E-commerce saw a spike of 25.7% at the start of the pandemic in 2020. By 2025, projections expect the industry to hit $7.385 trillion. 

Needless to say, this would absolutely blow the minds of businesses in the late 1990s when e-commerce began. However, it is important to note that this skyrocketing industry has also experienced a rapid evolution in the process. 

As a result of this, e-commerce has become a troublesome subject to understand. In the process, it created numerous misconceptions which companies must understand if they wish to utilize e-commerce platforms. 

Let’s address some of these misconceptions about how e-commerce works to be better prepared for the digital marketplace. 

Misconception: Brick & Mortar Stores and E-Commerce are at Odds

One of the first and biggest misconceptions about how e-commerce works came shortly after the rise of Amazon just a decade ago. 

There rose a panic at the time that e-commerce had the destiny to replace in-person shopping. However, in the years since, we have found that is not the case. 

In-person stores have become vital, driving factors in demand. On the other hand, e-commerce has become vital to reach customers wherever they are. They each have proven advantages against each other, but their true power is as complementary systems.

In-Person Stores Drive Demand

Many in-person stores have shifted to an omnichannel sales model, investing more and more in their e-commerce platforms. Walmart as an example invested $14 billion in their logistics and automation last year. 

They did this partly to enhance their e-commerce capabilities in 2021. Estimates from the company have its e-commerce revenue approaching $200 billion over the coming years.  

Why is this important? Despite the radical growth of e-commerce in recent years, recent studies have found that physical stores remain vital to retailers. Stores compensate for the unfortunate limitation of e-commerce: physical customer engagement. That is why many businesses that start as online stores expand into physical locations.

A physical location enables customers to handle, test, and try out products before purchase. This enhances customer value through physical engagement that increases satisfaction. 

A higher value means happier customers that are likely to repeat business with the store via their e-commerce platform. This is how hybrid models have managed to outpace many digital-only platforms. 

Misconception: E-Commerce is Cheap and Easily Scaled

As domain names and hosting became more attainable in the information age, there grew a misconception that digital space was a cheap and easy place from which to work. Online stores have always been an abundant part of the internet but often fall to the wayside.

Many believe that one merely needs a website and inventory to start a successful e-commerce business. However, several factors have proven that wrong. A few of the most common of these include:

Cost

There are the obvious costs of setting up an e-commerce business. These might include things like website design, platform payments, hosting, etc. Everyone knows about these and many know they are notoriously inexpensive.

Knowledge of this low barrier for the minimum of a website conceals the true cost beyond it.

What many do not know is that e-commerce requires consistent marketing to remain viable. Whereas physical locations attract customers organically, digital spaces must work extensive marketing campaigns to gain customers. You’re not going to catch somebody driving their car past your website.

This customer acquisition cost can prove to be the biggest expense for a new e-commerce business, and risk becoming untenable in the long run.

Many e-commerce businesses have failed by never self-correcting for these costs, failing to invest in the long-term value of their customers.

Scalability 

It is important to understand why future-proof scalability becomes a challenge in e-commerce. It is an issue that all platforms experience, even Amazon, and this issue is often a matter of traffic and performance.

As your audience grows, so does the traffic on your website. Should it grow beyond your platform’s ability to compensate, bottlenecks form, and performance suffers. 

This damages the user experience in a way that will increase bounce rates exponentially depending on the level of performance issues. Google reports that pages that see an increase in load time from 1 to 3 seconds experience more frequent bounce rates. 

This indicates a drastic loss of potential customers.

Thus, e-commerce businesses must find consistent and cost-effective solutions to scalability. Cutting corners in this area is the surest way for an otherwise successful digital business to stagnant or fail. 

Conclusion

These misconceptions are common hindrances to all new and established businesses. Whether you are looking to expand into e-commerce or improve on your current platforms. At Anata, we recognize these issues quickly and correct them accordingly.
These misconceptions are only a few of the hidden hurdles in how e-commerce works. Luckily, you don’t have to face them alone!

Contact us here at Anata for help improving your e-commerce with our innovative services.

What was something you wish you knew about e-commerce before you got into it?