Web Development

15 Must-know Ecommerce Advantages and Disadvantages

Ecommerce may be a holy grail business solution but that doesn't mean that it's a flawless one. Before spending your resources on building an owned selling platform it's important that you gain a full grasp of ecommerce advantages and disadvantages.

You don't have to be a business expert to see that ecommerce has transformed the modern marketplace in recent years. According to Statista, the global retail ecommerce sales of business-to-business are predicted to exceed USD1.1 trillion in 2021. While it is a dominating approach, selling goods or services online has its drawbacks.

This means you must look past the hype and form your opinions on the usefulness of ecommerce. How does it benefit your businesses and, ultimately, how will it help your customers address their needs? A balanced understanding of both points of view will help you assess whether an ecommerce solution is what you and your customers need.

The most successful businesses comprehend all of the advantages and disadvantages of ecommerce, even before they begin to see higher sales. On our end, with all our years of handling ecommerce web development services, these are things we always sure to tell your clients of its pros and cons so they know where their money is going.

The disadvantages of ecommerce

While it may initially appear that ecommerce could solve some of your business problems, an online store has its own set of unique flaws and vulnerabilities.

These are problems specific to this operational model that you need to be aware of to avoid typical pitfalls. Learn some limitations of ecommerce below:

1. Ecommerce is extremely competitive

Even before the pandemic, ecommerce has been quickly expanding in the Philippines, fueled mostly by online marketplace activities. However, in contrast to other nations, the Philippines continues to lag behind, in terms of ecommerce development.

To date, the Philippines' ecommerce reach has yet to be as established as that of other nations, leaving plenty of room for expansion in 2021. In terms of real world statistics, numerous businesses have only just begun to develop their ecommerce platforms in 2021.

In the Western part of the world, on the other hand, discussions on ecommerce competitiveness won’t be complete without mentioning Amazon. Amazon isn't the only giant making it difficult for small businesses to thrive, there's much competition in practically every market.

In truth, the finest niches are usually the most competitive. This is why so many businesses are drawn to them. However, the more competitive a specialized field is, the more expensive its advertising and marketing needs would also be.

There are companies whose ad budgets ensnare the high-profile phrases on Google Adwords and drive up the cost of clicks to absurd levels. There are shops that can ship faster or offer free shipping. And then there's the competition on who has the lowest costs.

Differentiating oneself from the competition entails discovering new marketing views and developing a strong brand identity. With so many businesses competing for the same audience, beef up your ecommerce practices with local SEO strategies so you can gradually move ahead.

2. Ecommerce is susceptible to errors that sacrifice operational hours

The worst ecommerce disadvantage is when no one can buy from your business because your website has crashed. You can’t make a sale if your website keeps on crashing.

For example, if you pay the minimum price for hosting and have a rush in traffic from a high-converting ad, your site would most certainly crash.

No customer wants to visit a website with a complicated or dull navigation menu.

If your customers don’t find what they are looking for easily, then they might bounce from your website without making any purchase.

Your visitors will leave your website if it is sluggish, ugly, badly designed, or does not work properly. An ecommerce firm cannot exist without a powerful website.

To save your online business from a sluggish performance, make sure your website is user-friendly, easily navigable, and loads at a lightning speed.

3. Ecommerce website could encounter security issues

Every time a consumer enters their information onto a website, they incur the danger of identity fraud and other risks. If your website does not persuade visitors that the checkout procedure is safe, they may be put off from making a purchase.

Businesses, on the other hand, are vulnerable to phishing attempts and other types of assaults. If one of your workers stumbles on a malicious link, it might undermine the operation of your website, financial information, or worst of all, the information of your customers.

When collecting this type of sensitive information, suitable protections must be in place to eliminate the danger of security fraud and phishing attacks.

Whether you start your online store on your own or with the help of an agency, you need to make sure that it is set up to handle secure transactions (with SSL) to avoid fraud.

4. Ecommerce lacks personal touch and face-to-face relationships

This issue might be of particular importance to customers shopping for specialty items, as they might wish to talk to an expert in person regarding the best product for their needs. A strong hotline cannot substitute face-to-face engagement with a specialized sales representative. In addition, many clients enjoy clothes shopping and desire to try on the goods before deciding to buy.

