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When you think about selling a product online, surely the first thing you consider is having enough inventory to meet the demand of your customers, that's great! You can't offer an out-of-stock product and affect your brand's reputation, but... In addition to this, you must consider other aspects that will be decisive if you want to boost the growth of your business and meet the high demand and promptness required in the ecommerce, where you will face increasingly demanding customers and environmental conditions that are affecting the penetration of the sector, not only in Mexico but everywhere LATAM.
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There are certain aspects that impact the behavior of online consumer and in their purchasing decision, these are important challenges to overcome in order to continue growing.
Have you ever wondered, what is the characteristic that online stores must guarantee to their customers to generate trust and increase sales? After thinking about it for a few seconds, you will agree that creating a satisfying experience during all stages of the process of buying and receiving the product is undoubtedly one of the greatest attributes to achieve this goal. Below, we have identified the following, as the 4 main challenges to achieve this goal, do not stop reading and determine how your online store is doing with respect to each point.
Challenge 1. Lack of Trust
In all human relationships, both personal and commercial, trust is a fundamental aspect that determines decision-making; in the case of online shopping plays an essential role, so much so, that after the price, the attribute that determines the consumer's purchase decision is trust in a website, one that has earned their loyalty and preference, thanks to a service experience satisfactory.
Taking into account that the ecommerce It is a technological product, where there is no face-to-face encounter in which the user can meet the seller physically, feel the product and carry it immediately. Trust is the most powerful tool to boost online sales and overcome certain fears that can not only be immersed in our culture but also stem from that lack of contact or face to face, one of them and perhaps the strongest, is fear of fraud, a situation that is usually in the consumer's mind and prevents them from buying the product for fear of losing their money or leaving their personal data and being a victim of scams or other crimes.
According to studies by the firms Riskified and Visa, conducted in Mexico and Brazil, 83% of Mexicans and 73% of Brazilians are concerned about identity theft (an average of 51% and 55% in Canada); 78% of Mexicans and 77% of Brazilians are concerned, secondly, about fraud through unauthorized cards (compared to 50% of Americans and 48% of Canadians); while 77% of Mexicans and 73% of Brazilians fear credit card fraud (a figure that in The US reaches 39% and 48% in Canada).
As we can see, Mexicans' fear of fraud compared to other regions is greater in different aspects, in addition to this, there are other reasons that, according to the AMVO, affect online purchasing decisions in the country:
Is your online store a reliable place for shoppers? Start by asking yourself, if you were the consumer of your products ecommerce What would you like to see? , What would provide you with security and confidence? , Would you find the necessary features on the site or the guide to carry out the process from start to finish, even if you don't know how to do it? , Would you find alternatives for your specific type of user? or, on the contrary, what would make you give up the purchase? In most cases,”Put yourself in your shoes of the customer” is a powerful tool for generating extraordinary experiences.
According to the report “The Reality of Online Consumers” prepared by the consulting firm KPMG, the following are the main characteristics that the companies that most inspire trust in the sector have in common ecommerce, Take note! :
In addition to the above, keep in mind the following tips that will help you increase the trust of your customers and sell more:
*Humanize your brand. Something that characterizes online shopping is that the user perceives the brand as something distant, and in many cases, robotic, which avoids that closeness that transmits trust; so that this does not happen in your ecommerce, a good tool is to establish direct contact between the customer and the sales team through the sales chat, where the buyer receives, through real-time answers, the advice and support necessary to make the purchase. This channel is so important, that 1 in 3 online shoppers say they use the chat before placing an order, to determine if the ecommerce is or is not reliable (according to Hubspot data).
In this case, chatbots are useful for speeding up the service process through automated responses, however, do not establish response cycles that are too long, based only on general aspects, each user has a specific condition and at a certain point they will feel the need to talk to an advisor, not finding this option easily, making them desist from buying and looking for another supplier.
In addition to the above, focus on empowering your Customer service After purchasing the product, it is highly valuable for a customer to receive a good after-sales service, in which not only a message is sent to them with the status of their order, but where they can easily access an advisor and their timely response. Remember: attention is one of the best attributes for building loyalty.
*Post positive testimonials from your customers about their experience in your online store. Digital channels can be real influencers in attracting new customers; opinions on the internet affect brand reputation and the generation of trust.
*Ensure that your website has a security certificate. These types of validations provide the user with the certainty of being in front of a verified brand, that their data and personal information will be sent to a legally constituted company and will not be used for criminal purposes.
