ECOMMERCE POSITIVE AND NEGATIVE

ECOMMERCE POSITIVE

Convenience: Ecommerce allows customers to purchase products or services from the comfort of their own home, at any time of the day or night.

Increased reach: Ecommerce businesses can reach customers from all over the world, whereas brick-and-mortar stores are limited to their local area.

Lower overhead costs: Ecommerce businesses generally have lower overhead costs than traditional brick-and-mortar stores, as they don't need to rent or maintain physical storefronts.

Personalization: Ecommerce businesses can use data and analytics to personalize the customer experience, such as recommending products based on browsing or purchase history.

24/7 operation: Ecommerce businesses can operate 24/7, allowing customers to purchase products or services at any time, which can result in increased sales.

Cost-effective marketing: Ecommerce businesses can use various cost-effective digital marketing strategies, such as social media advertising, to reach customers.

Better inventory management: Ecommerce businesses can use software and tools to manage inventory, track sales, and reorder products automatically, which can help to reduce the risk of stockouts and overstocking.

Larger product selection: Ecommerce businesses can offer a larger selection of products than traditional brick-and-mortar stores as it's not limited by physical space.

Increased competition: Online marketplaces such as Amazon and Etsy have made it easier for small and new businesses to establish their online presence and compete with big businesses.

Consumers worldwide shifted a great deal of their purchasing to online retailers when the COVID-19 pandemic struck in 2020. E-commerce sales increased by 43%, or nearly $250 billion, in 2020.1 Although most pandemic restrictions in the United States are gone, e-commerce is still booming. If you run or plan to run a business, make sure your customers can purchase your products and services online.

Many smaller consumer businesses rely on e-commerce completely to sell their products. It is more cost-efficient to operate completely online, and advanced digital advertising technology allows businesses to more effectively target potential customers. Understanding the advantages and disadvantages of operating an e-commerce business allows entrepreneurs to determine if it is right for them.

Pros

Lower overhead expenses

24/7 selling opportunities

Increased consumer base and ability to scale business

Customer data collection and target marketing capabilities

Preferred method of shopping

Cons

No customer in-store experience

Delivery

Technology and security

Easy price comparison and matching

Pros Explained

Lower overhead expenses: Many small e-commerce businesses can be operated by a solo entrepreneur, which means you likely won’t need to hire employees until you have sufficient revenue and sales to justify hiring someone. You also won’t need to face the cost of operating a brick-and-mortar store. You won’t need to lease property or face any of the numerous costs that come with operating a physical store.

24/7 selling opportunities: E-commerce businesses are open as long as the internet doesn’t crash, since you don’t need to be available every time someone makes a purchase.3

Larger customer base: Anyone your business can deliver to, who has access to the internet, is a potential customer.

Customer data collection and customer targeting capabilities: You’ll have access to customer data. You should be able to track customer buying habits and send out automated and customized emails encouraging future purchases. Targeting previous customers with carefully selected marketing messages can increase sales.

Cons Explained

No customer in-store experience: According to Raydiant, 44.4% of consumers still prefer shopping in person when possible.4 This may be especially valuable to customers who want to try out a product or ask questions about different products.

Delivery: Many e-commerce businesses offer next-day delivery, and Amazon offers some customers same-day delivery. However, a one-person e-commerce store can’t usually ship items to customers as quickly. To increase your shipping speeds, try to have your products ready to ship ahead of time.5

Technology and security: Phishing, malware, and ransomware can compromise or shut down your e-commerce business. You could be locked out of your systems or data if you don’t have sufficient protections in place. You’ll also need to ensure that attackers aren’t stealing credit card information or personal data from your customers. If your customers don’t trust your site, you won’t be able to sell them products in the future.

Easy price comparison and matching: Consumers can compare prices almost immediately. They don’t need to go to another store to find out who has the lowest price. Some shoppers will search for the absolute lowest price when deciding where to buy a product from, which means you’ll need to stay on top of competitor’s prices. Selling products online also means your competitors can monitor your prices fairly easily.

Preferred method of shopping: According to a 2022 Raydiant report, 55.6% of customers prefer shopping online.4