The chance to chat with a sales assistant about your requirements and difficulties is frequently more efficient than attempting to locate or compare items on your own. The ability to look your consumer in the eye and convey the worth of your items is the most significant loss.

5. Ecommerce entails complex taxation guidelines

There is presently no specific legislation in the Philippines that mandates the taxation of ecommerce transactions. This is because in terms of taxation, the National Internal Revenue Code (Tax Code) draws no distinction between firms having a physical presence and those with a virtual existence. In this regard, internet transactions are taxed in the same manner as brick-and-mortar transactions. Unless a taxpayer qualifies for an exemption, he or she is required to pay taxes.

As a business owner, you may be eager to offer your items all over the world. It does, however, imply that you must adhere to the taxation requirements in each country where you intend to supply. Aside from the time required to study them all to ensure compliance, you will need to address the issue of cost-effectiveness for your business.

This has the potential to complicate accounting, compliance, and taxation.

The advantages of ecommerce

Though there are some disadvantages to ecommerce, there are also a number of advantages that outweigh these. Now that you’ve gained a grasp of the downsides of the platform, let’s now tackle the unique benefits of ecommerce.

What is the primary benefit of having an ecommerce business? How do they affect the shopping experience of customers? Is it worthwhile to give ecommerce a shot?

Explore some of these significant issues below and see why the following ecommerce benefits make sense:

1. Ecommerce has limitless revenue potential

Another benefit of ecommerce is that online stores are available all the time for business. Most physical location stores are open from 9 a.m. to 5 p.m., offering you a competitive advantage. By being open at all hours, you can attract more customers, resulting in more revenue.

Consider your target client who does not work regular hours or is too busy to go shopping. With an ecommerce store, you can reach out to those who have irregular work schedules or don't have time to purchase in person.

What about clients who purchase late at night? You don't have to have an employee working the night shift to meet their requirements. All you need to do is automate your ordering processes so that consumers receive a confirmation email when they place their order, giving them peace of mind.

If you play your cards right, you have the opportunity to sell more products and earn more profit compared to a physical store.

2. Ecommerce will enable you to reach more customers

The ability to reach thousands of new clients on a daily basis is a significant advantage of ecommerce. Traditional brick-and-mortar companies are confined to customers who live and work nearby or who pass by on their way somewhere else.

If you establish an online shopping presence, you will never be restricted by region again. In essence, if you can market your business online and people are interested in your items, everyone in the globe might be your client, as long as you are ready to ship to them.

According to Entrepreneur, over half of the businesses reported a substantial increase in consumers after going digital, and 64% reported a substantial gain in income.

3. Ecommerce helps reduce operational costs

It is costly to open a store. You must pay rent, furnish the area, obtain the necessary equipment, and engage workers to operate in it.

Starting a business online, on the other hand, is far less expensive. If you currently have a client base and want to establish a bespoke website, you will most likely pay a few dollars for the coding and development of that site.

If you're just getting started, you can always seek a "pre-built" option, or better what are known as a third-party ecommerce platform. That is, the website's ecommerce functionalities are already in place, and you only need to set up an account, add your products, and voila! You’re now selling online.

But regardless of which platform you choose, one of the most appealing perks for online businesses is that your operational costs are often significantly lower.

4. Ecommerce can adapt to your needs

An ecommerce website is up and ready within a few days if you choose a hosted solution. Of course, a custom-built website will take longer.

You can update your product offers, display, and promotional materials on an ecommerce site nearly instantaneously. In a real store, you'll have to physically shift items around, which takes longer. An ecommerce site is incredibly adaptable, allowing you to respond to changing client wants as well as changing corporate demands.

Finally, an ecommerce business allows you to be flexible. As the proprietor, you may operate from any location with an Internet connection. You might not even need an office; you can work from home!

5. Ecommerce can manage multiple purchases

How many clients can a physical store serve at the same time? Three on average, with a maximum of five in a shop (excluding supermarkets). At an online business, there is no limit to the number of orders that may be placed, processed, and paid for at the same time. Furthermore, clients do not have to wait in line to complete their purchase, which is a significant ecommerce benefit for those who are impatient.

