20 ADVANTAGES AND DISADVANTAGES OF E-COMMERCE THAT YOU SHOULD KNOW

Are you thinking about starting an e-commerce business? Fantastic! Now is the perfect time to enter this field. According to statistics, global e-retail sales are expected to grow to $4,8 trillion by 2021. In fact, e-commerce is growing so rapidly that it's projected to serve a staggering 2,14 billion people. Of course, there are many more benefits to e-commerce, which we'll discuss below.

In this article, you'll discover the advantages and disadvantages of online stores so you can decide for yourself if this is the right type of business for you. These advantages of online businesses will help keep you enthusiastic and motivated throughout your entrepreneurial journey.

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What are the advantages of electronic commerce?

You came here to learn about the advantages of owning an e-commerce business. At the top of the list is the low financial cost, but other advantages include international sales, customer retargeting, personalized shopping experiences, and more. These benefits will help you determine if starting an online store is right for you.

E-commerce advantage #1: low financial cost

One of the benefits of e-commerce is its lower startup costs. Brick-and-mortar retail stores have to pay thousands of dollars to rent a store location. They also have various other startup costs, such as store signage, store design, inventory purchases, sales equipment, and more. And let's not forget that the store owner also has to hire staff to work and manage each location. They may also need to hire security personnel depending on the value of the merchandise in the store.

However, for an e-commerce dropshipping store, startup costs are estimated at $418, and e-commerce stores only pay a maximum of $3192 per year on Shopify for virtual space. Shopify also includes a user-friendly platform, hosting, free Shopify themes, great apps, and many other excellent benefits.

Depending on the type of e-commerce business you run, you may only need to hire employees once you reach a certain size. Since your online store is online, these employees can work remotely, making it easier to find staff that fits your business. If you choose to offer dropshipping online, you won't need to purchase inventory in bulk, saving you a significant amount of money.

Branding is also cheaper with e-commerce. Your store's logo is usually more affordable than a storefront sign. And graphic designers (yes, even the best ones) often cost less than an offline paint job. Your business expenses are generally much lower, which is one of the most attractive benefits for new entrepreneurs.

E-commerce Advantage #2: 24/7 Potential Revenue

Another advantage of e-commerce is that online stores are always open for business. With Facebook ads, you can attract someone at 11 pm or 4 am, anywhere in the world. In contrast, most brick-and-mortar stores operate between 9 am and 9 pm, giving you a competitive edge. By being available around the clock, you can attract people who would normally pick up a product in-store if the retail location were open.

Think about your audience who don't work regular hours or are too busy to go into a store to buy something. An e-commerce store allows you to attract those who may have unusual work schedules or simply don't have time to shop in person.

What about customers who order at night? Well, employees don't need to work a night shift to fulfill their requests. All you need to do is automate your ordering systems so customers receive a confirmation email when they place their order, giving them peace of mind.

And there's one more benefit to opening an online store instead of a physical store: you'll never need to hire a security guard!

E-commerce advantage #3: Selling internationally

The next benefit of e-commerce is that a new brand can easily sell to customers worldwide. You can discover your audience, whether they're in the UK, South America, or neighboring countries. If you choose to ship directly from AliExpress, many products offer affordable ePacket shipping or free shipping. This allows you to price and ship your products competitively to a global audience.

Selling globally is a major achievement, as it helps you build your brand much faster, expands your market exponentially, and allows you to turn a profit long before your local competitors. Furthermore, with our international shipping tips, you can avoid many of the headaches associated with shipping products across borders.

E-commerce advantage #4: easy-to-display bestsellers

The benefits of e-commerce, such as showcasing bestsellers, make it easier to display products to your customers. While you can design a physical store to persuade people to buy certain products, compared to browsing through different aisles and shelves, it's easier for a customer to find the best-selling items in an online store.

The reason you want customers to buy your best-selling products is that they're tried and tested. Other customers have already purchased them and are happy with their purchase. If you want to showcase new products to customers, you can include them in your upsell ads, email marketing, or retargeting campaigns. With an e-commerce store, you can include excellent product photos and descriptions to influence customer choice.

E-commerce advantage #5: Personalized online experience

Website personalization can help improve the online shopping experience. One of the biggest advantages of online business is that you can create customized landing pages for different audiences. This can entice them to buy from you without much extra effort on your part. It's not like customers who walk into a physical store and need to be nurtured from the moment they walk in. You can do all the hard work before launching a campaign and then relax once you start marketing to your customer base.

