Based on recent history and forecasts, there's no end in sight for the growth of e-commerce. In fact, shoppers spent more than $517 billio
Based on recent history and forecasts, there’s no end in sight for the growth of e-commerce. In fact, shoppers spent more than $517 billion online in 2018, up 15 percent from the previous year, according to the 2019 Internet Retailer Top 1000 Report. However, some of the challenges that lie ahead may surprise you. Here are the biggest barriers–and how to overcome them.
1. Preserving margin with ever-increasing shipping cost.
You might consider offering in-store returns if you have a retail presence, or teaming up with a brick-and-mortar shop, like how Amazon partnered with Kohl’s to accept their returns. With more than 1,000 stores nationwide, it’s a win-win for both retailers, driving more foot traffic into Kohl’s and saving customers from having to package their return items and wait in line at the post office.
2. Focusing on data is vital, but only if you know how to use that data.
Data analytics is needed to keep your company agile and responsive. However, those insights are only helpful if your team knows how to apply them and shares them across departments.
Take for example Adidas, who saw a surge in demand for apparel in North America, but was unable to meet demand. One possible reason for the shortage may have been that, despite the ability to predict a surge in demand, the supply chain wasn’t flexible enough. It’s not enough to just have data; You must also have a plan for that data and communicate those insights throughout your company to help you be better able to meet your customers’ wants and needs.
Walmart, on the other hand, used data analytics to pinpoint that customers were buying Pop-Tarts at seven times their normal rate in preparation for Hurricane Frances, enabling them to put enough of the product on shelves.
3. Expensive infrastructure is key for scaling your brand.
Your e-commerce company may stand out in terms of your design or product development, but still be unable to keep pace with today’s online retail landscape if you’re not making big investments in logistics, IT, or other capabilities. Smaller brands often can’t afford to sink money into these areas to the degree that bigger online retailers can.
One solve for this is to partner with existing companies to help you reach more customers and share services that would be too expensive to do alone, such as smaller companies’ using Amazon’s logistic services (think: Levi Strauss & Co. selling directly through Amazon in addition to their own platform).
Finding ways to scale, innovate and apply data insights will be key to overcoming some of the biggest challenges e-commerce companies will face in the upcoming years. Collaborating with partners to expand your reach and resources, as well as upskilling your team to know how to use data, will help fuel your success.
The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.
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