Top 10 Challenges Faced By E-commerce Players In India
Published on

E-commerce has been booming in India since the entry of big players like eBay and Amazon and with the country’s Made in India startups like Flipkart, Snapdeal and Paytm the e-commerce business has skyrocketed in the past few years.

With the amazing services and a plethora of products offered on these platforms, these companies have attracted the consumers unlike anything and moved them from buying from the offline retail outlets to their online marketplaces.

The growth of e-commerce companies in India has been tremendous accounting for 4-5% of the total retail sales, but it has also come with a price in the form of various challenges these companies are facing.

Here are the top 10 challenges faced by e-commerce players in India -

1. Market Research

Market research is the starting point of your business and when it comes to E-commerce in India which has a wide array of players, a well-researched market data can prove to be an edge over your competitors.

But, some players who are starting out are missing on this very important aspect which is causing them to lose out on the market share against their competitors.

Your market research will empower you to stay on the right track as you’ll be well aware of the on-going trends and where your competitors are having an edge over you.

It will also help you to find your niche which can help to scale your e-commerce business in the segment where there is not much or no competition at all.

And, this is a continuous process as once done there will be new trends, new products, and new competitors who will try to take your customers away from you but if your research is steady you will always remain one step ahead of your competition.

2. Finding the Right Product to Sell

Due to the fierce battle between e-commerce companies at winning on everything they sell, it is becoming hard to find the right product to sell which will actually sell and draw in profits for your business.

When most people think of building their very own e-commerce marketplace they wish to become the Amazon or Alibaba of that space in a short span of time but forget that these conglomerates took years of both hard and smart work to reach where they are today.

Moreover, they had the first movers advantage and have grabbed the market of selling everything under the hood.

So your opportunity lies in finding your niche in which you can do pretty well and face less competition from the e-commerce giants, much like Bewakoof and Firstcry have done.

Good market research will help!

3. Inventory Management

Managing inventory is the biggest challenge at which many e-commerce businesses are failing.

E-commerce is not just about seeing and ordering a product from a web or a mobile app. It is a long process where inventory management comes into play as your e-commerce company has to keep a stock of products in the warehouse.

Having too much inventory can lead to too much blocking of capital but keeping too less can lead to a drop in sales, higher turn around times and as a consequence, disappointed customers.

Efficiently managing your inventory can lead to high profits and good business much like what Walmart does and this part cannot be ignored if you want to succeed in this trade.

4. Supply Chain Management

E-commerce companies in India are prone to poor supply chain management system due to the adoption of inefficient methods and processes.

Good supply chain helps in improving sourcing, purchasing, managing stocks, cost reduction in procurement, a decrease in processing time and better delivery.

All these lead to better customer experiences, hence better sales and better profits.

Hence, building the best supply chain management system is the need of the hour for every e-commerce business.

5. Platform Personalization

Gone are those days when people did not care about personalization while buying a product. Now it’s the digital age where everything is personalized and if not, people are not going to stick around for long.

When it comes to buying products online, people have higher expectations from the platform on which they buy.

Now It is not just about searching a product and getting the results but it is about getting results which are personalized to their buying trends.

People expect better cart suggestions, great upselling, good site speed, improved navigation, attractive UI, a mobile-friendly site, an awesome mobile app and personalized emails of relevant products.

And that’s not it. You have to keep on upgrading your platform to suit your customer’s needs or else he will have many different options to buy the same thing.

6. Evolving Regulations

E-commerce companies in India have been constantly struggling with the evolving regulations in the nation around Business Licenses, FDI, National Competition Policy, FEMA and the recent one which will ban companies from selling products from the companies in which they have an equity interest.

Though many-a-times it becomes difficult for a company to comply with all the government norms owing to the nature of their business domain.

Due to this, there have been quite many regulatory violations which benefited the consumer to some extent but which also lead to emerging of some new policies to regulate these violations better.

All in all, with the recent developments it is evident that the e-commerce players will have to play by the rules of the Indian government if they want to remain in the game.

7. Data Protection & Security

The 21st century is a digital book and data is the fuel which is driving ‘n’ no. of businesses around the world including e-commerce.

So much data consumption has frequently lead to data breaches and privacy issues. Take for example the recent Facebook epidemic.

People are now insecure about their data as they not only share personal details but also bank details on the e-commerce platforms.

In the wake of such incidents, it is a real challenge for the companies to keep the data highly protected and encrypted.

8. Customer Acquisition Costs

All things at a place, if you don’t get customers you are not going to make sales and with the amounts of funding happening for the e-commerce companies it is very much evident that they are using the money to acquire customers. Which is basically the customer acquisition cost.

Companies are pumping money into discounts and cashbacks to lure the customers which ultimately is leading to high sales but also higher customer acquisition costs.

Due to this, the Indian consumer has become adept at finding the right e-commerce platform which can give him the best offer, but his loyalty has gone for a toss.

So, in spite of doing away with good unit economics, the Indian e-commerce companies have not yet been able to build loyal customers and now are spun in their own web which was created to acquire customers.

9. Preference For COD

The Indian ecosystem is still in the process of adopting digital modes of payment and a majority of the population still prefers to pay via cash.

Hence, cash on delivery still is the major mode of payment for e-commerce sales which has got the companies a large pool of customers but has also lead to immense loses.

Because of the liberty of COD a consumer can refuse to take deliveries at the doorstep which leads to returns & cancellations and turns out to be a big loss. This also includes fake buyers.

Data security is the reason which has made the Indian public reluctant towards online modes of payment, but COD is not something which will completely eradicate the problem rather it has become a new set of challenge.

10. Returns, Refunds & Replacements

Returns, Refunds & Replacements have become the heart of the Indian e-commerce ecosystem granting liberty to the Indian buyer to order and return if he doesn’t like the product.

This liberty has proven to be a bane for the companies as the return/replacement costs are higher and 1 out of 10 orders shipped are returned by the buyers.

Sometimes people have replaced and returned a good product with a bad one and such scams have been very much evident.

It is becoming very difficult to verify each and every buyer for authenticity which is leading to tremendous loses for the businesses.

Hence, it is high time that the e-commerce players keep a check on their returns, refunds and replacement policies, lest they wish to continue with their loses.


Conclusion

All these challenges can truly be overcome if the e-commerce players do not bet on getting more in a short span of time.

Luring customers via discounts and cashbacks won’t create loyal customers but providing great service and good products surely will. Also, too much liberty sometimes ain’t good for the business 😉

So if you too are thinking of starting your own e-commerce business, just make sure that these 10 things are well placed and in the list of your challenges to overcome once things get going.

What are the other challenges you think an e-commerce business has to overcome?

More posts by Pranay Rathod.

Comments

Top 10 Challenges Faced By E-commerce Players In India
Share
Twitter icon Facebook icon

Subscribe to How to Improve Business Efficiency of SMEs | Gridle