E-commerce

Seven challenges facing online businesses today – and how to solve them

There are a lot of challenges, risks and dangers that come with launching and growing a business online. Some of these are, unfortunately, out of a brand’s control – but there are things you can do to lessen their risk and prepare for the potential roadblocks on the path to brand growth.

Online retail purchases are forecasted to make up 21 per cent of all retail purchases this year and up to 24 per cent by 2026.

As online purchases continue to grow and digital technology evolves the sector, there are seven dangers that retailers must be aware of in this competitive market. 

1. Scam sites, counterfeit products and intellectual property fraud 

Fraudulent activities are becoming increasingly sophisticated, posing a threat to both brands and consumers. In 2023 alone, Australia reported 182,593 scams, resulting in losses totalling $328.6 million. 

Businesses should establish robust monitoring and reporting processes to identify activity that is potentially harmful to their brand. Websites with fake brand products mimicking established brands are on the rise, can damage the reputations of original brands and make it hard for them to build consumer trust in the online space. 

Hundreds of people are being scammed daily, and despite businesses’ efforts, scammers are smart and are finding ways around the systems. Even big brands are not immune.

2. Online reviews tarnishing brand reputation 

Negative online reviews can tarnish a brand’s reputation, with 93 per cent of consumers admitting that online reviews influence their purchasing decision. 

While businesses cannot control customer reviews, they can monitor reviews online and respond to negative reviews with the aim of resolving them as quickly as possible and turning an unhappy customer online into a satisfied one. 

An escalation in negative reviews can point to an operational or product or service issue. Ongoing, brands would be wise to identify customer pain points and do everything they can to reduce them to avoid negative reviews in the first place.

3. Intense competition

There are an estimated 12-24 million e-commerce sites in the world, giving 2.64 billion online shoppers the ultimate in choice but fierce competition for brands. 

Retailers should take time to research the product they want to sell and how they will sell it. They can research on social media platforms and on drop-shipping sites to identify what products are currently saturating the market. 

Tools like AI and other online software have made this process faster. It is important to make the product and brand stand out as the consumer’s first choice.

4. Poor user experience (UX) and customer experience (CX) 

A seamless and user-friendly website along with efficient customer service is essential for sales conversions. Complex navigation and slow loading times will turn customers away, and poor customer service processes will prevent them from coming back. 

Ensuring a positive user and customer experience can impact overall business success.

5. Low visibility on search engines 

Google has 4.3 billion users worldwide and over 3.5 billion searches take place per day. In such a highly competitive online market, it is essential for target customers to find brands easily on Google and other search engines. Poor search engine optimisation (SEO) can prevent customers from finding a product to meet their needs. 

6. Scaling and meeting demand 

Rapid growth, while desirable, can strain a business’s infrastructure, supply and operations. Businesses should have a plan in place to prepare for their growth. 

It can be challenging to maintain consistently high service quality, adequate inventory and efficient fulfilment when scaling rapidly. Networking with other entrepreneurs and remaining transparent with suppliers and team members can all help mitigate the risks associated with unprepared growth. 

Growth is exciting, but that also means it can be easy to drop the ball.

7. Marketplace dependence – having your own platform 

Approximately 27 per cent of online retailers use drop-shipping to fulfil customer orders, which offers an inexpensive way to run an online business. Heavy dependence on big online marketplaces for operating an online store can limit brand development. As a brand grows, having its own website and operation systems allows for greater brand control and a personalised customer buying journey. 

About the author: Davie Fogarty is an entrepreneur, founder of The Oodie, and a judge on the latest season of Shark Tank Australia.