Challenges that e-commerce still needs to overcome
Priya Wadhwa
10x Industry

Challenges that e-commerce still needs to overcome

Bounce rates, abandoned carts, order returns, higher delivery costs with the pressure of cheaper prices are nightmares of all e-commerce businesses. Let’s explore what these essentially refer to and how we can help resolve them.

Until two decades ago, the idea of online purchases was an alien concept. If you needed something, you had to go to the market, hunt from shop to shop to find the right item and price match, and then come back home. It was a task that had to be scheduled in the day.

Last-mile deliveries — the biggest pain point of online businesses — simply didn’t exist. Customers took this responsibility upon themselves.

The breakthrough came when Amazon and its likes across the world, told people to sit back and relax, because in just a few clicks they could order and have everything delivered to their doorstep.

However, with the growth of the e-commerce market, certain challenges have not yet been resolved. For example, with the hundreds of thousands of products available, it has become more challenging to find what one is looking for, especially when it comes to general e-commerce websites like Amazon, noon, Aliexpress, Flipkart, and their likes.

The unknown customers

Do you remember when, as customers, we would go shopping and we would often know which shops to go to, so buying items was a quick and easy task. We would tell the shopkeeper what we were looking for, they would pick out certain items from their large collection, and we were most of the time happy with what we got. The key there was that the shopkeeper understood our taste and instinctively knew what items we would like.

Artificial intelligence is the replacement of this relationship in today’s times. While it relies on data, it lacks a deeper understanding of preferences.

How often have people scrolled through a website looking for things, tried different terms and bounced off the website unhappy and frustrated? If e-commerce businesses had a dirham for every time that happened, they would not face any financial challenges.

In an answer to this problem, niche e-commerce websites such as Namshi and Myntra gained ground, who curated items based on a niche target market. However, they still face the same challenges, albeit to a far lesser extent.

E-commerce companies need to innovate and strengthen their core offerings to be identified as the go-to place for customers with select preferences. With stronger AI integration and data tracking, perhaps coupled with human intelligence, e-commerce companies can tweak algorithms to list better-matched items on top of their pages for customers. Easier said than done, but those who can achieve this will have a very strong edge in the market.

Then there is the question of last-mile delivery

70% of people prefer the cheapest option for home delivery according to a Mckinsey report; while only 25% are willing to pay extra for instant, express or same-day delivery.

The desire for cheaper prices is the norm in today’s world. However, with the increase in e-commerce sales volumes and growing market, the expensive last-mile delivery aspect is only putting more pressure on businesses and people.

Physical internet solutions such as drones, autonomous cars and robots are being developed and tested across the world to tackle this challenge. However, there are still regulatory and infrastructure hurdles in them becoming commonplace. Even then, without human inclusion, these solutions are not as “smart” when tackling in-situ challenges.

Considering the potential deployment of these solutions, businesses need to wary of their challenges — most of which will be faced by customer service.

The use of new-age technologies in the real world will put pressure on delivery businesses, at least in the short term while the technology is still advancing. We can foresee customers not being able to open the robots’ compartments to access packages, drones not being able to cater to residents living in high-rise towers, robots getting stuck in sand or powering down in the rain and driverless cars causing accidents

These challenges will impact the packages that the customers have ordered. This could be another avenue for insurance firms to grow their market.

The role of the government

The government also plays a pivotal role in strengthening the sector and ensuring its sustainable growth. Kate Gutmann and Amgad Shehata from UPS explain this in their online article. Here is a useful excerpt that outlines how governments are at the forefront of change. The significant growth of e-commerce in a short amount of time puts us in uncharted waters, and some governments around the world have sought to restrict its reach. Their concerns focus on:

  • The surge in import volume and its impact on the staffing of customs officers, as well as the ability to catch illegal and harmful packages.

  • New foreign competition for domestic retailers not covered by domestic sales tax or other regimes.

  • E-commerce users’ lack of understanding or application of a country’s existing trade rules.

While these concerns are not unfounded, UPS sees them as opportunities for governments to address the process complexities and possible gaps in a manner that still paves the way for e-commerce growth.

Tackling challenges with care

Businesses need to focus on customer service, which humans can excel at more than machines. The stronger the relationship they share with the customer, the more they keep them happy and satisfied, the easier it will be for e-commerce to tackle challenges instead of losing market share.

Humans in customer service could give businesses an edge for providing better service when all others are focusing upon replacing them with machines. People are and will remain smarter. Plus, when did a robot do better at developing relationships than a genuine human smile?