5 challenges e-commerce vendors need to overcome to grow a business

E-commerce has never been bigger than before, but neither have the challenges faced by e-commerce vendors. First, you have to find the best distribution channels for your products. As most will pay anywhere from 30-90 days after a sale occurs, you also have to solve vendor cash flow issues in order to speed up cash flow.

In order to get paid, however, you need to create brand awareness with your target audience, sometimes competing with thousands of direct and indirect competitors on the same platform. If your buying cycle isn’t completely moment-of-decision or impulse-related, you also need to somehow capture and cultivate leads. And once a sale is made, you need strategies for generating brand affinity and increasing repeat purchases and long-term customer retention.

Let’s take a closer look at each of these challenges, including tips e-commerce vendors can use to grow a business to the next level.

Finding the right distribution channels

Product, price, promotion, and place are the 4 Ps of marketing for any business, including e-commerce vendors. These are questions you’ll need to answer as you start and grow a business, including “place,” which refers to distribution. In other words, what channels are you going to use to get your product or service from your operation to the end user?

This could entail building an e-commerce website of your own and developing a search engine marketing strategy to sell directly to businesses or consumers online. Alternatively, it might mean determining which e-commerce platform to sell on (e.g., Amazon, Wayfair, Walmart, eBay, Zulily, Rakuten, Hayneedle, Overstock, and so on). Leveraging distribution companies to sell directly to your users is another option, as is using any or all of these distribution channels in combination.

When choosing the right e-commerce vendor distribution channels, consider things like:

Which are most likely to be used by your target audience
If using third party e-commerce websites, can you price your products high enough to generate a profit sufficient to support business growth after fees or commissions are deducted
If opting for a distribution model, is there enough space between your price and the final end user’s price for you and the distributor to make a profit
Are there distributors that serve your target audience (is your audience accustomed to purchasing through a supply chain distribution model)
If you want to eliminate commissions and fees and sell directly to your buyer online, what will it take to build a website and start generating web traffic, and do you have not only the capital but the time to invest in this before generating sales and profits

Speeding up e-commerce vendor payments from third-party platforms

Let’s assume you intend to sell on third-party e-commerce platforms like Amazon, Wayfair, Walmart, eBay, Zulily, Rakuten, Hayneedle, Overstock, and others. One thing to know going in is that unlike selling directly yourself, you won’t see a return on sales for weeks (or even months).

E-commerce vendor programs often include payment terms from 60-90 days. This means you’ll wait several weeks to receive payment on earnings statements, even though e-commerce platforms get paid right away. When your operation is just starting up or is growing quickly, this can put a strangle-hold on progress.

Slow cash flow is a huge problem for e-commerce vendors that sell through third parties. Not only are you already taking a hit to profits through the platforms’ commission percentage and fees, but you also have to wait several weeks to reinvest in your business.

You don’t actually have to wait, though, as financing tools that speed up e-commerce vendor cash flow are available to you in the form of invoice factoring. E-commerce vendor factoring is a debt-free form of business financing that allows you to access the money you’ve earned selling online as soon as an earnings statement has been received.

What happens is this: the same day you get an earnings statement from a platform where you’re selling online, you sell it to an invoice factoring company. The e-commerce vendor factoring company sends you a same-day advance of as much as 95-98% of the invoice amount, in turn, earning a small fee. The fee (called a factoring fee) could be as low as 2%.

Instead of waiting months to get paid, the e-commerce vendor invoice factoring company waits on payment from the platform. Once it’s been received, if any percentage has been held back by the factoring company, that’s also sent to you.

It might sound new, but vendor invoice factoring has been used for centuries, long before the internet came around. For e-commerce vendors, it’s a cash flow solution that enables faster reinvestment in your operation, which, in turn, enables faster growth of e-commerce businesses.

Creating brand awareness with the target audience

Regardless of the distribution channel, or channels, you select, you have to reach your target audience. Even if you work through a third-party distribution system. Without brand awareness, your products or services are just a commodity, discoverable only through online search (or search on e-commerce platforms), outside sales forces, and often distinguished mainly through price.

Being the lowest-priced of your kind isn’t ideal. It’s often a race to the bottom and doesn’t lend to strong brand positioning. As soon as someone else decides they can sell at a lower price (even if only temporarily), you’re no longer competitive. This actually goes back to the 4Ps of marketing with what’s often called the 5^th P of marketing: Position.

It involves your brand’s positioning; where you fit in relation to competing brands and products, whether your products will be promoted based on value for the money (vs. low price), or even if your brand intends to be a luxury option where price is not a primary determining factor for your audience. How you position your offering will then determine your target audience, which then informs the marketing tactics you will need to use to create brand awareness with your audience and in relation to competing brands and products on the market.

Lead nurturing

Reaching your target audience through brand awareness may be all that is needed to generate sales. If, however, your products or services have a longer buying cycle, then lead nurturing is a key e-commerce vendor marketing need. This can be especially challenging if selling on third-party platforms, as you will generally not be able to build a contact list for sales outreach or email marketing campaigns.

To nurture leads on websites like Amazon, Wayfair, Walmart, eBay, Zulily, Rakuten, Hayneedle, Overstock, and others will generally require that you invest in advertising on the platform. If you do have your own website and find that prospects tend to research your brand and find your website after seeing your products or ads on e-commerce platforms, find a way to capture the contact information of those site visitors for lead nurturing outreach.

If selling through a distributor model, don’t sit back and leave brand awareness and lead nurturing up to their website or outside sales team. Find ways to partner with them in proactive lead nurturing marketing through websites, catalogs, search engine marketing, Google and social media advertising, email marketing, direct mail marketing, and so on. The easier you make it for the distributor to promote your brand, the more success you will have and—honestly—the easier you make it for the distributor’s sales force to choose to prioritize promoting your brand.

Creating brand loyalty and customer retention

This is another area where it could be super-challenging when selling exclusively on e-commerce websites, as you will not have access to the email contact details of your buyers. You may, however, have options to work with the e-commerce platform to follow up with buyers after a sale, such as to offer support. You can also leverage physical packaging and inserts to increase brand awareness and potentially drive future sales through your own website, eliminating the competition that comes with selling on third-party platforms and establishing the basis for customer retention marketing.

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