6. Ecommerce automation can help reduce human errors

The bulk of shop activities are incorporated into your ecommerce platform and are programmed to run automatically. It's fantastic since it reduces the possibility of a mistake, such as a lost order or an inappropriately charged payment. There is a benefit in that they will not confuse or annoy your consumers, resulting in creating a terrible reputation.

7. Ecommerce makes in-depth product description available 24/7 

How much information about an item can a physical retailer give its customers? Certainly not much. Customers select whether or not to purchase a product based on the packaging and a brief description offered by the manufacturer.

When you purchase online, however, you receive a more extensive product description sometimes with multi-angle shots, tips, unboxing videos, and a list of numerous similar items. Furthermore, online purchasing allows you to read product reviews left by other customers. All of this information contributes significantly to a better informed buying decision. It is one of the most significant benefits of ecommerce and internet business.

8. Ecommerce offers easy access to customer data

One of the finest ecommerce benefits is the ease with which you may obtain data for consumer analysis. Most individuals are hesitant to give their email addresses or postal codes to physical stores. Through ecommerce, you may legally obtain your customer's name, postal address, email address, and phone number. This implies you have at least three distinct ways to interact with your customers and build a relationship with them.

An important caveat you should consider in this regard is that: The ability to collect data from your customers requires responsible handling of their personal information. For example, here in the Philippines, your collection and handling of data should strictly be in compliance with the provisions stated in Republic Act 10173 or the Data Privacy Act of 2012.

In a nutshell, businesses and other entities requesting information from their end-users should must ensure that:

  • Data should always be gathered with consent.
  • Lawfully handle the data based on the requirements in the Data Privacy Act of 2012.
  • Ensure confidentiality of the gathered data.

9. Ecommerce businesses are scalable

One of the advantages of ecommerce is the ease with which the platform can be scaled. You may boost your ad budget when people are clicking and buying without having to worry about keeping up with demand, especially if you dropship.

With ecommerce business, you may add new items to your site without having to worry about shipping or physical inventory, allowing you to expand swiftly.

10. Ecommerce performance can be tracked

With the aid of analytics, you can gather information about a customer and gain a clear knowledge of their demographics, including their gender, age, hobbies, the kinds of products they prefer, and much more. In addition, you can easily track which products are performing well and which aren’t. You may design the shop to automatically offer consumers the goods they are most likely to be interested in, based on these data.

Analytics is a great way to explore business opportunities and figure out what you need to change to improve your return on investment.

To wit, ecommerce is not a perfect solution that is invincible to outside factors. However, despite its inherent weaknesses, it does offer a lot of redeeming value for your business. A balanced knowledge and understanding of both will help you decide and act accordingly.

To recap, below are the advantages and disadvantages of ecommerce:

DisadvantagesAdvantages
1. Ecommerce is extremely competitive
2. Ecommerce is susceptible to errors that sacrifice operational hours
3. Ecommerce website could encounter security issues
4. Ecommerce lacks personal touch and face-to-face relationships
5. Ecommerce entails complex taxation guidelines
1. Ecommerce has limitless revenue potential
2. Ecommerce will enable you to reach more customers
3. Ecommerce helps reduce operational costs
4. Ecommerce can adapt to your needs
5. Ecommerce can manage multiple purchases
6. Ecommerce automation can help reduce human errors
7. Ecommerce makes in-depth product description available 24/7
8. Ecommerce offers easy access to customer data
9. Ecommerce businesses are scalable
10. Ecommerce performance can be tracked

Key takeaways

Armed with a basic understanding of the benefits and drawbacks of ecommerce businesses, you should be prepared to start your own. Despite the disadvantages, ecommerce has become so popular that most brick-and-mortar merchants have established ecommerce platforms to supplement their physical operations.

  • Ecommerce is not a fleeting trend; it is the future and a result of the aforementioned technological advancements.
  • You'll need to make a serious commitment to develop a fantastic website and a strong online presence. You must be attentive to the demands of your company and its customers.
  • Your business needs to identify marketing tactics that will help differentiate itself from the competition and establish itself as a respected brand.

Are you struggling to find the right ecommerce strategy for your business? We’d love to hear from you! Drop the Propelrr team a line over at our Facebook, Twitter, or LinkedIn pages.

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