What are 5 advantages of e-commerce?

E-Commerce offers the following advantages to consumers.

1. Wide range of products and services

Electronic commerce through internet enables the customers to choose a product or service of their choice from any vendor anywhere in the world. Due to space constraint, a vendor can stock only a minimum amount of goods in the physical store.

A virtual store enables a business organization to stock a lot of goods without considering the inventory cost. Hence, a business also provides a lot of choice to consumers to choose a product of his /her choice.

2. Convenience

Customers can buy any product from anywhere in the world without moving away from their workplace or home through internet. Due to bad weather, people may restrict their shopping even if necessity arises. E-commerce provides convenience to buy goods or services without causing any physical constraints to the consumers.

3. Saves money

The cost incurred by the business on the middlemen generally falls on the consumer. Since the middlemen are eliminated, the customer is free from bearing the cost of the middlemen. To attract customers and to combat competitors, several business organizations offer product and services at cheaper price.

Certain goods like e-books, music audio clips, software can be purchased and delivered through internet. It saves cost for the buyers.

4. Saves time

Time saving is one of the prime benefits of online shopping. Time taken for selection, buying and paying for an online product may not take more than 15 minutes; the products are delivered to customers’ door steps within a week. It saves delivery time for the buyers.

5. Adequate information

Internet is used as a main vehicle to conduct transactions in e-business. Internet allows customers to search for product information, compare the prices and benefits and finally evaluate its value before committing purchase.

Through internet, customers can get their queries clarified and track their delivery status when the goods are being sent to them. If any doubts arise while handling the products, the customers can easily contact the business through internet.

There's no doubt that the ability to sell online has made many businesses viable and profitable. Like all business models, eCommerce has its advantages and disadvantages. It's important to get a good handle on the pros and cons so you can be informed when making your strategic decisions:

Advantages of eCommerce 

There are many obvious and not-so-obvious advantages to doing business online. Understanding exactly what they are can help you leverage them to your advantage:

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 since 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 a 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. Personalized Messages

eCommerce platforms give merchants the opportunity to serve up personalized content and product recommendations to registered customers. These targeted communications can help increase conversion by showing the most relevant content to each visitor.

7. Increased Sales With Instant Gratification

For businesses that sell digital goods, eCommerce allows the delivery of products within seconds of making a purchase. This satisfies consumers' need for instant gratification and helps increase sales, especially for low-cost items that are often "impulse buys."

8. Ability to Scale Up (Or Down) Quickly And Unlimited "Shelf Space"

The growth of an online business is not limited by the availability of physical space. Even though logistics can become an issue as one grows, it's less of a challenge compared to those running a brick-and-mortar store. eCommerce merchants can scale up or down their operations quickly, and take advantage of the unlimited "shelf space," as a response to market trends and consumer demands.

Disadvantages of eCommerce

Running an eCommerce business is not all rainbows and unicorns. There are challenges unique to this business model -- knowing them will help you navigate the choppy waters and avoid common pitfalls:

1. Lack Of Personal Touch

Some consumers value the personal touch they get from visiting a physical store and interacting with sales associates. Such personal touch is particularly important for businesses selling high-end products as customers not only want to buy the merchandise but also have a great experience during the process.

2. Lack Of Tactile Experience

No matter how well a video is made, consumers still can't touch and feel a product. Not to mention, it's not an easy feat to deliver a brand experience, which could often include the sense of touch, smell, taste, and sound, through the two-dimensionality of a screen.

3. Price And Product Comparison

With online shopping, consumers can compare many products and find the lowest price. This forces many merchants to compete on price and reduce their profit margin.

4. Need For Internet Access

This is pretty obvious, but don't forget that your customers do need Internet access before they can purchase from you! Since many eCommerce platforms have features and functionalities that require high-speed Internet access for an optimal customer experience, there's a chance you're excluding visitors who have slow connections.

5.  Credit Card Fraud

Credit card fraud is a real and growing problem for online businesses. It can lead to chargebacks that result in the loss of revenue, penalties, and a bad reputation. Some businesses are at higher risk than others for credit card fraud or failure which can impact whether or not e-commerce is right for your business.

