E Commerce is probably the most important trend in the timeline of human business endeavors. E Commerce exploded once the internet became ubiquitous and faster than before. The advent of giants such as Amazon and eBay led to a number of small businesses taking their business online.
If you are planning to take a business online or just want to understand if you should even consider doing it, it is a good idea to understand the pros and cons of going online.
Let us look at some of the pros of doing online business.
You have global reach
If you can fulfill the need, the world is your oyster now. People searching for that special product that only you can manufacture can find from beyond your country’s border. You get orders from distant places and being online just exploded your reach. You have more data to analyze about global audience and chance to explore markets that may be more profitable than your local demographic.
You are online all the time
That is the dream of every business, to be running even when the owner is asleep. The orders can keep flowing while you are busy with other aspects of the business. You don’t have to pay your employees to be at the store all the time. The website acts as an interface, the chatbots answer customer queries and even make sales on your behalf. The customers are browsing, checking out your products even when there is no personnel around to show the products to them.
Your costs of operations are reduced for the hours you are open
Of course, there are costs associated with operating an online store. However, if you are using large companies such as Amazon, Etsy or eBay to list your product, you may just add the products, set up details and forget about them. These companies will do the job of keeping the servers running and even marketing products if they fit their own criteria. You will just need to fulfill the orders. You can even outsource the product in case of the dropshipping business, where someone else will fulfill the orders on your behalf.
Even if you run your own website, the cost of running it is far less than operating a physical store with all whistles and bells such as electricity costs, rent, hiring employees, providing physical security and dealing with store theft.
Enhanced Data analysis and tracking
You collect the information the moment a visitor lands on your site. You have their IP, their browser type, the mobile phone they are using, their geographic location etc. The granularity of data can help you understand customer behavior in more detail. You may find it easy to target a particular demographic based on the data collected and analyzed. This level of detailing is not possible in a physical store where the data collection is often minimized to phone number or email address.
But not everything is hunky dory. As is everything in life, good things come with a cost and that cost cannot be avoided. There are obvious cons to selling online.
Faceless ordering leads to poor interactions and personal connections
Yes, you are aware of the customer’s geographic location and other attributes, but you can never replace the value of a customer that you know personally. A good shop owner knows their customers often by name and understands their buying patterns and motivations to buy something. The relationship leads to lifetime customers who come to them for repeat purchases and even for suggestions. Online doesn’t establish such connections easily and thus cannot replace the value of personal connections
Product fitment problems
Can you ever imagine going to a clothing store and just buying an item of clothing by reading the size label. You won’t, like, ever do that. But online, you are often forced to make an educated guess about if the product is really going to fit your needs. The site selling the product may have policies that a return is not allowed.
As a store owner, this could be a problem as customer expectations are hard to foresee and it is always a guess work even for you to correctly resolve fitment issues.
Security and data protection issues
Well, you may ask, if there are no storefronts, why do you need security. It is because you are custodian of the customer data and often that data is sensitive. You wouldn’t want the world to know what any customer has ordered. The expose of such data may lead to loss of reputation, hurt brand reputation and open you up to lawsuits. And the data stays in the world forever, ready to be used time and again by hackers.
Photo by Jan van der Wolf
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