12 Feb
Let’s discuss the advantages and disadvantages of e-commerce.
E-commerce has made many businesses worthwhile. It is one of the powerful online tools which can help your business grow across the globe. It is really important to see the buyer’s trend and look over everything before starting an e-commerce store because that is what makes your business grow by taking strategic decisions.
If you are thinking to start an e-commerce store, this article is best suitable for you to understand the advantages and disadvantages of e-commerce.
What is e-commerce?
Ecommerce, also known as electronic commerce or internet commerce, refers to the buying and selling of goods or services using the internet, and the transfer of money and data to execute these transactions.
Moreover, there are six basic types of e-commerce and all of them represent a different purchasing dynamic:
- Business-to-Business (B2B)
- Business-to-Consumer (B2C)
- Consumer-to-Consumer (C2C)
- Consumer-to-Business (C2B)
- Business-to-Administration (B2A)
- Consumer-to-Administration (C2A)
What are the Advantages of e-commerce?
You must have heard that “every coin has two sides” therefore lets speak about the 1st side of a coin this advantages of e-commerce. These benefits of ecommerce will help you determine if starting an online store is right for you.
1. Low Financial Cost
One of the factors that benefits e-commerce is the low cost for the startup. The physical retail store needs lots of dollars to rent a store. There are more upfront costing in physical retail store like: Store design, buying inventory and much more. Moreover, for physical store you need to hire staff to run different locations and depending upon the products value they may need to hire a security guard too.
Whereas, for a dropshipping store cost up to $418 and e-commerce store only pay $3192 a year on Shopify at most for virtual ‘rent’. Furthermore, Shopify also includes an easy to use platform, hosting, free Shopify themes and plenty of great apps.
Additionally, if you choose to dropship online you won’t need to buy bulk inventory saving you a lot of money. Your store logo is also more affordable than a store sign. Your business expenses are generally much lower in ecommerce. This is one of the most attractive benefits for new entrepreneurs looking to keep their costs low.
2. 24/7 Potential Income
E-commerce is one of the platform which available for consumers 24/7 and globally. An online store never closes. The website is functional at all times; it does not have working hours like a shop.
With your Facebook ads, you can attract someone at 11 p.m. or 4 a.m. in any part of the world. Most physical location stores are open between 9 a.m. to 9 p.m. by being available all the time e-commerce store attracts customer who have odd work schedules or who don’t have time to shop in-person.
Similarly, if a person orders at night, you don’t need to hire a night shift staff or a security guard for that. All you need to do it to generate an automatic confirmation email once the order is placed to ensure them that you have received their order.
3. Sell Internationally
The next advantage of e-commerce is that a brand new store can easily sell to the next town, the next state, or even across the ocean.
The customer will have access to the online store from anywhere in the world, which can globally be accessed. This is what every customer is looking forward to having as their service because sometimes customers are not able to find a particular product which not available at the store location but though online store works like a magic to provide them with multiple options.
Additionally, selling worldwide helps you grow you brand faster and allows you to see profit before your local competitors.
4. Easy to Showcase Best Sellers
It’s easier for a customer to find the best-sellers in an online store. Customer wants to buy best seller because they are proven as other customers have already purchased them and are happy with purchase.
Furthermore, if you want your customers to know about you new products include them in your upsell, email marketing or retargeting ads. With an ecommerce store, you can include great product photography and product descriptions to influence the customer’s choice.
5. Personalized Online Store
One of the advantages of e-commerce store is creating personalized landing pages that tempt the customers to buy from you. Like a physical store you don’t need to encourage the customer from the first minute. Instead you can all the work before launching a campaign and then relax when you release campaign to your customer base.
Besides this you can segment your emails list based upon the purchase made or how much a customer spent. You can also retarget a customer who visited your online store showing them an ad for a product they added to their cart and forgot to checkout.
If you online store have a login feature, you can show a welcome message with the name of a certain person. Also, Product bundles can help the customer buy more for a better price. You can also personalize upsells based on what the customer has looked at or what you think they might like based on their purchase behavior.
6. Affordable Employees
Hiring employees is also a great advantage for e-commerce because you can hire from anywhere in the world. You can outsource your work in countries where the cost of living is much lower.
Additionally, you need fewer employees for an online store than in a retail store. You don’t even need any employee at the time of launch. You can start and run an ecommerce business all by yourself. Only when you start to grow you can hire employees.
7. Easier to Encourage Impulse Buy
Impulse buying is one of the techniques where it works as a common behavior of customer’s perception towards a particular product. It is related to the control of human psychological behavior which is like some people possess personality traits that can be said as impulse buying tendencies.
If you have attractive products photography, vibrant color or human emotion you can create ads that drive impulse buys. You can also execute a range of scarcity tactics such as countdown timers or showcasing limited quantities.
8. Easy to Retarget or Remarket to Customer
Retargeting uses cookies from previous visits to display ads. Even if someone doesn’t make a purchase, retargeting is a marketing tactic that can gain business by keeping your brand in front of potential customers. You will see retargeting ads on websites unrelated to the page you’ve visited.