6. IT Security Issues

More and more businesses and organizations have fallen prey to malicious hackers who have stolen customer information from their databases. Not only could this have legal and financial implications but also lessen the trust customers have in the company.

7. All the Eggs In One Basket

eCommerce businesses rely heavily (or solely) on their websites. Even just a few minutes of downtime or technology hiccups can cause a substantial loss of revenue and customer dissatisfaction.

8. 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.

There are many advantages and disadvantages of e-commerce. Choosing to move your business online is a big choice with many factors to be considered. Both online and in-person business models come with their own challenges, but with the right information, and a developed action plan, a successful e-commerce operation is in your future. 

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Ecommerce Advantages and Disadvantages You Should Know

If you strive to keep your business alive and healthy, you should stay open-minded to change and ever-lasting alteration of rules in the business world. For example, Covid-19 affected online retail sales as they increased by 32.4% in 2020. In this text, we are talking about the change from physical to virtual.

What are the advantages and disadvantages of ecommerce business and which benefits or drawbacks of e-commerce will you encounter on your way to the online world – read more below.

Advantages of Ecommerce or Why Brick-and-Mortar Goes Click-and-Order

One thing is for sure — e-commerce is growing rapidly as we speak. In fact, in 2020 global e-retail sales surpassed an incredible 4.2 trillion dollars worldwide. But what is so luring about e-commerce that keeps retailers build online stores? Let’s dive deeper into the advantages of e-commerce.

Advantage #1: Cost Effectiveness

Maintaining a brick-and-mortar business can sometimes be money-draining because of numerous overhead expenses. Going virtual is profitable since you will not have to own a physical store to sell your products. This means that you can forget about paying costly rent, hiring on-site staff, paying utilities and insurance — with online technologies and the right ecommerce platform, you can launch your startup easier and cheaper.

Advantage #2: Absence of Physical and Temporal Restrictions

The laws of physics work differently in the online world. There are no limits when we speak about time and space. The number of items you wish to display to potential customers is unlimited, and so are your working hours. You can stop worrying about the in-store “shelf space” for your products and stay open for your customers 24/7. As 72% of consumers like to shop late at night, you can welcome a higher number of customers as well as delocalize your services and expand your business globally.

Advantage #3: Access to the Global Market

When you go online, you go global! Why might this be important for an e-commerce business? The reason is simple — more opportunities to sell! Meet your customers where they are — on social media, Google shopping, or even their favorites marketplace like Amazon or Ebay. The choice is yours!

­Besides, you can start selling internationally and break cultural barriers; after all, some commodities might work better in other parts of the world. Just like Nintendo, a Japanese-based brand that receives its largest revenue from North America. In other words, there is a world of opportunities out there, and grabbing the right one is just a matter of coordinates.

Advantage #4: Data Use to Attract, Convert & Retain Customers

Another great advantage of ecommerce is that you don’t need to tug at your customers’ sleeves to get their feedback. In e-commerce, there are simple analytics tools to track that instead. The data is perfectly measurable and convertible into successful digital marketing strategies. With tools like Google Analytics, MailChimp, Kissmetrics, etc., you can easily monitor your customer journey and manipulate that data to meet online shoppers’ expectations.

You can easily gain insight into the following valuable data:

·  Trends and customers’ preferences

·  Customers’ feedback

·  Effectiveness of marketing strategies

·  Inventory management

Advantage #5: Fast and New Ways to Market Products

Online selling is extremely beneficial if you are looking for speed and variability in marketing. First, it takes only a few clicks to introduce loyalty programs, set targeted ads on social media, and notify your audience of the new product you’re launching. Second, you can take advantage of personalization by integrating a recommended products engine into your website and, thus, and successfully cross-sell and upsell your products. Third, you can embed digital channels into your physical retail and embrace the omnichannel strategy (especially since the omnichannel purchase rate is almost 10% higher than the single-channel purchase rate).

Overall, the world is your oyster when it comes to ecommerce marketing. Use it wisely.

Advantage #6: Unlimited Scalability Opportunities

Another great advantage of e-commerce sales is an ever-growing number of sales and unlimited scalability. The COVID-19 pandemic pushed 150,000,000 customers to shop online for the first time ever, which increased the online market demands significantly.

