What is Advantage and Disadvantage of E commerce?

May 13, 2019

6087 Mary D.

What is Advantage and Disadvantage of E commerce?

What is meant by ecommerce? In a nutshell, this is the activity of buying and selling goods or services online. It has emerged only recently, but, despite its brief history, there is already an established concept of e-commerce and its benefits for conducting business are internationally acknowledged.

Table of contents:

What is ecommerce?
Advantages of ecommerce
Disadvantages of ecommerce
Wrapping it up

What is ecommerce?

At the moment, e commerce works as a form of retail that can provide a variety of capabilities to small, middle and large enterprises, as well as individual retailers and freelancers, like trading intangible digital products and intellectual property, participating in auctions in real time, purchasing tickets, paying utility bills and e banking – the capabilities that surpass the ones available in traditional brick-and-mortar retail. With all the diversity and benefits in e commerce in mind, there is no surprise that in the last years ecommerce globally has enjoyed steady and substantial growth, and this tendency is projected to remain and increase, reaching $27 trillion in sales in 2020 according to expert estimations.

All this might be enough for an entrepreneur to consider starting their own e commerce business, and although the pluses of e-commerce to customers are evident, it will be still unwise to tread carelessly into the undiscovered and unresearched activity, for, naturally, no activity, even the seemingly perfect, does not have disadvantages. Therefore, instead of leaping into action, it is better to study both online shopping advantages and disadvantages and make a carefully weighted decision.

In this article, you will find out which of the following are the pros and cons of online shopping.

What are the advantages and benefits of e commerce?

Which merits does Internet retail have? We have singled out 9 most significant benefits of e business.

Advantage #1: Saves time for a customer

Buying online immensely speeds up the buying process and saves a person’s time and efforts. Imagine you need a particular product – choosing to purchase it online, you spend no time to reach the store physically. Also, instead of browsing among the aisles of one shop or even different stores in one shopping mall looking for an item, you can immediately check its availability by looking it up in the catalog or typing its name into the shop’s search bar. Making a purchase in an online store is as well a pleasant several-step process with no queue. Also, you can make purchases wherever you are, even on the go from your cellphones, with mobile advantages and disadvantages for constantly busy people. And the last but not least – your purchases will be delivered to you, instead of you making your way home with all the items you acquired, which may be especially complicated if you purchase furniture or equipment. All this is a great benefit of e-commerce for people who value their time.

Advantage #2: Detailed product information

What amount of information about a specific item can a brick-and-mortar shop provide the customer? Not much. Customers make a decision based on visual impressions and the essential information the producer gave. In an online store, you will find a more detailed product description, with photo and video demonstrations, vivid case studies and, most importantly, product reviews left by customers who have already bought and tried this item out. All this information contribute to a more conscious “to buy or not to buy” decision, which are benefits of ecommerce.

Advantage #3: Personalize the shopping experience

As a brick-and-mortar shop owner, you are physically incapable of making it universally likable and pleasing to every eye. A digital store, however, offers much more extensive personalization capabilities – a wonderful e commerce advantage for creative marketing specialists. Having collected customer data with cookies, you get a clear understanding of who your customers are: their sex, age, interests, and other personal metrics. With this data on hand, you can configure the store to automatically offer customers the products they are most likely to be interested in, similar to what they have already purchased or from their wishlist as well as customize the outer look of the store and a welcome message.

Advantage #4: Retarget the customers

In brick-and-mortar retail, it often happens so that a customer is genuinely interested in the item, yet leaves without purchasing it. Unfortunately, in real life, there is no chance you can remind them about this item and how great it is, but on the Internet, you can. Retargeting is an advertisement technology that shows the user the ads of the product he or she viewed in your online store before. This way, you will unobtrusively refresh the customer’s memory about the product they liked and perhaps still desire, urging them to come back to your store and reconsider. You cannot but agree that this a great ebusiness benefits.

Advantage #5: Retail with no geographical and time limits

While the geographic restrictions of a physical store are obviously permanent, in ecommerce, the countries you want to sell your goods to are limited to solely your intentions and wishes. With an online store, you can extend your markets and customer range immensely and do not rely on the local community of buyers. And with the recent achievements in logistics and delivery technologies, organizing worldwide shipping will be a mission impossible. Payment, in its turn, can be performed via online payment systems (we know there are its own advantages and disadvantages of electronic banking, but they are a topic for a whole separate article). What is more, the working hours of a physical shop are restricted to 8-10 hours per day, with the store becoming inaccessible when closed. An online shop is not only open 24/7, but also takes orders around the clock. This is among the benefits of e-commerce for night owls and people too busy to shop during the day.

