Advantages and disadvantages of e-commerce businesses

Today, trading on the Internet is confidently crowding out traditional shopping, but the advantages and disadvantages of e-commerce need to be weighed in each case.

To make online purchases, conducting various important transactions over the Internet for many modern people is a favorite and familiar pastime.

What is e-commerce?

Dictionaries say that e-commerce is a sector of the economy that includes financial and trading transactions that are carried out using computer networks. It is customary to include electronic to this type of commerce:

• information exchanges;
• capital flows;
• types of trade;
• money;
• marketing;
• banking;
• insurance services.

What is e-commerce on the Internet?

By such a term as electronic commerce on the Internet, it is customary to understand not only building a business, creating stores on the network, but also various calculations, purchases and earnings.

For many modern people, this type of commerce has become a familiar thing, without which it is difficult to imagine life. However, there are those among us who still doubt and do not trust the Internet and everything connected with it.

Advantages of eCommerce

1) A Larger Market

eCommerce allows you to reach customers all over the country and around the world. Your customers can make a purchase anywhere and anytime, especially more people are getting used to shopping on their mobile devices.

2) Customer Insights Through Tracking And Analytics

Whether you’re sending visitors to your eCommerce website through SEO, PPC ads or a good old postcard, there is a way to track your traffic and customers’ entire user journey to get insights into keywords, user experience, marketing message, pricing strategy, and more.

3) Fast Response To Consumer Trends And Market Demand

The streamlined logistics, especially for merchants who do “drop ship,” allow businesses to respond to market and eCommerce trends and consumer demands in a nimble manner. Merchants can also create promotions and deals on the fly to attract customers and generate more sales. 

4) Lower Cost

With the advance in eCommerce platform technologies, it has become very easy and affordable to set up and maintain an eCommerce store with low overhead. Merchants no longer have to spend a large budget on TV ads or billboards, nor worry about the expense for personnel and real estate.

5) More Opportunities To “Sell”

Merchants can only provide a limited amount of information on a product in a physical store. On the other hand, eCommerce websites allow the space to include more information such as demo videos, reviews, and customer testimonials to help increase conversion. 

6) The benefits consumers enjoy are shared by e-commerce companies when it comes to the supply chain. 

Consumers like online shopping because they don’t have to deal with cash, worry about schedules, or wait in long lines. Those benefits also apply to entire supply chains interlinked with business-to-business e-commerce systems. Procurement becomes faster, transparent, and there’s no need to handle currency notes or cash. The result is cheaper, easier transactions with fewer opportunities for accounting errors.

Finally, e-commerce allows the business to track logistics, which is the key to a successful e-commerce company. Digital conversion simplifies automatic data collection and number analysis. Although it can also benefit from knowing what sells best, it can also be allowed to take more risks with smaller volumes. The traditional retail strategy focuses on storing fast-moving goods, but the e-commerce economy allows slow and even obsolete products to be included in the catalog. Storage is cheaper, and displaying the product is as simple as adding another product page to the site.

MORE: What is an economy pricing strategy, and how it works?

E-Commerce Drawbacks

1. Lack of opportunity to study the purchased product live, that is, buyers purchase products blindly. This scares some representatives of the target audience. There may also be some misunderstanding and criticism towards the seller.
2. High shipping costs for some items. It does not always compensate for the savings as a result of those discounts that shops make due to refusal to rent real estate.
3. Credit card fraud is a real and growing problem for online businesses. This can lead to chargebacks that result in loss of revenue, fines, and poor reputation. Also lack of sufficient regulation. So far, there are not enough laws that would fully regulate cooperation via the Internet, so there is an opportunity for various scammers to work.
4. Security risks associated with the protection of personal information and financial transactions.
5. Complexity In Taxation, Regulations, and Compliance. If an online business sells to customers in different territories, they’ll have to adhere to regulations not only in their own states/countries but also in their customers’ place of residence. This could create a lot of complexities in accounting, compliance, and taxation.

Good for Consumers, Bad for Businesses.

Some aspects of e-commerce don’t fit nicely into just the pro or con side of the argument. Unique issues present an advantage to shoppers while adding difficulty for businesses. Customers might be buying, but the business could suffer in other ways. Price comparison is a major advantage for online shoppers that can restrict businesses. Consumers can compare prices with a simple click, rather than crossing town to check another store. Many shoppers will search for the absolute lowest price, and if you can’t offer it, you will probably lose the sale.

Even if you can offer lower prices, businesses that compete in these price wars will see their profits decline. Though there is nothing about e-commerce that’s intrinsically tied to discounts, the way online business has evolved has led to lower prices. Buyers love the lower prices, but sellers—not so much.

Shipping is convenient for consumers, but it adds inconvenience to the business. Shoppers love having things delivered right to their doorstep, but the logistics of delivery adds substantial strain to the e-commerce business operation. The more you shop, the bigger the burden becomes. Logistics and management can become a nightmare, even as the business enjoys steady profit growth and customer retention.

Conclusion

The global and still growing market reach allows future betting on e-commerce. That is, enterprises can plan the conditions for their activities in the future. This allows you to provide the client with a much larger number of products and services. On the Internet, selling an unusual product is easier than in reality. Moreover, fresh ideas are valued in the e-commerce market.