How to Battle With the Most Common Challenges of an Online E-commerce Marketplace
Being an e-commerce startup entrepreneur, challenges come gifted as soon as you kickstart the ecommerce business. We often see companies tussling with them without any principle to embark upon agile transformations in order to achieve desired objectives.
Based on our experience across numerous e-commerce operating models, we see the following most common challenges faced by e-commerce businesses of all sizes.
1. Product Sourcing- Choosing the Right Product
Product sourcing refers to finding and buying products at a real wholesale price and to sell through your business online for a profit. This comes as the most initial and challenging task to tackle when starting an e-commerce marketplace.
If you’re just invading into online retail sales, you’d have a clear picture of sourcing products and about its various techniques that gives best profit margins.
There are five major types of sourcing techniques:
1. Drop-shipping - Dropshipping is a process where your wholesaler stores all the products you offer on your website. When you make a sale online, the wholesaler is responsible to ship the product directly to your customer. Your customer pays you the retail price listed on website, and you pay the drop shipper your wholesale price. This way online retailers can benefit from dropshipping.
2. Light bulk - A term coined at WorldwideBrands.com, it allows you to buy products from your wholesale supplier in small and affordable quantities. Here you're in charge of warehousing the products and shipping them to your customers.
3. Volume Wholesale - On contrary to Light Bulk, in Volume Wholesale you can buy products from a wholesale supplier in large quantities and you’re responsible for handling storage and shipping.
4. Importing - When you buy goods from manufacturers in other countries in a large amount, with cheap production.
5. Liquidation - When you purchase merchandise in a bulk from reclamation centers or B2B auction websites.
- DropShipping is the most used and proven method for new sellers to start with for Product Sourcing.
- It eliminates shipping and storage issues and any inventory investment.
If in case you’re totally a new beginner or don’t opt for dropshipping than here are a few.
Tips and techniques for inventory management:
- Set par levels of the products i.e. minimum amount of products that must be present all time.
- Practice FIFO (First-In First-Out) for non-perishable products.
- Prepare and plan for unpredictable situations.
- Do regular auditing.
- Make a breakdown of products with a low, moderate and high-frequency of sales.
2. Segmentation and Buyer Personas
Customer segmentation means breaking your customers into groups of like buyers those have similar characteristics and make a strategy for each group. While Buyer Persona is a method to customer segmentation that in simple definition by HubSpot can be defined as the “fictional characters created to represent the different buyer types within a targeted demographic, attitude and/or behavior set that might engage with a site, brand or product in a similar way.”
When it comes to e-commerce marketplace it is a very head-scratching task and not at all an easy feat to segment customers. It is hard to scale, optimize, and maintain different buyer personas.
Tips and techniques to segment customers:
- Define your personas broadly. Don’t bifurcate them at a very granular level initially otherwise you’ll end up in marketing and acquisition strategy. Rather drill them down in collecting persona details and knowing your customers closely. You can do your customer research by utilizing tools and bring them altogether.
3. Generating Targeted Traffic
As soon as you plunge online, “be everywhere” online is mandatory. Expanding your reach & word of mouth on one or more platforms seems to be the only way out. Well, maybe not. Focusing on one single channel keeps your all resources on a single point-– especially when you’re totally a new beginner.
Just a little homework before you opt for a user acquisition channel-> Identify your target audience. Create a marketing campaign that targets your customer persona, run it with your own small budget and cross verify the engagement by tracking the click through rate via website analytics.
- User Acquisition Channels - Find and identify your own user acquisition channel through the following steps.Take it from Growth Marketing Conference.
- Understand common growth channels
- Identify your competitive advantages
- Pick your top 1-3 channels
- Digital Marketing - Digital Marketing channels are the most powerful engines to drive traffic to your online store. Activities like SEO, PPC, email, display ads, social media marketing, retargeting and affiliates help in driving quality traffic to the online website.
4. Customer Retention
In an online e-commerce marketplace, it is easier and less expensive to retain customers than to acquire the new ones. To woo your customers and to bring them back for more you’ve to set your sales goals, map your own customer journey by analyzing questions that convert on a purchase. You can ponder over questions like:
- How your customers did became aware of your e-commerce website?
- Do you get lot of referrals?
- Are your customers following you on social media?
Once you know your customer journey, start applying your lead acquisition strategy that works best, optimize it on each step and improve customer retention in the process.
5. Choosing a Long-term Technology Partner
When you head towards running a successful e-commerce marketplace, it is necessary to seek an e-commerce development company that can be your technology partner for the long term. Online markets are often dynamic. They are subjected to change and develop progressively with new technology market trends. In such scenarios where you aim for continuous growth hiring a reliable e-commerce solutions provider is a go-to choice.
Overcome these challenges with Codiant’s Robust and Dynamic E-commerce Solutions.