
  • The increased value adds

Jill assessed how much it cost to produce the product (expenses), and her profit based after an item was purchased. Jill also reviewed related products on se-commerce marketplaces and reviewed the pricing of local and national competitors. Competing with larger, more established brands like Pretty Instinct and Blue Alchemy, Jill initially targeted the same demographic as her competitors. However, after analyzing customer feedback and reviewing her sales data, she realized her actual buyers had unique needs and preferences. Instead of focusing on the sensual perfume market (her competitor’s best-selling product), Jill found that her customers were more interested in holistic wellness and natural ingredients. Jill also appealed to her customers’ desire to purchase complimentary items to create a multi-sensory experience. This inspired Jill to expand her product line to include complementary items such as bath salts and candles, which increased her average order value and customer satisfaction. As your business, there will be a time to consider adding additional products and price points for this product. Jill took advantage of the feedback from her customers and researched the competition to create the best case for which products to introduce and how to price them. For more information on the techniques to consider proper pricing for your new product, be sure to read more here.

Overcoming E-Commerce Growth Challenges

In conclusion, growing an e-commerce business means navigating a wide range of challenges, from customer acquisition to inventory management. To ensure long-term success in e-commerce, you must continually optimize your operations, research, and get customer feedback. By learning from real-world examples like Jill’s experience with Beauty Blip, you, and e-commerce entrepreneurs like you, can apply proven strategies to overcome obstacles and scale your businesses effectively.

Meet with a Business Advisor

Advising was critical to Jill’s success. Through her AOF advisor, Jill consulted with trusted experts that provided beneficial feedback and personalized advice that helper her solve her e-commerce growth challenges. Accion Opportunity Fund provides complimentary advising that can be scheduled here.

Whether you are just starting or looking to expand, the key to success lies in optimizing operations, diversifying marketing channels, and always keeping the customer at the center of your business strategy.

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