What are the biggest frustrations facing eCommerce companies right now?
Over time we have built websites that are pure play e-commerce companies that are built as Brand owners. A brand oriented e-commerce store is a series of products that we manufacture to our own specifications using our own brand name, typically through contract manufacturers, which are often, but not always located in China.
This differs from many e-commerce companies that are buying from large wholesalers and trying to resell those same “big brand items” in a very competitive market. Steve Simonson started selling online in 1998 and has witnessed a dramatic evolution in the e-commerce landscape over the last 20 years.
Today the tempo of innovation in e-commerce is driven by Amazon. Most people don’t realize that about 50% of ALL e-commerce sales are completed on Amazon.com. The silver lining is that the Amazon Marketplace allows third party sellers to list products online. eBay, and other marketplaces like Walmart.com, Jet, NewEgg, etc.. also allows external merchants to list products, but none of them as of now have the volume or system sophistication to give e-commerce merchants the sense that the juice is worth the squeeze.
Therefore many of the frustrations we face today are related to Amazon specifically.
REVIEW FRAUD AND INABILITY TO MANAGE REVIEWS
Why do reviews, which appear to be 100% legitimate keep getting deleted? We believe the algorithms deigned to stop review fraud are processing MANY false positives.
And to complicate matters in many ways the marketplace is a lot like the wild wild west. There are new seller’s coming online to the marketplace everyday – many of them from China directly. Often these sellers practice unscrupulous tactics and even have conferences dedicated to “Black Hat” methods. (example: https://mp.weixin.qq.com/s/IXEXdMJC3s8i0G-kaqkP2A — This original link in Chinese talks about ways to remove negative reviews from amazon after a customer leaves them. They don’t talk about how to improve the product to earn positive reviews, they talk about ways to game the system up to and including hacking the customer’s Amazon account and changing the review themselves.
Other tactics used include factories in China listing on Amazon and then recruiting a network of college students to make purchases and leave reviews for a fee of $5-$10 each + the item is free to the buyer. Over time reviews have gone through a significant change in terms of the ability to incentive reviews to the present day where there can be no incentives of any kind and even an poorly worded request for a product review to an Amazon customer can lead to a seller account being suspended. Reviews are a nightmare right now for sellers.
COST PER ACQUISITIONS ARE ON THE RISE
Over time the cost per customer acquisition have continued to increase. The nature of multiple traffic sources and devices for the same user leads to the extremely complicated world of attribution. The customer journey is more and more complex and therefore the tools and expertise required are increasing as well. Digital agencies are very difficult to assess because many of their presentations will include the stated objectives you want, but it is very hard to see if the agency has the experience and talent to deliver. In our experience less than 25% of agencies are capable of delivering top notch service. The biggest problem is that it takes months and months to determine if an agency is getting the job done, which results in large costs both in terms of money and opportunity. It is challenging for companies drive enough traffic at low enough CPA due to the increasing costs at search engines as well.
Other problems: Finding and hiring enough talented team members whether they are employees or contractors or insourced or outsourced.
Smaller companies lack systems to run the business. They don’t have a enterprise level solution so they cobble together many smaller tools that are not seamless.
Cash flow is especially difficult for brand builders who experience high growth. The more you sell the more you need to buy, but because the supply chain has lag time the cash flow can be very challenging especially in the 4th quarter.
Overall the landscape in e-commerce continues to flourish, but it is complex and growing more so each day. We expect that the rapid pace of innovation and change will continue for the foreseeable future as more and more consumers think about purchasing online first.