You can also personalize the experience you provide through your email marketing campaigns. Try segmenting your email lists based on purchases made, location, or even how much a customer spent. Another recommendation is to retarget customers who visited your online store by showing them an ad for a product they added to their cart but forgot about. If your online business has a login feature, you can display a welcome message like "Welcome back (name)."

Product bundles can help customers buy more for a better price, increasing the average order value. You can also personalize upsells based on what the customer has viewed or what you think they might like based on their purchasing behavior.

E-commerce advantage #6: Affordable employees

One of the benefits of e-commerce is that hiring employees is affordable, and as mentioned earlier, you can hire from anywhere in the world. You can also choose to outsource the work to virtual assistants in countries where the cost of living is much lower.

You'll need fewer employees for an online business than for a brick-and-mortar store. A major advantage of online businesses is that you don't need to hire staff at launch. You can start and run an e-commerce business on your own. Only when you begin to grow or when you have the capital should you start building a team.

E-commerce advantage #7: Easier to encourage impulse buying

Another benefit of e-commerce is that you can capitalize on impulse purchases, as online shoppers are more inclined to engage in this. If you have attractive product photos with vibrant colors or human emotions, you can create ads that generate impulse buys.

You can also implement a variety of scarcity tactics, such as countdown timers or displaying limited quantities to encourage purchases. Additionally, if you have a new or limited-edition item in your inventory, consider testing it for impulse buys to see how people respond. Since impulse buyers tend to be more social and image-conscious, they may purchase items simply for the chance to boast about getting the latest product before anyone else.

Ecommerce Advantage #8: Easy to retarget or remarket to the customer

It's easy to create retargeting ads to reach customers in your area when you run an online business, making it one of the most cost-effective e-commerce benefits. You can create a Facebook pixel to show ads to your potential customers in their Facebook feeds. You can use the Shoelace Shopify app to retarget people who visit your store but don't make a purchase.

With e-commerce stores, you can retarget people who add products to their cart but abandon them without purchasing, or those who visit a blog post and never buy. You can easily collect email addresses with an effective pop-up or lead magnet and continue marketing to your customers even after they leave your site.

E-commerce advantage #9: Customers get a less intrusive experience

e-commerce customer experience
Some people are hesitant to enter a physical store because they are forced to interact with store employees. Whether it's learning about a sales promotion or being asked questions during the shopping experience, some customers may prefer to shop online, as it can be a bit less intrusive, making it one of the best benefits of e-commerce.

If a customer wants to contact the store owner, they can click on a live chat feature, send an email, or send a Facebook message. The store owner, in turn, can train customer service staff to answer inquiries effectively. When staff are unavailable, they can use a Facebook chatbot to direct customers to frequently asked questions and other self-help resources.

E-commerce advantage #10: Easily access customer data

One of the best advantages of e-commerce is that you can easily access customer data for analytics. Most people feel uncomfortable giving email addresses or postal codes to brick-and-mortar retailers. In e-commerce, you can obtain your customer's name, postal address, email address, and phone number. That means you have at least three different ways to communicate and build a relationship with them.

You can even have them complete marketing surveys, share their date of birth with you, and more. If you ask them to create an account, you can gather even more information to better serve them. If your customers are located in Europe, be mindful of GDPR regulations when communicating with them.

E-commerce advantage #11: Able to process a large number of orders

If you choose dropshipping, you can easily process a large number of orders. As your business continues to grow, you can choose to hire employees to help with order processing. Furthermore, with dropshipping, you don't need to physically have the product in stock to sell to a customer. Therefore, you don't have to worry about inventory control like brick-and-mortar stores do.

In retail stores, long queues can discourage people from buying. With e-commerce, there is no waiting time. A customer can place orders on their own schedule without delays, allowing for a high volume of orders.

E-commerce advantage #12: You can scale your business quickly

One of the benefits of e-commerce is that it's easy to scale your business. You can increase your advertising budget as people click and buy without worrying too much about keeping up with demand, especially if you offer dropshipping.

With brick-and-mortar stores, it can be difficult to expand product lines or add more cashiers due to limited space. You'll need to find a larger space, renovate, or wait for your lease to expire to scale your business. If you create informational products, you face another challenge, as writing ebooks, courses, and more takes time.

With the dropshipping e-commerce model, you can add new products to your store without having to worry about shipping products or maintaining inventory, allowing you to grow quickly.

Ecommerce Advantage #13: Grow your business organically with content

With the E-commerceYou can increase organic traffic and sales with e-commerce blogs. From creating videos to writing blog content, you can optimize your store to boost traffic and sales without spending more money. Furthermore, you can not only generate organic traffic through content creation but also monetize those customers with retargeting ads.

