The impact the internet and e-commerce have had on the retail industry is undeniable. However, while commerce experts have been predicting for many years that the e-com sector would soon overtake traditional high street sales, it’s only relatively recently that the online shopping model has taken off.
In 2019, just 14.1% of all global retail sales were made on e-com sites – by 2023, that figure is forecast to rise to 22%. With the meteoric rise of commercial titans like Amazon, Walmart, and Target, it seems populations globally are finally waking up to the convenience of shopping online – plus the substantial savings it can bring.
Moreover, from a retailer’s perspective, the online model offers significant benefits over real-world stores, including operating 24/7/365 at a fraction of the cost of holding stock in commercial premises. From automation to secure purchasing online and improved customer relations, the e-com style of selling is (in most ways) a dream come true for the majority of retailers.
The dangers presented by the e-com model
However, while moving online makes good sense for most retail operations, some associated risks are associated with e-retailing. As you might expect in such a high-worth sector, the dangers posed by cybercriminals are ever-present – though there are many other considerations retailers often overlook.
If you’re looking at embracing e-com technology – or even if you’re already operating – below are some of the most common problems faced by retailers online.
Shopping cart abandonment: One of the most frustrating and problematic areas of running an online store is the phenomenon of Shopping Cart Abandonment (SCA). In an SCA episode, a customer will browse the retailer’s site filling their cart with goods, only to suddenly become distracted by something else or simply leave the store without purchasing. Unfortunately, the problem is endemic across all e-com companies – big or small – and costs firms millions each year. Indeed, evidence shows 68% of all shopping carts are abandoned before transferring into a sale – and, in some cases, that figure can be as high as 80%.
Promo or coupon code abuse: Retailers typically run promo code discounts to gain new customers or encourage existing clients to make repeat sales. While these promotions can often be hugely successful, they are nonetheless extremely vulnerable to coupon abuse. The scale of the code abuse problem can run from the relatively innocuous (e.g., a customer creating a fake account to gain a small percentage discount on clothing) to potentially financially crippling scams developed by cybercriminals to fraudulently generate vast sums of money. In particular, referral codes where one user recommends another in return for a discount or financial reward are particularly prone – and very difficult to protect against.
Cyberattacks: Where there is money to be made, you can be sure the fraudsters won’t be far behind, and the e-com industry is no exception, unfortunately. In recent years, cybercriminals have become increasingly more inventive and sophisticated in the types of attacks they’re launching against both online stores and their customers. From launching Distributed Denial of Service (DDoS) attacks against sites to phishing scams masquerading as a recognized company to brute force attacks to hack into a site’s underlying code and database, the tactics used by online criminals are as varied as they are dangerous. For the best protection against online criminals, you should look at entrusting the development and running of your site and its e-com functions to a trusted web design company, host, and security provider.
Developing customer and brand loyalty: While selling online drastically cuts a shop’s overhead in terms of staff, stock, and premises, this reduction in interpersonal contact also presents another problem – namely, that it’s much harder to develop a relationship with consumers through technology and a screen. However, if a company doesn’t succeed in building brand loyalty, it will ultimately struggle. Research shows it costs five times more to source a new customer than it does to retain an existing one – plus the old Pareto Principle states just 20% of a firm’s clients generate around 80% of its sales. To combat the problem, try installing a live chat function on your site to encourage your trustworthiness and develop communication with potential customers. You should also be fully transparent with your contact details/terms and conditions and also ensure you provide the best possible customer experience and support. Customer Relationship Management (CRM) software can largely automate the task of customer care and support.
Returns and refunds: Shoppers will inevitably return goods from time to time – however, how you handle returns is vitally important if your e-com venture is to succeed. Somewhat unsurprisingly, given the blind nature of buying online, over 60% of all e-com shoppers check a store’s returns policy before making a purchase – with 80% saying that overly complex returns or refunds policies put them off buying in the first place.