The Oodie founder shares the seven biggest e-commerce challenges — and how to navigate them

Online retail purchases are forecasted to make up 21% of all retail purchases this year and 24% of all purchases by 2026. As online purchases continue to grow and digital technology evolves the sector, Davie Fogarty, founder of The Oodie, former AFR Young Rich lister, and Shark Tank Australia 2023 judge, shares his insights on seven dangers that online retailers must be aware of in this competitive market.

Below, Davie Fogarty shares his journey, alongside the seven risks and challenges online retailers are likely to encounter in their business venture.

I began my entrepreneurial journey at the age of 23 with just $500 in savings and the idea of a wearable blanket. Now, The Oodie has sold more than 8.1 million units, exceeding $500 million in revenue.

However, I didn’t get to where I am today without several failed business ideas and startups. Throughout my journey, I have had to teach myself the algorithms and systems of major social media platforms, which I now share across my socials and mentoring program in hopes of assisting aspiring digital entrepreneurs in their ventures.

Seven of the biggest e-commerce challenges

Scam sites, counterfeit products and intellectual property fraud

Dealing with scam sites, counterfeit products, and intellectual property fraud has been a significant challenge in my journey as an online retailer. In 2023, Australia reported a staggering 182,593 scams, resulting in losses totalling $328,655,604. These fraudulent activities are becoming increasingly sophisticated and pose a threat not only to brands but also to consumers. I recommend that, as business owners, we consider establishing robust monitoring and reporting processes to identify any activity that could potentially harm our brand. Recently, I came across a fake website imitating The Oodie. These scammers are advertising their sites on Google despite the brand being trademarked. Hundreds of people are being scammed daily, and despite doing everything we can, scammers are smart and are finding ways around the systems we have in place. It is proof that even big brands are not immune.

 Online reviews tarnishing brand reputation

Negative online reviews can tarnish a brand’s reputation. In fact, 93% of consumers admitted that online reviews influence their purchasing decisions. While businesses cannot control customer reviews, they can monitor reviews online and respond to negative reviews with the aim of resolving them as quickly as possible and turning an unhappy customer online into a satisfied one. When negative reviews start to pile up, it often may point to an operational product or service issue. I have made it a practise to identify customer pain points and do everything we can to reduce them to avoid negative reviews in the first place.

 Intense competition

Facing intense competition has been an aspect of my journey in the world of online retail. It’s crazy to think that there are an estimated 12-24 million e-commerce sites globally, offering an abundance of choices to 2.64 billion online shoppers. If you are starting your business journey, it is important to take time to research the product you want to sell and how you will sell it. You can research on social media platforms and on drop-shipping sites to identify what products are currently saturating the market. Tools like AI and other online software have made this process faster. Make your product and brand stand out. You want to be the consumer’s first choice.

 Poor user experience (UX) and customer experience (CX)

A seamless and user-friendly website, along with efficient customer service, is essential for sales conversions. If you have complex navigation and slow loading times, it will turn customers away, and poor customer service processes will prevent them from coming back. Ensuring a positive user and customer experience can impact overall business success.

 Low visibility on search engines

Google has 4.3 billion users worldwide, and over 3.5 billion searches take place per day. In such a highly competitive online market, it’s essential for target customers to find brands easily on Google and other search engines. Poor search engine optimisation (SEO) can prevent customers from finding a product to meet their needs.

 Scaling and meeting demand

Rapid growth, while desirable, can strain a business’s infrastructure, supply and operations. It’s critical to have a plan in place to prepare for the growth of your business. It can be challenging to maintain consistently high service quality, adequate inventory and efficient fulfilment when scaling rapidly. Networking with other entrepreneurs and remaining transparent with suppliers and your team can all help mitigate the risks associated with unprepared growth. Growth is exciting, but that also means it can be easy to drop the ball.

 Marketplace dependence – having your own platform

Approximately 27% of online retailers use drop-shipping to fulfil customer orders, which offers an inexpensive way to run an online business. Heavy dependence on big online marketplaces for operating an online store can limit brand development. As a brand grows, having its own website and operation systems allows for greater brand control and a personalised customer buying journey.

Davie Fogarty is the founder of The Oodie, an investor on Shark Tank Australia, and the founder of the mentoring program, Daily Mentor.