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The Most Common Forms of Revenue Loss for eCommerce Brands

From eCommerce fraud and lost packages, to poor customer service and sales tax errors, here are the areas of your business to shore up now to protect against revenue loss.

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The Most Common Forms of Revenue Loss for eCommerce Brands

There are thousands of articles about increasing sales and making more money from an online store, but very few on how to stop an eCommerce store from losing money. This article aims to rectify that. Here are the top causes of eCommerce revenue loss and how to avoid them. 

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eCommerce Fraud

Fraud is the biggest cause of revenue loss for eCommerce brands and comes in many different forms. Identity theft is the most common and accounts for 71% of all eCommerce fraud. More causes include account takeover fraud, chargebacks, and friendly fraud. 

Stopping all fraud cases is wishful thinking, but brands can protect themselves by working with a good payment processor that automatically detects suspicious transactions. Other fraud protection software can also identify fraud before it happens. Furthermore, partnering with a Merchant of Record can remove financial liability. 

Poor User Experience

A slow, unintuitive user experience can send customers fleeing from a store and with them potential revenue. Site speed is one of the biggest culprits. According to a study by Aberdeen, sites lose 20% of their visitors with just a three-second delay in load time. Improve site speed by using a content delivery network, reducing HTTP requests, and minimizing code. 

Mobile sites can be another source of user experience problems, and the checkout experience in particular. The solution is to reduce friction wherever possible to increase conversions. This means enabling a guest checkout, for example, and decreasing the number of fields customers are required to fill. 

Customer Churn

Most eCommerce stores face customer churn. Unless brands sell consumable or replenishable products such as food or makeup, it can be difficult to encourage customers to make repeat purchases. One solution DTC retailers can pursue to combat one-and-done customers is to shift towards offering subscription models. Not only do subscriptions provide consistent revenue streams, they also significantly reduce customer churn. When the customer’s credit card is kept on file, auto-renewal or replenishment orders are frictionless. 

According to Marion Caillierez, eCommerce Growth Specialist at Scalefast, focusing too much on customer acquisition and not enough on customer retention is a mistake many DTC retailers make. “Returning customers are key for any brand’s eCommerce success because obtaining a customer costs five times more than retaining an existing one. To solve this, brands should focus on creating a VIP customer list. Finding ways to re-engage with their best customers through loyalty programs and exclusive deals is a great way to inspire repeat business. 

Illustration of two female figures wearing headsets and talking on phone in front of computer for eCommerce customer service team.

Poor Customer Service

Nothing puts customers off more quickly than poor customer service. Whether it’s a bad after-sales experience or lack of pre-purchase support, unhappy customers tend to voice disapproval with their wallets. 

Rectify this by making customer support information clear on your site. A chatbot can also offer the kind of instant advice customers need directly before purchase. Then go above and beyond after the sale to keep them coming back. Delight customers with personal thank you messages, package inserts, and random acts of kindness. 

Lost or Damaged Packages

Products will always get lost or damaged whether you sell online or in-store, but eCommerce brands are at greater risk than most. Causes range from improper packaging and poor handling to theft. Brands can take measures to reduce the risk of losing out, writes Kristina Lopienski at ShipBob. Among other solutions, she recommends:

  • Pack items properly by using the right box size and filling empty space
  • Use fragile labels
  • Analyze shipping damage data to find and rectify repeated issues
Illustration of woman holding long ream of paperwork.

Sales Tax Errors

Even if brands only sell to U.S, customers, calculating and reporting sales tax properly is far from straightforward. Sales tax is the biggest issue facing eCommerce stores, and brands that fail to charge customers accurately can face fines and other user experience issues. 

Using software to calculate tax automatically can solve many problems, but so can working with an expert in the form of a Seller of Record. This is an authorized entity that takes responsibility for all eCommerce transactions and is held financially liable. 

Poor Analytics and Lack of Personalization

A lack of actionable insights can contribute to revenue loss. When brands don’t understand their customers, how can they design products, solutions, and services that meet their needs? eCommerce brands that struggle with data analytics are likely to struggle with lackluster conversion. When it comes to segmenting, reaching, and understanding their audience, data around user experience is essential. 

“With growing competition, ignoring who your customers are comes at a retailers’ great peril.” says Marion Caillierez, eCommerce Growth Specialist at Scalefast. “Brands that spend time getting to know their audience are able to adapt their eCommerce experience to user needs. The insights a brand can gather from user experience analytics platforms like Air360 help retailers deliver the right message, in the right place and time to their customers.” eCommerce retailers can focus on learning more about their customers through a variety of means. Data analysis tools, user experience analytics platforms, customer data collection, and customer service feedback. This information can then power strategic CRO decisions and personalization efforts.”

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