Whereas, Remarketing uses the information from someone’s past purchases and site interactions to send emails about sales and promotions for related products. Remarketing is a more laser-focused marketing tactic that requires a customer’s email address.
9. Customers Get a Less Invasive Experience
Online shopping can be a little less invasive making it one of the best benefits of ecommerce. If a customer wants to contact the store owner, they can click on a live chat feature, email or send a Facebook message.
E-commerce helps the customer to avail the specific product easily and speedily.
10. Gain Access to Customer Data Easily
You can easily gain customer’s data like their email address, contact number and home address which makes it easy to communicate with the customers. If you ask them to create an account, you can obtain even more information from them to better serve them. If your customers are based within Europe be careful of GDPR regulations when contact customers.
Moreover, you will be able to collect data on how long your customers stay on your site, what they look at, and how they go about making purchases. That gives you direct insight into what’s making them click “Buy” or what’s stopping them.
11. Able to Process High Number of Orders
As your business continues to grow, you might choose to hire employees to help with order processing. with dropshipping you don’t need to physically have the product in order to sell it to a customer, therefore you do not have to worry about stock control like physical stores have to.
In retail stores, long queues can deter people from shopping. With ecommerce, there’s no waiting time. A customer can place orders on his or her own schedule with no delays allowing you to accept a high number of orders.
12. Can Scale Business Quickly
One of the advantages of e-commerce store is its easy scaling. You can increase your ad budget when you see an ad performing well.
With physical stores, it can be hard to grow product lines or add more cashiers due to finite space. You’ll need to find a bigger space, renovate or wait for your lease to end in order to scale your business.
Whereas, with dropshipping you can add new products to your store without having to worry about shipping products or holding inventory.
13. Grow Your Business Organically with Content
Content is a king. With e-commerce, you can grow organic traffic and sales with blogging. You can optimize your store to drive traffic and sales without having to spend more money. E-commerce, help you get traffic organically through content creation, but you’ll also be able to monetize those customers with retargeting ads.
What are the Disadvantages of e-commerce?
The 2nd side of a coin is disadvantage of e-commerce. When starting an online store it’s important to know the disadvantages too.
1. No One Can Buy During a Site Crash
This is the worst thing when no one can buy from your store if your website crashes. Therefore it’s important to make sure that your website is hosted on the right platform.
Luckily, Shopify offers free hosting in their monthly fee allowing you to have one of the best servers. Site crashes on Shopify are so rare that it’s likely not to cause problems in your business.
2. Customers Can’t Try Before They Buy
Currently this is the problem of many online stores that a customer can’t try before they buy but this won’t be a long term problem. Most of the stores are starting to add AR elements to their store to allow customers to try products on.
Augmented reality ecommerce companies offer solutions for businesses to create a more interactive experience with your customers. If you own a cosmetics store, you can check out Sephora’s Virtual Artist app for an example of a beauty retailer with an augmented reality experience.
3. E-commerce Is Highly Competitive
The more competitive a niche is the more expensive ads for that niche are. If all your customers are being targeted by competitors through Facebook ads, you might try ranking organically with SEO optimization. If all your competitors are using Pinterest, you might try Instagram marketing if your audiences are very visual beings.
And there’s always the battle for who has the lowest prices. Setting yourself apart from the competition means finding different marketing perspectives and building a strong brand identity.
4. Customers Can Be Impatient
In a retail store the sales person is available for your queries. Whereas, that’s a disadvantage of most of the online stores because many of them delay in customer queries. The reality is most customers expect a response from a business within the hour on social media. Hence if you delay in responding to their message, they can become annoyed and shop somewhere else instead. You need to be online 24/7.
You can also hire a customer service representative to be there for the customers when they need them. Your fast reply can make a customer happy.
5. Shipping your Products
Shipping your products can be a worst e-commerce disadvantage. When a customer shops in person she can take the product home right away. But, with online shopping, most customers receive their products in a week or more.
The solution is to be clear with your customer. Let them know when they can expect packages after they place an order.
6. Unsure about the quality
One of the biggest problems with buying things online is that you will have no guarantee of a products’ quality. Reviews are not always helpful and though all the researches will never assure you about the quality of a product.
It may mislead customers to increase sales but though for they will have to make sure and get aware that sometimes faulty products are being sold online too.
Conclusion
Many brick-and-mortar shops have an e-commerce outlet to compliment their businesses and lots of e-commerce brands have stepped into the physical retail stores. Both of them have their advantages and disadvantages.
Even though e-commerce and retail are often contrasted, it does not mean you only have an either-or choice. Therefore every business depends upon the marketing strategies to stand apart from the competition and position them as reputable brands.
You are an entrepreneur. You’re ready to open your own store. Read these advantages and disadvantages of e-commerce. Take some time to decide whether brick-and-mortar or e-commerce is better for your company, and then get started!