E-commerce Challenges Faced by Businesses and Ways to Tackle Them

e-commerce chalenges

E-commerce in India is undoubtedly the fastest growing sector today and will continue to see an upward trajectory considering the increase in internet users, ease of access and greater awareness among consumers.

Growing at an exponential rate, the market value of the e-commerce industry in India was approximately 22 billion U.S dollars in 2018. This number is estimated to reach 350 billion U.S. dollars by 2030.

The potential is enormous and so are the pitfalls. This article talks about the key e-commerce challenges a business has to face when selling products and services to an online audience.

E-commerce challenges faced by every online business

Irrespective of its size or scale, every business has to tackle multiple issues to establish a strong identity online. Here are some of the crucial ones that companies need to solve when expanding their business on the internet.

1. Customer experience

A business might be offering a great product or service to its audience but it often struggles when extending an equally enriching experience of selling it on the website or app. 

Customer experience is a challenge because it spans across the various stages of the user journey and multiple segments of the website – each requiring detailed attention and consistent improvements.

73% of consumers say that customer experience is a deciding factor when making purchase decisions.

Some of the most fundamental areas to look at when working on the customer experience are:

  • Optimise the checkout process
  • Pay attention to customer feedback
  • Focus on intuitive page website design
  • Be clear on the prices
  • Enable personalised interactions

Also read: What is an E-commerce Website? A Complete Guide to Build One

2. Customer retention

To attract new users to their platform, e-commerce businesses often extend deals and discounts to first-time buyers. This usually works, but retaining them thereafter and tuning into loyal customers needs massive efforts. In fact, getting new customers to the website is costlier than retaining them.

A 5% increase in customer retention can increase company revenue by 25-95%.

It’s also difficult to build loyalty unless there is an emphasis on personalisation and a focus on the brand-consumer connection. Additionally ensuring that a customer comes back to your website is the total of their shopping experience, buyer expectations, and the product among others.

Here are some methods to improve customer retention rates:

  • Invest in building customer relationships
  • Manage expectations and over-deliver
  • Reward buyer loyalty
  • Be transparent with your audience
  • Determine customer lifetime value

3. Competition analysis

A quick search for a product online and consumers are shown a range of options varying across brands. How do you make your product stand out and get the buyer to purchase it?

Achieving a competitive edge is a combination of factors such as the product price, service, operations and more. E-commerce is highly competitive and hence performance and process need to be constantly enhanced.

It is also about being a step ahead of the rest by identifying and analysing the strategy of other businesses that sell similar products.  Insight on where you stand helps build the steps required to improve your visibility.

Here are a few important things to consider when analysing the competition:

  • Invest in content marketing and SEO
  • Identify and  target a specific set of audience base 
  • Focus on online reviews and social media strategy
  • Frequently analyse and compare competition’s website, products and services
  • Employ every marketing channel 
  • Conduct thorough market research

4. Shopping cart abandonment

Unfulfilled shopping carts are an extremely common and concerning issue for e-commerce. Users spend time selecting products, and adding them to their cart but do not proceed with the transaction.

It is highly likely that the issue is not with the product but the experience during the buyers’ shopping journey. 

The average cart abandonment rate across all industries is 69.57 Percent. Mobile users have an even higher abandonment rate of 85.65 per cent.

If you have been encountering cart abandonment here are the potential reasons that need to be rectified

  • Long checkout with multiple steps
  • Mandatory login/register to transact
  • Unnotified shipping costs
  • Website performance/loading issues
  • Absence of preferred payment option

5. Refunds and returns

Unlike a brick-and-mortar store, buyers are unable to touch and perceive the product when they shop online. There is always some sense of ambiguity and as a result, returns are an inevitable part of e-commerce. For businesses, this leads to reverse logistics challenges, additional costs and loss in sales. 

At least 30% of all products ordered online are returned as compared to 8.89% in brick-and-mortar stores. 

Online buyers are also hesitant to transact if product returns are not an option. Moreover, the refund process often takes time and hampers the shopping experience.

While returns cannot be entirely skipped by businesses there are ways to minimise them, here are some key steps

  • Use high-quality product images and videos along with clear descriptions
  • Introduce size guides and fitting details
  • Collect detailed feedback from customers who choose to return
  • Work on a more stringent return policy
  • Identify and manage buyers who return repetitively

6. Privacy and security

An e-commerce website is an easy target for cybercriminals and many businesses are not equipped to protect their customers’ data. Such breaches can mean the user’s loss of trust in the business and the potential risk of having to shut the shop.

Three out of four SMBs in India have suffered a cyber incident in a year, resulting in 85 per cent losing customer information to malicious actors, in addition to a tangible impact on business.

Cyber attacks are not uncommon in e-commerce and with users having to share their personal details, it is a significant responsibility of the business to ensure secure transactions. Here are a few measures that should be in place.

  • Configure your website with an SSL certificate
  • Partner with a PCI DSS compliant payment gateway
  • Stay updated with the latest security updates and versions
  • Ensure that users use strong passwords
  • Do not collect more information from user than you shall require


Like any other sector, the online space has its advantages and disadvantages. As far as e-commerce is concerned many of the challenges can be solved by employing the right set of solutions.

For instance, a reliable payment service provider such as Paytm Payment Gateway which is PCI DSS compliant with 128-bit encryption ensures that the transactions on the website are safe and secure. It also offers a seamless and instant checkout experience for customers.

With tech advancements, there will be newer challenges and therefore a need to employ the best techniques and tools that can effectively take your e-commerce business towards growth and success.


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