Pros and cons of eCommerce: Is it worth it?
Buying and selling online have become inevitable for businesses that want to scale quickly. But doing business online has its pros and cons like any business model. To decide if it is worth building an e-business, you need to know about eCommerce’s main advantages and disadvantages.
Pros and cons of eCommerce to sellers and businesses
Benefits of eCommerce to sellers
Here are 12 benefits of eCommerce to sellers and organizations.
- 24/7 Potential Income. Always open.
- A wide choice of business ideas
- Quick and easy to set up
- Multiple ways to acquire new customers
- Larger audience reach and sell internationally
- Lower the costs of running a business
- Offer a different UX
- Allow traffic analysis and retargeting/remarketing using customer data
- Increase chances to experience exponential growth
- Can generate passive income
- Working from home
- Favor upselling
Disadvantages of eCommerce to sellers
Here are 6 disadvantages of eCommerce to sellers.
- Price war and competition
- Cannot reach the 7% of Americans who do not use the Internet
- Security issues
- Traffic sudden variations
- Disparities of shipping times
- Give personal information
Pros and cons of e-commerce to consumers
Benefits of eCommerce to consumers
Here are 10 benefits of eCommerce to consumers.
- A wide choice of products and services
- Shopping from the comfort of your home
- Find competitive prices
- Suitable for asocial people
- Convenient for people with disabilities
- Reduce exposure to diseases
- Offer a different UX
- Customers have much time to make an informed decision
- Save time
- Shop at flexible time
Disadvantages of eCommerce to consumers
Here are 6 disadvantages of eCommerce to consumers.
- No try on possible
- Online scammers and hackers
- Long shipping times
- Sharing personal information
- Require an electronic payment method
- Some rural areas have poor internet coverage and delivery options
10 Advantages of eCommerce
An online business offers 24/7 potential income
The best advantage of eCommerce over physical stores is that you do not have to be there to sell. Now customers won’t have to care about the opening and closing hours. That increases the probability that a customer would buy from your store. You can even make money while you sleep and are on vacation if you build an automated system. Automation is one of the most valuable benefits of e-business to organizations.
Choose among various types of eCommerce
You can earn an income online from the four major types of business. For example:
- B2B eCommerce: Your business can offer payroll outsourcing services.
- B2C eCommerce: Sell physical products on Shopify.
- C2C eCommerce: Sell used items on craigslist.
- C2B eCommerce: As a consumer, you can benefit financially from sending pictures/videos of you using a specific product.
Here are some popular eCommerce business models:
- Retail arbitrage
- Subscription and membership site
- Selling physical products in your online store
- Offering services online
- Selling digital download
- Being a seller on Amazon, Etsy, eBay, etc.
- Investing and trading
Many e-businesses are quick and easy to setup
Website builders like BigCommerce, Shopify, Wix, and WordPress
incorporate many tools that facilitate the spread of eCommerce. Many of them have drag and drop features and non-techy solutions that eliminate the need for coding.
If you have great products and want to start selling online, the best eCommerce CMS’s have everything to create a successful online business. Launching an e-commerce website is possible even if you are not a professional developer or designer.
You can find a complete eCommerce solution with fully customizable designs, built-in professional tools to create products catalog, check-out pages, set up discounts/promo codes, and customer reviews. For example, MotoCMS is an easy website builder for professionals and beginners.
Depending on the CMS you chose, it is possible to have a customized online store live in 2-4 weeks, and it is even quicker if you open a one-product online shop. Despite what some people say, you have to work hard at the beginning and it might take months to build a more complex online business.
However, I know some online entrepreneurs leverage paid traffic to generate profits quickly after launching their sites.
Different ways to acquire new customers
If you have a web-based business, you can have new leads and customers from paid or free traffic. In addition to the usual advertising strategies brick-and-mortar stores use, you can get new customers from:
- search engines traffic
- social media
- paid advertisements
- free classified ads
- direct traffic from people who know your brand
- traffic from content sharing
When you add all these traffic sources, you can get thousands of visitors to your websites every day. If you have a good product and an effective sales funnel, you will convert a large percentage of your visitors into buyers.
Selling on the internet gives a larger audience reach
Marketing through the World Wide Web means you may reach people from all over the world. With the ePacket and all the shipping options available, you can sell your physical products in many locations. For example, if you are dropshipping on Shopify, you can use Aliexpress or US-based suppliers to fulfill your orders.
It is even easier if you are selling services or digital downloads to reach people wherever they are. The location does not matter because anyone with an internet connection is a potential customer. Plus, people can purchase using a laptop, a mobile device, and a tablet.
Starting a web-based business helps to lower operational costs
It is much easier to create an eCommerce on a tight budget because, in many cases, you need to buy a domain name to get started. Your team can work from home and be in countries with low wages like The Philipines. Videoconferencing software like Zoom has made distance working highly effective.
Plus, you don’t have to hire them at the launch of your business. Start with as little money as you can, and when it starts to grow, hire some employees. Other than employees, you don’t need fancy stores in commercial areas either, and customizing a website is extremely cheap.
