The development of easy-to-use website building tools, accessible product manufacturers, and drop shipping providers have made it easier to launch an ecommerce business. However, these developments have also increased the number of choices potential consumers can make. Also, new ways to launch e-commerce businesses challenge how a company may enter the market. Here are a few issues you may face when entering the ecommerce space and the best ways to overcome each obstacle.

Price competition, the first entry barrier.

With more and more businesses competing for the same customers, the natural reaction of companies is to compete on price. This is due to the renowned price sensitivity of shoppers. However, it has an impact on margins and consequently upon how much a company can afford to spend on marketing to one more customer.

The sales funnel has become narrow, a second entry barrier.

Nowadays, a consumer’s product options almost always reach into the hundreds. Meaning, their decision-making process is longer compared to a market with fewer competitors. This process almost always has an impact on a website’s conversion rates. This can then cause an increase in the cost to acquire a sale.

The same products sold, but trust is hard to gain, a third entry barrier.

Since consumers have so many options, they limit the stress of choice by forming bonds with the companies that have stronger brand awareness. The increase in drop shipping businesses inevitably created a larger need for a strong brand to sell the same product found on tons of other websites. Meaning, the cost for acquisition rises when you factor in how to reach a customer so they form a bond with the brand.

Getting past the obstacles.

The common denominator of all three entry barriers is that businesses will have a higher cost per acquisition (CPA) for new customers. Only if companies develop a strategy that justifies why a user should buy from them, refrain from comparing products to other companies, and creating possible premium prices will a company reach success and maintain a reasonable CPA.

The best place to work on such a strategy is social media. The reason being: People trust their peers, ask them for recommendations, and love to share their experiences with a product or service. Learning how to develop an engaged online presence that takes advantage of consumers’ social media behaviors will benefit a business in many ways.

Increase trust and familiarity.

Creating company social media accounts allows consumers to connect with a business the way they do their friends. Consumers are more likely to shop with a company that creates a positive and influential social media presence. Also, if their peers are the ones to engage or speak on behalf of a company, consumers perceive the company as less of a stranger and more as a trustworthy venture. This results in fewer clicks to get to a sale.

Increase sales on your website.

Many companies are currently selling a lot on Amazon but are having difficulties generating a similar sales volume on their website. This phase happens because Amazon has a powerful brand, and customers trust it more. Creating social proof for your products or businesses on social media will help you replicate this model, and it will maximize your website sales over time.

Garner genuine feedback about your products and services.

Social media users like to describe their experiences with products and services. Sometimes it is to help other users or to detail the support quality of companies. And other times it is express their concerns. Therefore, companies need to monitor conversations to identify business opportunities and to develop products that better match customer needs.

Connect with your potential audience on a more personal level.

Social media is a great tool to be in touch with your potential customer base and to get to know them better. It is essential to join conversations about your brand and to address any concern about issues to show customers that the brand is listening.

Connecting on social media will result in a more personal relationship with users. It will generate an overall better conversion rate on your website since users will trust your site more.

Many social media platforms are helpful to developing trust within your customer base. Facebook is undoubtedly the most important one, but Instagram and Twitter are incredibly useful because of their vast user base and engagement levels.

Investing in a relationship with your potential customers does not generate sales right off the bat, but it is definitely vital if you are planning to establish a successful business for the long run.

Article written by: Rocco Baldassarre