This blog is to help entrepreneurs launch their online selling business. But, as an online seller you should understand the e-commerce challenges in India. Despite tremendous growth of e-commerce, merchants have to work hard facing these challenges.
Don’t treat this article as a discouragement but as a guide to help you avoid mistakes and to make strategies for setting up a successful business.
This is what PwC India has to say about e-commerce challenges in India:
Technological disruption has driven change in the e-commerce industry with shoppers embracing multiple touch points in their purchase journeys. Overall, there is humongous potential for the e-commerce companies helped strongly by a growing internet user base and advancements in technology. However, this will not be without its share of challenges –operational, regulatory, digital, etc. A company’s ability to prepare itself proactively to meet these challenges will decide the difference between a successful venture and a failed one……….Sandeep Ladda, Technology Sector Leader, PwC India
Here are the most common e-commerce challenges in India:
1. Lack of proper knowledge/ poor market research
Online sellers are likely to make costly mistakes when they launch their business unprepared as they are not equipped with adequate knowledge to be successful.
Market research and learning should be an ongoing process. If you are selling on marketplaces, there are great seller training resources where you can learn the tips and tricks. Any smart seller would make maximum use of this knowledge to be successful.
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2. Choosing the right product
The first difficult step for every new online seller is to choose an ideal, hot selling product. You need to do lots of research and brainstorming before choosing the killer products. There is huge competition in almost all the product categories and profit margins are squeezing up.
So, you have to work really hard to identify a unique product that can give you decent profit margins. You can hire a freelancer at affordable prices (starting $5) to help you identify killer products.
This problem is more with the marketplace sellers as they have to bear deductions like marketplace commissions at an average of around 40% of the selling price. New sellers sometimes fail to calculate costs like packaging, cataloging charges, handling and shipping etc. before fixing the selling price.
Moreover, different sellers in a bid to survive, reduce prices forcing their competitors to sell with marginal profit levels. Also, product returns make the things worse. Low profitability and sometimes selling at losses force many sellers to quit.
The best strategy for sellers is to find ways to procure unique products at best rates that have less competition.
Sellers have to maintain proper inventory levels as they can’t afford to delay shipping after receiving orders. When buyers see out of stock product listings, they move on to look for other sellers. Also, customers prefer receiving goods faster and any delay in shipping may force them to cancel the orders.
Sellers who don’t have sufficient working capital, find it harder to manage their inventory levels.
Sellers who can’t invest much can sell on marketplaces with low investment and by selling low-cost items.
5. Returns and cancellations
This is the most frustrating thing for online sellers. On an average, 1 out of 10 orders shipped are returned by the buyers because of different reasons. Sometimes, there are genuine returns but there are fake buyers too.
Also, return logistics has not yet fully evolved in India which is a problem for both customers and online retailers.
To minimize the product return ratio, sellers should work to ensure offering the best quality products, timely delivery, safe packaging and great customer service.
Different e-commerce SAAS platforms have made it easier for anyone without any technical knowledge to open an online store.
But, the real challenge lies in promoting the store to attract customers. It’s not easy to make the product visible as customers don’t come on their own. You have to market aggressively both online and offline.
It is wise to invest time and money in SEO, not too costly social media ads and Google ads, YouTube, content marketing etc. to increase your online presence and to build a strong base of loyal customers.
Due to intense competition, marketplaces have also started product listing ads for more visibility. Sellers can take advantage of this as these ads are cheaper and can result in huge sales volume.
You can also hire an expert on Fiverr at low rates starting $5 who can can handle social media promotions for you.
7. Logistic Challenges
Sellers need to deliver items faster for better customer service but that largely depends on the service provided by courier partners. As there is also the risk of items getting damaged during transit, choosing a wrong shipping service provider can turn out to be disastrous for your business.
Though courier companies are working hard to cover remote locations and villages, shipping to such areas is still one of the major e-commerce challenges in India.
India Post has succeeded to a great extent to help e-tailers overcome this challenge. So, sellers should use India Post as one of their shipping partners to cater to customers living in areas that other courier companies find inaccessible.
Sellers can also use services like FBA(Fulfillment By Amazon) as packing and shipping is done by Amazon.
Good packaging gives a good first impression on the customer and vice versa. A poorly packaged product shows that you are not concerned about customer satisfaction and makes you lose another repeat customer which already is one the biggest e-commerce challenges in India.
Moreover, proper packaging also ensures the safety of products against breakage and damage during transit that you should care about seriously.
9. Working capital
Lack of investment is one of the biggest hurdles in launching your business. Sellers need working capital to buy inventory. They need regular flow of funds to sustain momentum and to keep generating sales.
Almost all leading marketplaces have launched capital assistance programs to assist sellers in overcoming this challenge. Online sellers can also make use of the sites that help in procurement of working capital loans.
10. Legal barriers
Many e-commerce ventures shut down their business due to legal violations. Fast growth of e-commerce also raises new issues from the legal perspective which gives rise to the e-commerce challenges in India. As an online seller, you need to be aware of these.
Also, consumer protection laws now safeguard online shoppers from fraudulent sellers. This is the necessary step as cases of fake selling had increased to a great extent but there are fears that such laws are likely to be misused by fake buyers too.
So, online merchants need to understand and follow the e-retailing laws and regulations to avoid legal problems.
11. Cash on delivery
Indian online shoppers prefer to place ‘cash on delivery’ orders instead of making payment online. Though COD facility helps in generating more sales, it is also a risky option for sellers as some percentage of customers may refuse to accept goods at the time of delivery due to various reasons. Fake buyers too are a big harassment to sellers and make them suffer losses.
Well, this is a part of the game and merchants can’t do much to avoid that. They have to assume that some percentage of goods will be returned. Offline selling strategy should be planned as well as returned items have fewer chances of getting sold online due to mishandling at different stages.
12. Changing market trends
Market and fashion trends keep changing faster. You need to be aware of the latest trends to avoid falling behind the growing competition. For example, more and more sellers are adopting the strategy to import Chinese goods for reselling in India for more profits.
Stay in touch, read related magazines and articles, then plan accordingly. Try to sell evergreen products.
13. Attracting repeat customers
There are lakhs of e-tailers out there and online shoppers have a vast choice. It’s a hard thing to keep customers coming back to your store for further purchases. But, that is the key to building a successful business. Even the biggest companies rely on repeat customers to grow their sales volume.
Sellers need to adopt strategies to attract repeat and loyal customers.
14. Lack of Internet connectivity
There are areas where internet connectivity is low and people don’t use smart phones. So, these customers are not able to buy online. This is something sellers can’t do anything about.
Digital India initiative by the govt. with plans to make hi-speed internet available to all Gram Panchayats in India will prove to be a blessing for e-commerce companies that hold a really bright future.
15. Online security issues
E-commerce sites face the highest risk of cyber attacks as there are financial transactions and customer data is stored.
So, you need to keep your site secure. That is why fully hosted SAAS platform is the preferred choice for e-tailers because of inbuilt security features.
You have to keep your PC/ laptop secure as well by installing a rock solid anti-virus like Kaspersky. Always choose a paid anti-virus instead of a free one.
Despite all the e-commerce challenges in India, online sellers can build a big business by following the suggested steps to overcome these challenges. Take these challenges as an opportunity to improve the overall performance as an e-commerce entrepreneur.
e-commerce challenges in India