Ecommerce is an industry that continues to grow, an indication that online selling works and it plays a massive role in reshaping the global marketplace.
On a microscale, however, things are not as glossy as they may seem. When embarking on an online business venture, the basics are the same as for a brick-and-mortar retail business, but the pros and cons are distinct.
The plan is to weigh the pros and cons of this revenue stream to help make an informed decision that shapes your business strategy for smooth running and success.
Over 90% of all Internet business start-ups end up failing within the first four months. As a result, many online businesses go through failure before picking up in terms of growth and sales.
It is imperative to understand the reasons this happens frequently and to apply logic in leveraging the opportunities and mitigating threats that may affect a product or service.
The Advantages of running an online business
Leverage these benefits to scale your online business.
1. Ability to collect relevant customer data
You can collect a wealth of information about your customers buying and browsing habits online using web cookies on eCommerce websites. The opportunity to do this allows you to create detailed customer profiles for your target market.
These portraits, together with useful metrics, can help guide how you tailor your online advertising, how to optimize landing pages and how to develop and personalize your product or service.
You can also send customized emails to your customers to inform them about a sale, promote new products or keep in touch with them.
2. Ability to customize orders
A customer’s experience when purchasing your products should be fulfilling and seamless. When selling online, the customers are able to personalize the exact products they wanted, down to the colour, style, and size – making them feel valued.
The heightened anticipation despite the duration it will take to ship the goods to them is valid since they know they did not just settle for products they didn’t need.
With the right system, you can make your online store an endless aisle even when products are out of stock. Ensure the customers do not leave empty-handed using in-store inventory to locate the customized items in your supply chain and have them shipped to the customer.
3. Low overhead costs
Online businesses have the luxury to avoid the excessive overhead costs unleashed in form of high storefront rent, and vague insurance policies, utilities, maintenance or even hired staff to stay afloat. The worry about where there’ll store inventory is eliminated.
With less overhead costs to cover, some wonderful sellers pass on the savings to their customers by lowering their prices – instead of increasing profit margins.
4. Expanded reach
The main reason customers prefer online purchasing is the convenience it offers. You can buy from anywhere you are, and with proper logistics and shipping capabilities, the online business will deliver your purchase right at your doorstep.
This new frontier has seen physical storefronts getting fewer customers in their establishments while online businesses are widening their target market reach from thousands within cities to millions of global audiences.
It doesn’t stop there. Develop good eCommerce SEO to drive even more traffic to the websites.
5. Easy to adapt to market needs
Online sellers get a pass with no fuss when adapting to their client’s new needs. Since the customers have a greater reach that does not depend on locality, it is convenient to try out new things or to adjust systems that do not work efficiently.
For example, most online customers prefer using Paypal as a comfortable mode of payment. You can set this up as fast as you can and avoid chasing customers away.
The Disadvantages of selling online
As discussed, mitigating the challenges below will determine your chance of survival.
1. A saturated marketplace
There are so many businesses that have moved to establish their presence in eCommerce. As a result, your business will be stack against a massive number of competitors also vying for the same visibility and a wider audience.
Marketplace saturation can push you farther down the ladder, making it difficult to penetrate it. It’s your responsibility to find what aspect of your business gives you an edge over your competition and use it appropriately.
2. Poor credibility
Physical stores enjoy a certain level of trust that exists between a customer and the business. Investing money in a physical establishment convinces sceptical shoppers that the store owner has poured their time, effort and resources in something they believe in.
A customer would always find a physical shop more credible than a small business online still struggling to prove legitimacy.
3. Lack of face-to-face interaction with customers
Many consumers still prefer to experience the physical interaction with a human or product before purchase. It helps develop familiar levels of trust in you and your business.
If you impress your customer base with how you speak to them, it can prompt them to share their enjoyable experience with others.
Unfortunately, some customers struggle to connect with a seller who operates online. For products that may require further consultation with an expert on which one would best solve their needs, an online store would not be ideal.
4. Risk of security and credit card fraud
Customers always run the risk of identity fraud when shopping online. If your site is not well secured, your business can get exposed to countless forms of cyberattacks which compromise your site’s functionality or customer’s information.
If you have not assured potential customers of the security measures in place during checkout, they will avoid your site like the plague.
5. Poor website and mCommerce experience
If your web host is unreliable and your website goes down randomly with long periods in between fixing the connection, chances of you losing business are so high. A potential customer would not stand an error message while trying to access your website.
Similarly, slow loading speeds on the website and a bad user interface on mobile will dissuade potential customers from making a purchase.
Maintain your website regularly to avoid such cases. Ensure your site is mobile responsive since most customers prefer using their phones to buy online.
Create a seamless shopping experience on all your platforms. The look and feel of your storefronts, whether online or offline, should be cohesive. Do not use separate inventories on your different channels – use a single stock pool for easy visibility.
To be a successful online business, you should understand your pros and acknowledge the cons. This way, you’ll be able to create a sustainable and realistic strategy, process and technology for growth.
Make the most out of the situation with these tips, and your business will enjoy maximum benefits.