What happens if your customer writes to the chat today? , What happens if you make a purchase? , What security are you giving him to leave his data and what are you looking for in doing so? , How often do you want to receive information from your brand? Focus on knowing the customer, creating a relationship of trust and maturing it over time. The cycle is simple: rather than selling products, sell experiences, these will translate into trust, once you have it, it will be replicated in new sales and favorable references for your company.
Challenge 2. Low banking
According to World Bank studies, approximately 1.6 billion adults worldwide are currently not Banked, that is, they do not have access to the services of a bank or financial organization, which for the ecommerce It becomes a great challenge, because the payment gateways used to collect the purchase money, which facilitate and make the process more secure, mainly handle banking products that allow digital transactions, which would be leaving a vast percentage of the population out of the option of buying online. The following graph shows us the percentage of banking in some countries in the region:
The above figures show quite notable growth gaps. We see that among the Latin American countries with the lowest bankers is Mexico, which is also among the nations worldwide, where the unbanked population is larger, together with Egypt, Morocco, Vietnam and the Philippines (as shown by studies by the research firm Merchant Machine), which confirms the great growth challenge in banking matters facing this economy.
In the case of nations such as Colombia or Chile, the percentage of banking in the adult population is significantly higher; a relevant aspect that affected their growth in recent months was the COVID 19, since due to the lockdown and the economic difficulties generated by this phenomenon, different governments provided monetary aid to vulnerable populations, which meant that millions of people had access to a banking product as a requirement to receive this benefit. In the Colombian case, for example, more than 2 million accounts were opened for this purpose.
It is expected that after the pandemic, online payments will continue to gain strength at all socioeconomic levels, where cash is currently still of great relevance; according to studies by the consultancy firm Kantar, cash payments have a 95% share in lower strata and 65% in the population with the best incomes in Latin America.
There are several factors affecting banking in Latin America, the challenge of ecommerce is to face this reality and devise strategies that allow different populations to access their products with different forms of payment.
In LATAM we have different alternatives, where the following stand out:
- In-store payment (self-service or convenience): with a reference or code issued from the payment gateway of the ecommerce, it is possible to pay for the product in physical branches authorized for this purpose, such as Oxxo, Efecty or Baloto; in this case, the challenge faced by entrepreneurs of the ecommerce is to achieve that payments are made, since up to 80% of purchases made under this modality are not finalized.
- Cash on delivery (COD): although this option is quite a logistical challenge, it is a good alternative for unbanked people who seek to avoid travel. The challenge in this scenario is to avoid a greater number of returns for not specifying the payment, since, in many cases, the person receiving it may not be there at the time of delivery, which can double the logistics cost.
- FINTECH Ecosystem: one of the industries that has detected this deficiency in LATAM, are the Fintech, who have bet on the region and have experienced constant growth in recent years, only 14% in 2020 (394 vs. 441), where their specialization is: 20% payment services, 12% financial technology institutions and 12% loans, according to information from Deloitte's' fintech 'sector.
Although financial inclusion has accelerated around the world in the last year, there is still a long way to go, ecommerce they must adapt to this scenario and to the methods to attract different types of buyers, always offering them a safe, varied and guaranteed shopping experience. If your end user has at their disposal a payment alternative adapted to their needs, they will surely end up buying from your ecommerce.
Challenge 3. Logistic infrastructure
The growth of ecommerce in Latin America, it has posed challenges in multiple scenarios, including logistics, where the providers of these services must be up to the task for this type of purchase, integrating and coordinating all the processes associated with the supply chain and achieving higher levels of satisfaction in the end customer, thanks to a great service experience.
Among the characteristics that buyers attribute to consider a delivery process as efficient, we can find the following:
It is at this point in particular that several countries in the region have deficiencies in their public postal services, unlike the United States and American Postal Services (USPS), which have a great service that meets the expectations of ecommerce: speed, cost, traceability, coverage and quality, all with a government subsidy. Big problem and disadvantage for LATAM! Where we don't have such organizations.
In the last mile, the quality of the delivery is decisive; if a customer does not receive their product on time or in excellent condition, if they have no tracking of the shipment or are dissatisfied with the delivery process, they will hardly buy from it again ecommerce; automatically, your perception of the brand from which you purchased will go from positive to negative; this is the great importance of having an incredible messaging service that not only guarantees service but also competitive costs (as in the case of the United States).
Faced with this scenario, many have emerged Last-mile startups in the region that seek to meet this need.
