Much progress has been achieved since the birth of ecommerce more than two decades ago, many merchants and brands continue to confront enormous obstacles. According to VTEX’s study report ‘Three Investments to Drive Ecommerce Growth,’ below are the top three problems that merchants repeatedly identified.
The traditional ecommerce philosophy was that merchants could offer to customers for less money by eliminating costly physical infrastructure (store) expenditures.
The online retail scene, however, has gotten congested, and merchants are finding it increasingly difficult to drive visitors to their digital businesses. One major contributor is an increase in the cost per click (CPC) from Facebook and Google when ad prices climb relative to sales, it said.
To make matters worse, Apple’s recent privacy reforms made ad targeting less effective, while Google intends to phase out third-party cookies in Google Chrome by the end of 2024. According to the report, the iOS 14.5 upgrade reduced the efficiency of digital ads by 38 per cent.
According to the report, brands and merchants have been in a state of inventory turmoil since the start of the Covid-19 outbreak. Manufacturing and supply chain interruptions, along with high consumer demand, drove shop inventory levels to dangerously low levels in 2021.
Those supply chain difficulties are mostly fixed, but retailers and brands are now seeing sluggish (and shifting) demand. Despite dropping demand, retail inventory levels will increase by 22.5 per cent in 2022, according to the report.
According to the report, the ugly secret of ecommerce is that conversion rates are appalling. Even if (and this is a huge if) you can get a consumer to see your ad, click on it, browse your website, and add a product to their shopping cart, chances are they will not complete the transaction.
With roughly seven out of every ten digital shopping carts abandoned (and that figure climbs to 85 per cent on mobile), retailers are losing a lot of money. According to the report, customers abandon 69.8 per cent of all online shopping carts.
