Internet retail makes up about 3% of all retail sales in the US and is expected to grow to at least 8% in the next ten years. What does that mean for online retailers? Quite simply, the market is growing, and is anticipated to at least double in the near future. With a growing market, comes growing opportunity.

However, that opportunity also attracts a large number of newcomers. Shopping engines such as Shopify.com and the like, make it easy for anyone to create their own retail website and sell online. This introduces a scenario where there is tremendous growth, but also very low barriers to entry, causing an influx of new retailers daily.

While the opportunity and demand has grown, supply and competition has also. The nature of Internet Retailing however is unique from traditional retail in the way that they reach their customers. Most online consumers find the products they purchase through traditional search engines such as Google, Yahoo!, etc. Research has shown that search engine users typically do not browse past the first page of results, usually concentrating on only the first few websites on the first results page.

Internet Retailers compete for these top results fiercely, through a variety of Search Engine Optimization methods. Increased competition in a given industry increases the difficulty in obtaining these top spots. So, although the market for retail sales is growing, the means at which consumers find these outlets are not. These pressures will lead to increasingly competitive tactics implemented by online retailers to achieve premium placement in the search engines.

Not only will it be more competitive in getting your site in front of this expanding market, the sheer number of shopping choices available to consumers allows them to easily "shop around" before making a purchase. While this scenario is ideal for consumers, it presents yet another challenge to online retailers - converting visitors to customers.

These are two of the biggest challenges facing Online Merchants in the years ahead, but there are a host of issues inherit in this industry which should be managed closely today to prepare for tomorrow. They can be summarized into five categories:

1) Obtain visitors and traffic to the website: This can be accomplished through a variety of Internet Marketing activities including Search Engine Marketing (including PPC and SEO), online and offline advertising, PR, and email marketing.

2) Convert visitors to buyers: Site design becomes the biggest factor here, layout, colors, copy, and your policies all play a part in not only conversion optimization, but also instilling consumer confidence in your company, enough confidence for them to provide you their personal information, as well as their money.

3) Analyze and Improve: Implementing a robust analytics package is a must. The insight it can provide in regards to ROI, product performance, and conversion rates should drive your business decisions going forward.

4) Customer Service: This is what sets many successful Internet Retailers apart from unsuccessful ones. Customer service touches almost every aspect of the order life cycle. From communications with your customers, to your privacy and return policies, how you manage the interactions with your customers not only affect their purchasing decision this time around - but also their likelihood of purchasing from you again.

5) Back-office Operations: Streamlining your processes will allow you to lower costs, improve customer service, and improve profitability. The advent of integrated SaaS eCommerce solutions such as Netsuite and Interprise Suite (with ASPDotNetStorefront) are a move in the direction of integrated back-office systems - ERP, CRM, and eCommerce. This allows you to manage all of your data in one place, eliminating the need for custom built synchronizations between systems, ad-hoc solutions, and double-data entry.

At the end of the day, Online Retailers are going to be faced with some tough decisions due to the current makeup of the industry. As the number of Online Retailers continue to grow, many small to mid size merchants will find it more and more difficult to compete, eventually reaching a point where they will need to make certain decisions:

1) Attain the necessary resources and expertise for all of the issues listed above in-house. This can be accomplished either through years of experience and training, or by hiring staff members with existing experience in these arenas. The problem with learning it yourself is that there is so much to learn it would take years to become successful at a number of these items, and in the meantime your site suffers. Hiring for expertise in these areas also becomes difficult because typically people have expertise in one are or another, along with a large pricetag.

2) Sell the website/company. Typically when markets become very saturated you'll see a lot of acquisition going on as medium to large merchants look to gain that additional market share.

3) Seek the assistance of an eCommerce Consulting Firm such as Blue Acorn. eCommerce Consultants specialize in identifying the biggest areas for improvement and opportunities to maximize the performance of your website. By looking at your entire "eCommerce Lifecycle" Blue Acorn will work with you in identifying, recommending, and implementing solutions that aim to improve the success, profitability, and ROI of your website.

Our suggestion: Don't wait until you're struggling to address these topics. Everyday that passes without optimizing them is opportunity lost, as well as giving the competition an open window. Stay ahead of the curve, and ahead of the competition - because there's a lot more coming ahead.