When the market asks for it, be ready to upscale and grow your business. Here are some upscale ideas:

·  Improving your infrastructure

·  Expanding communication channels with customers

·  Upgrading your services or product offer (adding more products to your catalog)

·  Adding more payment options

When the time comes, you won’t have to worry about your sudden need for extra “shelf space” because e-commerce platforms (like Magento development, for example) will sustain any kind of traffic peaks with no performance issues.

Advantage #7: More Sales Channels

One of the biggest advantages of ecommerce to a business is multiple sales channels. You get more different ways to inform customers. This means that you can provide information about the product using different modes of communications such as demo videos, audio instructions, user experience, and tips and tricks. This can actually attract users’ attention more efficiently and sell the product more successfully.

Disadvantages of Ecommerce or What Drives Retailers Away from Online Business

Starting an online business from scratch or converting it from brick-and-mortar can potentially become a rewarding change, but it does not come without certain challenges. Let’s take a look at some disadvantages of ecommerce.

Disadvantage #1: Privacy & Security Concerns

Unfortunately, the increase of online shoppers induced an increase in cybercrime as well. According to the Insurance Information Institute, identity theft and fraud reports in 2020 spiked up 45% in comparison to 2019.

This new “trend” is damaging to the e-commerce economy, but still not enough to stop it from growing. We might as well encounter new and more efficient fraud prevention systems in the future.

Disadvantage #2: The Risk of Downtimes and Tech Issues

Joining the online world cancels brick-and-mortar physical restraints, but imposes new ones via technological issues. They often represent a more complex, interconnected and harder to discern systems of errors such as:

·  System failure

·  Human error

·  Network outages

The downtime due to these events might be only temporary, but it can be long-term damaging for the brand itself. For example, it can cause data loss, damage the productivity and reputation of the brand.

The good news is that you can address this issue even before it arises. Magento support services come in handy in case you come across some frustrating downtime episodes.

Disadvantage #3: Immense Online Competition

According to Statista, in 2020 e-commerce sales worldwide amounted to 4.28 trillion US dollars revenues, and are projected to grow to 5.4 trillion US dollars in 2022. And now everyone wants a piece of that pie! This means that the online market is a pretty crowded place to thrive, and you will need to work extra hard to stand out. Make sure you get well acquainted with the competitors if you plan to join the saturated market of e-commerce.

Disadvantage #4: Uncertainty About the Product Quality

Even though e-commerce is trending and providing some pretty handy and practical shopping possibilities, certain customers are just not buying it, literally! The lack of possibility to check out the product personally is just way too repulsive for some. According to the Smart Insight survey, the inability to see and touch the product is actually the first reason why customers opt for brick-and-mortar stores instead.

In this case, a favorable return policy is an absolute must. If you need more information about e-commerce return policies, you are just a click away.

 Disadvantage #5: Tricky Shipping Times

OTD (On Time Delivery) can be very challenging for online retail businesses. Mostly because it is related to third-party services and can’t be fully controlled by the seller. According to the Smart Insight survey, 34% of customers wouldn’t shop online because the delivery takes too long, 25% find delivery costs too high, and 14% find complicated return policies repellant. Naturally, the customer is always right! In this case, being honest and realistic about delivery time with your customers goes a long way. 

 Disadvantage #6: Taxation and Legal Difficulties

In this case, access to the global market and wider public represents a setback. If you sell globally, you are obliged to keep good track of local legal and taxation regulations. For instance, if you sell wine online, you should know that every country requires different kinds of permits and licenses for a liquor store. And unfortunately, not all are adapted to selling spirits online (as in the case of some provinces in Canada).

As overwhelming as it is, this hurdle however is not impossible, it just requires more time, work, and accounting expertise. Make sure you are ready for it!

Is It Worth Getting Into Ecommerce?

Numbers never lie. And after analyzing all the advantages and disadvantages of ecommerce to a business, we arrive at a conclusion that the exponential growth of e-commerce trends in recent years is undeniable.

Cost-effectiveness, easier access to the global market, and a pragmatic approach to data manipulation are extremely captivating. Also, new creative approaches to digital marketing can be pretty stimulating and inspiring both for users and sellers. However, keep in mind that knowledge is power, and make sure you gather all the right information about both merits and demerits of e-business before it overwhelms you.