For example, a small business selling legal services online with a remote workforce does not have to rent a commercial building. Since a modest 200 meters square office costs around $25,000 a year, you can spend an extra $2,000 on ads each month to boost your sales.
An eCom offers a different UX
Some people dread talking or interacting to store owners or sales assistants. That is why they prefer going to online stores. Shopping online doesn’t require any in-person interaction, which is one of the benefits of eCommerce for introverts and people who suffer from social anxiety.
Even though try on is an important part of buying some physical goods, there are ways to ensure that the products meet your expectations. For example, you usually have access to detailed features, videos, images, and more.
Users’ experience is different than brick-and-mortar stores, but it does not mean it is less effective. Taking the time to read a product description and contact someone by email or chatbox can be as effective as physically touching a product.
Selling on the net favors traffic analysis and retargeting campaigns
Many tools like Google Analytics, Facebook pixels, Pinterest tags allow website owners to collect data about people visiting any website. By analyzing and interpreting the data, you can learn more about your visitors and their behavior on your site.
Customer insight helps you to keep your products up-to-date and to improve your marketing strategy. It also becomes much easier to set up retargeting campaigns to boost sales because you know how each visitor interacted with your content.
If you know how to interpret the metrics, you can boost the traffic of your online store. Consumer insight is helpful to analyze trends, increase sales, and improve your overall customers’ experience. You can adjust the stocks based on what customers like in which part of the year.
An automated eCommerce is a source of passive income
Like any business, building an online eCommerce requires commitment and consistent work, at least at the beginning. But if you decide to offer web-based services and sell digital goods, you can generate passive income in the long run. Here are a few examples of passive income streams related to eCom:
- sell books online and publishing
- affiliate marketing
- sell digital products
- sell online courses
- stock market investing
An automated online business requires little to no when you set up everything correctly.
7 disadvantages of eCommerce
I already discuss the advantages of eCommerce to businesses and consumers, but now I let’s cover the disadvantages of eCommerce.
Not able to see in person and touch the product
Some products are more difficult to purchase online due to poor tactile experience. These include occasional dresses, luxury items, footwear, and others. When buying them online, you need to know your size well because you can not try them. No matter how good the pictures are, people can not feel the quality.
You must provide the best product description and add a video if possible to ensure a good user experience. Plus, if customers get deceptive products, you will have a high refund rate and few returning buyers.
Price war and high competition
Accessing a multitude of online stores has plenty of benefits for the consumers but can be a drawback for the sellers. Sometimes the internet accentuates the price war, and you need to have excellent strategies from product creation to marketing to remain competitive. The fearless competition going on on the web is one of the main disadvantages of online business.
Not everyone uses the internet
It might seem extremely strange to you, but there are people with hardly any Internet or electricity facility in many parts of the world. In those areas, most people are unable to order and buy online. Technical issues like using the Internet are among the disadvantages of e-businesses.
In addition, even in developing countries, part of the population is not familiarized with using the Internet. For example, older people generally prioritize brick-and-mortar stores over online shops. Targeting the right audience will ensure better results.
IT security issues
With the increase in online purchases and more and more transactions being made, online fraud is increasing. Many e-businesses have had to deal with spammers trying to impersonate them to steal people’s money.
Even though cybersecurity has improved lately, there is still a possibility that people get scammed when trying to purchase online. Thankfully, online transactions are more secure, but the risk of encountering a dishonest merchant is still there.
Online business income is subject to sudden traffic variations
Websites can experience exponential traffic growth, but unfortunately, they have also to deal with unexpected website traffic loss. For example, if your sales depend exclusively on organic search traffic, you may lose everything after a Google core update.
The same thing applies to paid traffic since Facebook can shut down your account anytime. It would be better if you can diversify your traffic sources. For example, combining search engines traffic, free social media traffic, and paid ads is a much safer strategy.
Shipping times disparities in e-businesses
Shipping is one of the technical disadvantages of eCommerce. When a person buys something in a physical store, he takes the product home right away. But with online shopping, there is a delay before the customer finally receives the package. While some online stores have short shipping time and a well-organized delivery process, others can take weeks to deliver a package.
Some merchants are not upfront about how long it takes to receive a box to make things worse. Being honest and open with the customer about the delivery time is vital to building a profitable online business that lasts.
Sharing personal information
eCommerce websites usually demand that a customer provides an email address, name, and sometimes a phone number. Many people are still reluctant to give these details, especially if they do not know your brand.
People trust more the eCommerce giants many small business owners struggle to make consistent sales. In the beginning, gaining trust is much harder compared to a physical store.
Final thoughts: Is eCommerce worth it?
Now that we know what eCommerce is and its advantages, you can decide if you should consider creating an online business. Despite a few disadvantages, I believe that eCommerce is worth it. Many excellent content management systems integrate payment processors, funnel builders, and the tools needed to build a profitable eCom. The importance of e-business in today’s world keeps growing, and now is the best time to start.