Advantages and Disadvantages of E-Commerce

Introduction 

Whether you are deciding on investing in ecommerce or looking to grow your business through it you need to have a clear picture of pros and cons of ecommerce development

This article will help you in decision making, forming strategy and planning for your organization. 

This knowledge can also help people who want to know more about ecommerce.

According to oberloo.com 

“An estimated global population of 7.7 billion people, that’s about 25 percent of the world’s population shopping online. What’s more, this number is rising rapidly and is expected to hit a massive 2.14 billion people in 2021.”

From the above numbers it is clear that this is a huge market with tons of potential and challenges.  

In this article I will discuss the major advantages and disadvantages of ecommerce.

Advantages 

1. 24-Hour Service 

You can easily provide round the clock sales and service to customers. This is the perk of having technology. 

It also saves you the cost of employees, managers, and power expenses of running a physical store. 

2. Less Capital Needed

A brick and mortar can be very expensive to start depending on the location and building.

It can be very hectic to select the best possible location of your store. 

However, this online store will require less capital to start running it and get focused on your activities.

3. Become A Global Brand 

Ecommerce has made globalization of brands possible without crazy amounts of investments done to establish overseas stores.

Unlike a physical store, an ecommerce store is available to the whole world. With proper shipping and delivery channels you can reach anyone who has an internet connection.

4. Reduce Costs and Increase Profits

It saves the business on tons of fixed costs and operating costs. 

Like rent, transport, heating and lightning etc. employees like cashier, sales person, receptionist etc. are not needed to operate an online store.

You can outsource most of the work for very less cost.

All these costs are reduced and in turn the business profits go up.

 5. Easy for Customers 

It saves the customers a lot of time and expenses of visiting a physical store.

Most of the millennials and generation z customers like to shop online and they prefer the ease of buying from online stores.

6. Target Effectively

You can target your audience effectively and gain complete information about your customers.

Google analytics and other tools give you the complete information of your efforts and results. Their demographics, their buying behaviors etc.

Whether an ad campaign is not working or your new promotion is not getting a positive response from customers you can track all this with ease.

7. Less Barriers for Competition 

If you provide quality services and products to your niche you can easily compete with the biggest players in the market. 

You can create quality content for your audience through blogs and videos and drive traffic and sales to your store. 

8. User Reviews and Testimonials 

You can harness the power of user reviews and testimonials about their experience. You can showcase the best reviews on your website to gain trust of customers. 

But they should be genuine reviews written by actual customers. Fake reviews and paid testimonials will not work in the long run.

This will help you form deeper relations with the audience and encourage them to buy from you.

Disadvantages 

We have discussed the advantages now let’s dive into some of the main disadvantages of ecommerce. 

First think about your product or service you are offering.

Selling intangibles is much easier as compared to tangibles because of shipping and delivery complications. 

1. Website Crash

From the title it is obvious that website crashing is a major drawback of ecommerce. If the website is crashed, then the users cannot access the products and purchase them. 

You can get rid of this problem by investing in a good hosting service although that will cost more.

We have seen even the biggest websites crash when there is unusually high traffic due to some reason.

2. Intangible Display 

In websites customers can’t actually see and feel the product in real time. This poses a challenge to businesses that work in tangible products like apparel, jewelry, etc.

3. High Competition 

Chances are that the niche you are targeting already has established competitors. 

Your competitors might be in the market for years. This makes the ad campaigns very tough and costly. 

4. Quick Response 

You need to reply to your customers queries quickly before they lose interest and go shop somewhere else. 

For this you might outsource customer service but again that will add to costs of the business. 

The loading speed of your website is also very important to retain and convert customers. Nobody wants to keep waiting for slow websites to load.

5. Shipping Time

Shipping takes time which makes customers impatient and uncertain. In brick and mortar stores they pay and take the product with them.

Shipping of tangible products is very time consuming and takes a long time for all the processes to start running smoothly. 

Overseas shipping is another huge barrier to trading online because of the different laws and regulations of each country and the high cost of shipping.

6. Physical Stores

Physical stores still dominate the market share because of the value they provide to the customers. 

That is the reason that still the majority of the people buy from physical retail outlets. 

They offer an easy conventional alternative which poses a disadvantage for ecommerce stores.

7. Sales Returns

A hefty portion of sales made online are returned due to some issue the customer faces. 

Customers might not have been able to analyze the specs or form of product through a website.

This creates a barrier for online sales. Most online stores have a return policy and they bear the costs of returns.

8. Security Issues and Frauds 

Safeguarding the financial information of your clients is a challenge for ecommerce stores.

There are many hackers ready to steal credit card information and personal information of your clients.

You have to provide a security solution for your ecommerce to ensure safety of your store and customers. 

Conclusion 

So here it is. This is a quick checklist when considering ecommerce for your business. 

Apart from some exceptions and small businesses every other business can reap the benefits of ecommerce. As the market is trending towards e commerce soon it will be inevitable for businesses to thrive without ecommerce web development.  

You have to consider the long term benefits and costs related to your business in order to achieve the maximum profit through ecommerce. 

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