20 advantages and disadvantages of ecommerce
This article explains the pros and cons of e-commerce. We hope it helps you to determine if ecommerce is the right business for you. Let’s start
What are the advantages of ecommerce?
In this section, we will talk about the benefits of e-commerce. From a minimal investment, to obtaining passive income, there are many compelling reasons to launch an online store
Low financial cost
One of the benefits of digital commerce is that it does not require a large investment to start the business, unlike physical stores that must pay thousands of euros just for rent, in addition to having to invest upfront in things like the design and sign of the store, buy inventory, sales teams, among others.
Likewise, physical stores must also employ personnel to work in their various locations, and may have to hire security personnel, depending on the value of the products in the store.
However, an online store only pays for: the ecommerce platform, the hosting of the page, free themes, applications or plugins.
Depending on the type of e-business you have, you may need to hire employees once you have reached a certain level of growth.
And this can be made even cheaper if you decide to dropship, since you won’t need to buy inventory in advance.
Potential income 24 hours a day, 7 days a week
One of the advantages of e-commerce is that online stores are always open, and with banner ads you can attract someone at 11 p.m. or at 4 a.m.
Most physical stores are open from 9:00 am to 9:00 pm, so having an online store open 24 hours a day can attract customers who would normally buy your products in physical stores, if they were open.
Similarly, shopping online can be very practical for people with unusual work hours or who don’t have time to do it in person. Also, you don’t require employees to work the night shift to process your customers’ orders who buy during those hours, and you don’t need to hire a caretaker.
Ecommerce allows small brands to have a global reach and sell their products around the world, you just have to find out where your audience is, either in the UK, South America or in neighboring countries.
If you dropship products from AliExpress, you will see that many sellers offer free standard shipping, which will allow you to reach customers globally, while maintaining competitive prices.
It is easier to display the best-selling products
You can design a physical store to attract people and invite them to buy certain products, but it is easier for buyers to find the best-selling products in an online store.
The reason is that these items have already been purchased by other buyers who were satisfied with their order, and that makes them more reliable and attractive to your customers.
If you want to present new products to your customers, you can include it in your upsell strategy, email marketing or remarketing ads.
You can personalize the online shopping experience of your users or segment your email list based on purchases made, location or even according to what the customer has spent.
Personalized online experience
You can also reconnect with customers who have visited your store, showing them an advertisement for a product that they have forgotten in their cart. If your store has a login feature, you can place a welcome message like “Hello (name).”
Also, combo products allow customers to buy more at a better price. You can also customize the related and complementary products, according to the articles that the user has visited or that you think they might like.
One of the benefits of ecommerce is that you can hire employees at a more affordable cost for your business.
Another advantage is that an online store does not require the number of employees that a physical store, and you do not need to hire staff to launch the store. In the beginning, you can run your eCommerce business by yourself.
What are the disadvantages of ecommerce?
You can’t sell if your page goes down
One of the worst downsides of e-commerce is that no one can buy if your store page goes down. That is why it is vital to ensure that your website is hosted on the correct platform.
Chances are, if you pay the lowest hosting fee and get a spike in traffic from a high-conversion ad or popular TV show, your page will most likely go down.
Fortunately, Shopify includes free hosting in its monthly fee, allowing you to access one of the best servers on the market.
Customers cannot test the item before purchasing.
Although this is a current problem for many traders, it will not be for much longer. Thanks to augmented reality, more stores are beginning to implement this technology in their stores so that customers can test the product.
Companies in this industry such as Holition and Augment offer solutions to businesses to create a more interactive shopping experience for customers.
If you have a cosmetics store, check out the Sephora’s Virtual Artist app for an example of a beauty merchant using an augmented reality experience.
E-commerce is highly competitive
Finding a good niche is another disadvantage of ecommerce. The reality is that the best niches are generally the most competitive and that is what attracts people to consider them when starting their business.
The more competitive a niche is, the more expensive the advertisements for that niche will be.
There are some ways to get around this hurdle. First, you can target a different audience than your competitors. For example, if your customers receive information about your competition through YouTube ads, then you can try to rank organically in web searches. If your competitors use Pinterest, you can try using Instagram, which is also a visual platform.
Also, if your ads are expensive, you can drive traffic to blog posts and reconnect with visiting customers through retargeting to lower your advertising costs.
Customers can be impatient
In a physical store, if a customer has a question, he can go to one of the salespeople to answer her question. However, in digital commerce, most businesses are slow to respond to their customers’ inquiries.
The reality is that most customers expect to get a response on social media within an hour.
If you take too long to answer them, they may be offended and go shopping elsewhere. You need to be online 24/7. That’s why we recommend hiring customer service representatives through Upwork, who are trained to keep your customers happy.
For customers, shipping times are one of the worst disadvantages of ecommerce. When a customer buys in person, they can take your product home at once. However, when you do it online, most take at least a week or more to receive the product.
The solution is to be honest with the customer. Clearly inform them when they can expect their package once they have placed the order.
Retail in physical stores continues to be more popular
The physical commerce industry generated $ 22 trillion in profits last year. However, e-commerce only generated 3.5 trillion worldwide.
For this reason Amazon, despite being the largest online store, is also betting on physical stores.
In any case, $ 3.5 trillion in sales is not a small number and there is a lot of potential for higher profits. So go ahead!