Security, another aspect that we cannot forget
In addition to the lack of optimal postal services, security is another major challenge for last-mile logistics and the fulfillment of the deliveries of ecommerce; in countries such as the United States, it is possible to deliver orders, simply by leaving them at the front door of the indicated address, without the need for a person to receive them, since there are no losses or theft of the merchandise, which avoids returns and other associated costs. What would happen if the deliveries were made like this in LATAM? Surely you wouldn't tell the delivery person to leave the order at your door to pick it up when you return from work, most likely you won't find it, right? This scenario creates greater inconvenience for delivery, as you have to coordinate with the buyer's schedules and check that they are there to receive their order, which also increases service costs when such a connection is not achieved. Seeking to solve this problem, some alternatives have emerged, such as parcel delivery lockers, initiatives that are currently being optimized and in which we still need to grow.
Technology, an ally for logistics infrastructure
Undoubtedly, its integration into the logistics industry has generated multiple benefits that directly impact the productivity of companies, its relevance is such that currently any ecommerce who wants to boost their growth in the medium and long term, must include it in their processes, which has become a challenge for different brands, where factors such as reluctance to change, fear of the new or increased operating costs, affect the transformation of logistics processes.
If your goal is growth, you must apply a strategy that adapts to the current demands of the sector ecommerce, considering outsourcing services with logistics partners that provide you with the technology to digitize the process, make it easier, identify weaknesses in the supply chain and generate the necessary changes to obtain a greater return on investment, while building buyer loyalty. Companies that invest in their logistics are more competitive, have better levels of customer service and are more profitable; technology is an ally in this field, allowing for the reduction of preparation and delivery times, measurement of productivity and satisfaction indicators, among others.
There are several benefits generated by technology in the logistics field. More and more Mexican companies are aware of this reality and are implementing technologies in areas such as data analysis or automation in warehouses, seeking greater efficiency in inventory management and delivery compliance, at the lowest possible cost.
Challenge 4. Lack of legislation
The lack of legislation that provides coverage to the sector on issues such as online transactions or the exchange and return process, has undoubtedly been a great challenge in the different countries of the region, where many of them do not have such regulations. In Mexico, for example, behaviors such as online fraud are not considered a crime, nor is there an established policy of exchanges and returns, two criteria that, from the buyer's point of view, affect the penetration of ecommerce because of the lack of guarantees for both parties.
If we analyze the situation in other territories such as Colombia, the issue of electronic fraud is part of the computer crimes or cybercrime that are criminalized in the country, for which there is a regulatory framework that seeks to eradicate this type of behavior. In the case of exchanges and returns, all ecommerce who operate in the country, must establish a policy that contemplates this aspect, where by law, they are obliged to receive or exchange the product to the customer when the customer is not satisfied with it, either because it was not to their liking or because they want to cancel the purchase. In this case, a period of up to 8 days is stipulated for the customer to request the exchange or return, guaranteeing the perfect condition of the product; in situations like this, it is the user who bears the logistical costs generated for the return, not the ecommerce.
Fraud, exchanges and returns in numbers
Analyzing some of the region's figures on fraud issues, we found that, in the Mexican case, 40% of the online transactions carried out are potential fraud. On the other hand, on issues of reverse logistics, we see that the return rate It varies in different countries, in Mexico for example, it is 2%; moving to more established regions such as Germany, this behavior occurs in 41% of purchases; in the Netherlands it occurs in 36%, while in the United Kingdom the percentage of returns stands at 32%, quite high averages compared to those of other territories such as Spain, where it reaches 18%, or Italy, where the number of returns is 13% of purchases.
What did you think of these 4 challenges currently facing the sector? ecommerce? , Did you link any of them to your online store or did you identify others? Every company is a “world” from which we can learn, leave us your comments.
Are you looking for an ally to help you improve your delivery process, enhance your compliance and customer satisfaction? , do not hesitate to contact us, we are the best Fulfillment center for ecommerce in Mexico and Colombia, you just have to click Here.
Sources of information:
Study on the “Reality of Online Consumers” carried out by KPMG in Spain/AMVO_Estudio_de_Venta_Online_2021_Affiliate Version-1/Association of Banks and Financial Institutions of Chile (Abif)/Multinational market research firm, Ipsos/Banking and Financial Institutions Association (Asobanking) /KPI's Online Sales Study 2020 AMVO/The Supply Chain as a Driver of Competitiveness, EGADE Business School of Tecnológico de Monterrey/Data from the Mastercard firm.
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