Advantages and disadvantages of e-commerce

 E-commerce had revolutionized our way and it changed the way traditional business worked.  Electronic commerce proved to be profitable for many businesses however, similar with other business it has its own positive and negative aspects. To be successful in eCommerce sector it is critical for businesses to be aware of these aspects.

 

Advantages:

I.                   A wider market: E-commerce allows businesses to reach customers everywhere in the world. Due to the lack of physical limitations online stores can sell anywhere assuming that they can ship the product.

 

II.                Easier to retarget customers: data mining provided business with information related to customers and their preferences. This allows businesses to create marketing campaigns, specific ads, and pricing strategies.

 

III.             Increased selection: E-commerce allows businesses to respond fast to consumers and market demands. Online stores proved to offer a wider selection of items comparing with the traditional shops.

 

IV.            Lower cost: An online store does not require a physical location therefore, businesses do now have to spend on insurance, building maintenance, and property taxes. E-commerce store become easy to set up and maintain.

 

V.               Convenience: Online stores provide a 24/7 coverage which it is convenient for businesses since profit can be generated passively and customers who can purchase products and services at any time.

 

Disadvantages:

I.                   Limited customer support: online stores in general provide customer support and online chat however, customers can not ask for a demonstration of product features from employees.

 

II.                Lack of tactile experience: this is a negative aspect of online shopping that can impact sales on different products that rely on user’s sensorial experience. Businesses provide solutions to ameliorate this negative aspect namely superior advertising and fast delivery option however, the tactile experience cannot be replaced regardless of advertising quality.

 

III.             Reliance on technology: E-commerce websites require fast internet connection to provide greater user experience. Maintenance periods, overwhelming traffic or website breakdown could impact businesses revenue.

 

IV.         Higher competition: Due to lower entry limitation, customers ability to compare online prices forces businesses to be constantly mindful of market strategies causing them to be competitive on price causing reduction in profit margin.

 

V.             IT securities issues: the fast-paced sector of E-commerce and its highly competitive nature forced many businesses to ignore security concerns. This resulted in data loss or data theft and credit card causing loss of revenue and reputation among businesses.

 

Similar with other business types E-commerce provides its own challenges and advantages that any businesses owner should be aware of. Being a highly competitive sector E-commerce could prove to be challenging for new starters into this domain however, being aware of advantages and difficulties proposed by E-commerce could make the difference between failure and success for businesses. 

References

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Bloomenthal, 2022. Electronic Commerce (ecommerce) Definition. [online] Investopedia. Available at: <https://www.investopedia.com/terms/e/ecommerce.asp#toc-advantages-and-disadvantages-of-ecommerce> [Accessed 12 July 2022].

Wong, L., 2022. E-Commerce Advantages and Disadvantages | Apruve. [online] Blog.apruve.com. Available at: <https://blog.apruve.com/e-commerce-advantages-and-disadvantages> [Accessed 12 July 2022].

CHIPSCHOLZ, 2018. The Pros and Cons of Consensus Leadership. [online] Leader Snips, the Blog. Available at: <https://chipscholz.com/2018/03/13/the-pros-and-cons-of-consensus-leadership/> [Accessed 12 July 2022].