A brick-and-mortar retailer would need to market to its customers to encourage visits or ensure that they are located in a high-traffic area to attract more shoppers.

What are the disadvantages of e-commerce?

As with any profession, there are scams. So, when starting an online store, it's important to be realistic. Below are some common disadvantages of e-commerce that merchants experience, which don't apply to brick-and-mortar stores.

Disadvantage of e-commerce #1: Nobody can buy anything during a site outage

The worst downside of e-commerce is when no one can buy from your store if your site crashes. That's why it's crucial to ensure your website is hosted on the right platform. For example, if you're paying the minimum hosting fee and get a traffic boost from a high-converting ad or a TV commercial like Shark Tank, your site is likely to crash.

Fortunately, e-commerce solutions like Shopify offer free hosting in their monthly fee, giving you access to one of the best servers on the market. In recent memory, there was only one instance where sites were down. However, e-commerce stores weren't the only sites affected. Twitter, Spotify, SoundCloud, and others were also impacted by this outage. The issue was resolved the same day. However, site outages on platforms like Shopify are so rare that they are unlikely to cause problems for your business.

Disadvantages of e-commerce #2: Customers can't try before they buy

While this is currently a problem for many retailers, it won't be a long-term issue. With augmented reality, more stores are starting to add AR elements to their online presence to allow customers to virtually try on products. Augmented reality e-commerce companies offer solutions for businesses to create a more interactive experience for their customers.

How exactly does AR work? You can check out Sephora's Virtual Artist app for an example. The beauty retailer offers an augmented reality experience where customers can virtually try on different eyeshadows, lip colors, and more.

Disadvantage of e-commerce #3: E-commerce is highly competitive

Competing for customers is another major drawback of e-commerce. The reality is that the best niches are often the most competitive. That's why so many entrepreneurs are drawn to them. However, the more competitive a niche is, the more expensive advertising becomes. There are a couple of ways to avoid this. First, you can implement a different marketing strategy than your competitors.

If all your customers are being targeted by competitors through Facebook ads, you can try to rank organically with SEO optimization. If all your competitors are using Pinterest, you can try Instagram marketing if your audience is highly visual. Secondly, if your ads are expensive, you can drive traffic to blog posts and redirect visitors to create lower-cost ads. Working on CRO campaigns can help you achieve much greater success than your clients.

Disadvantages of e-commerce #4: Customers can be impatient

If a customer has a question in-store, a salesperson is on the floor ready to answer it. However, one drawback of e-commerce is that most businesses experience a delay in responding to customer inquiries. The reality is that most customers expect a response from a company within an hour on social media. If you take too long to reply to their message, they may get angry and shop elsewhere. You need to be online 24/7.

You can hire customer service representatives trained to make your customers happy through Upwork. Or you can work with a chatbot to help customers find answers any time of day or night. But all of this still doesn't replace having a person who can serve each customer face-to-face.

Disadvantage of e-commerce #5: Shipping times can be long

Customers consider shipping times to be one of the biggest drawbacks of e-commerce. When a customer shops in person, they can take the product home immediately. But with online shopping, most customers receive their products in a week or more.

Although Amazon offers same-day delivery, it wasn't a profitable model until they created Amazon Prime. It only became profitable because they have tens of millions of Prime members. The solution is to be transparent with your customers. Let them know when they can expect packages when they place an order.

Disadvantages of e-commerce #6: Physical retail remains more popular despite the decline

Although one of the benefits of e-commerce is its growth, brick-and-mortar retail still holds the largest market share. In 2020, the retail industry had accumulated $4,184 trillion, even though the COVID-19 pandemic severely impacted offline stores. However, online commerce alone generated $709,78 billion worldwide.

Starting an online business in the early stages allows you to become a leader in your niche. However, if you have a physical store, you might consider creating an online presence for your business, and vice versa. For example, Amazon, despite being the largest online retailer, is now opening physical stores. Similarly, retailers like Gap and Macy's are rushing to go online. As things stand, there is enormous potential that e-commerce businesses can capitalize on.

There you have it: 20 pros and cons of e-commerce that reveal both the strengths and weaknesses of this business. As you can see, there are more advantages to starting an e-commerce business. Furthermore, you can overcome the challenges by being persistent and implementing the solutions mentioned above. E-commerce is a booming field, and we only expect it to grow in the coming years.

Fascinated by e-commerce? Ready to give it a try?

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