Advantage #6: Lower costs of store maintenance

Running a brick-and-mortar store is a rather expensive activity. Just think about the cost you will run up: rent of the facility, the utility bills like electricity, heating and water, insurance, warehouse maintenance and salary to your staff. But even more than that, consider a high number of operational costs like repair service bills, employee training, advertising costs and so on. With an online store, you do not need to pay all the maintenance costs for a physical location. You also will require fewer staff members; if your store is small, you can even run it yourself.

Advantage #7: More affordable and effective marketing

Promotion of physical stores is mostly accomplished with a set of traditional marketing practices, which is promotion via such means of mass communication like print, radio, TV commercials, direct mail and telephone. Traditional marketing means and strategies used to be effective in a time when there were no advanced digital technologies. At the moment, these types of product promotion offer little interaction with the audience, are costly and yield poor conversion ratio and make these techniques inapplicable for electronic commerce.

For ecommerce, one implements the different, more advanced level of marketing technologies – digital marketing. The merits of internet, or digital marketing are its broader range of electronic media: content marketing, SEO, affiliate marketing, email marketing, pay-per-click and social media marketing. With each of them using the Internet as the media, which makes these activities less expensive, great advantages of global marketing like this. Moreover, it has a more direct effect on the people who experience all these great many advantages and disadvantages of social media. The disadvantages of online marketing are high price of the service and the need for specific expertise to set it up, but thighs are expected to change in the near future.

Advantage #8: Automation minimizes human error

Since the majority of store operations will be set up perform automatically fully integrated into your ecommerce platform, this diminishes the probability of a mistake, like a misplaced order or an incorrectly charged bill. Moreover, there are no consultants at an online store (at least, not physically present) who can confuse or downright offend your customers, creating you a negative reputation. It is, however, not advisable to leave your customers completely unsupported, so it is an excellent practice to implement a virtual assistant of a chatbot in case some questions arise. Of course, there are a number of its own advantages and disadvantages of IoT (Internet of Things).

Advantage #9: Ability to handle multiple purchases

How many registers can one physical store have? Three on average, maximum five (excluding supermarkets). There is no limit to the number of orders that can be placed, processed and paid simultaneously in an online store. What is more, not a single customer will need to wait in a queue to make their purchase, which is a great ecommerce advantage for impatient people.

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What are the disadvantages of e-commerce?

Apart from numerous advantages, there are certain disadvantages of Internet retail. Let us explore demerits of e commerce and m commerce now.

Disadvantage #1: Uncertainty about the product quality

Despite the detailed product description, a customer cannot see or feel the item before the purchase, therefore cannot make sure whether it is as described before the purchase. This is where the shop reputation and positive reviews play a crucial role in customer decision, yet some people may remain unconvinced and opt against making a “risky” purchase.

Disadvantage #2: Waiting for a product to be delivered

Shipping is a headache for both store owners and customers. The first need to devise the delivery logistics, find the carriers, make sure that the products will be delivered correctly and in time and deal with all sorts of delays and complications. The second, in their turn, pay for a product but need to wait for it to be delivered, which is a discouraging factor. In the worst-case scenario, their purchase can never be delivered to them, either lost in the mail or sent to the wrong address. These complications pose a significant disadvantage of ecommerce.

Disadvantage #3: Some items are hard to purchase online

Although you can find almost every kind of product sold via the Internet, there are certain limitations of ecommerce capabilities – items that are quite tricky to select correctly or make sure they will suit you. Among such products are make up, glasses, high-heeled shoes, etc., and although the most progressive retailers successfully implement Augmented Reality technologies to their webstores, this is still a very rare practice. Another type of products that are popular in online retail are the ones that need a related service to accompany their purchase, like a roof luggage rack for a car that most people probably do not know how to install correctly. These are serious limitations of e commerce.

Disadvantage #4: Complex taxation guidelines

As a store owner, you may be most willing to sell your products worldwide. However, this means you need to comply with the taxation guidelines adopted in each country you are aiming to deliver. Apart from the effort to study them all and make sure you can conform with them, you will need to deal with the question of cost-effectiveness for your enterprise. Such legal complications are the major cons of online shopping. We wrote a guide on taxes in ecommerce that might help you to deal with complex tax regulations.

Disadvantage #5: Compulsory registration

In some instances, a person needs to register at the online shop to complete an order, and for some, this is an unwanted outcome. Due to the increased frequency of hacker attacks, it is understandable why some customers are reluctant to submit such sensitive features of e commerce as name, surname, address, email address and so on to an online store. Also, there are those who make purchases in a hurry and do not want to spend time at a rather lengthy process of registration. This is a great disadvantage of e business.

Wrapping it up

As you have studied our detailed list of advantages and disadvantages of e commerce, we believe you will be able to decide for yourself whether or not to start an online store. And if you made a positive decision, BelVG is here to provide you high-quality Magento development services.

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1 comment

  1. Thanks for sharing your thoughts about e-commerce. Very Helpful. You really did a lot of research.

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