E-Commerce: Advantages and Disadvantages

In 2020, e-commerce sales reached $861.12 billion in the US alone. That presents a huge opportunity for e-commerce businesses, but online sales pose some unique challenges that brick-and-mortar shops don’t. Before you decide how best to run your business, you should consider the e-commerce advantages and disadvantages.

Advantages Of E-Commerce

There’s a reason vendors like Amazon choose to do business online. It gives them some unique advantages over their store-bound competitors. The biggest advantages are the low costs, the flexibility and speed, and the high levels of data.

Low Costs

Opening a store is expensive. You have to pay rent, furnish the space, get the equipment you need, and hire employees to work in it. The total dollar cost will depend on how much space you need and where you want to open your store, but it will run you at least a few thousand dollars to start and then rent and ongoing expenses thereafter.

Opening a business online, on the other hand, is much less expensive. If you already have a customer base and want to build out a custom website, you’ll probably pay a few thousand dollars for the coding and building of that site. If you’re just starting out, you can look for a “hosted”  solution. That means the website’s e-commerce functions are already built and you just have to customize your information. Shopify is one popular choice; it charges anywhere from $30 – $180 per month to host your online store.

Flexibility And Speed

Opening a brick and mortar store takes time. You have to find a space, get through the commercial leasing process, and get the store set up. That may involve construction time, or at least the time to decorate and prepare your space.

An e-commerce website, on the other hand, can be up and running in just a few days if you use a hosted solution. A custom-built website, of course, will take longer.

On an e-commerce site, you can change your product offerings, display, and marketing materials almost instantly. In a brick-and-mortar store, you’ll have to physically move things around and it just takes longer. An e-commerce site is extremely flexible and lets you adapt to the changes needs of your customers and the changing demands of the business environment.

Finally, an e-commerce business is flexible for you. As the owner, you can work from anywhere with an Internet connection. You may not even need to have office space; you can work from home!

Data

In 2016, data is king. All of the websites we use every day collect tons of data about us to learn how we surf the web, what sorts of sites we visit, and what kinds of things we purchase. If you’re running an e-commerce site, you’ll be able to collect data on how long your customers stay on your site, what they look at, and how they go about making purchases. That gives you direct insight into what’s making them click “Buy” or what’s stopping them.

You can use that information to improve the shopping experience and improve the likelihood that your site’s visitors will turn into customers. It’s much harder to get that information in a brick-and-mortar store. There’s no record of what every single customer looked at or how long they spent with a particular product before buying it.

E-Commerce Disadvantages

Of course, e-commerce isn’t perfect. It’s all online, which means that customers can’t touch or feel or try on your products before buying. Online transactions often feel less personal, which can make it harder to make a genuine connection with your customers to keep them coming back for more. E-commerce is limited by the lack of a brick-and-mortar store, the new challenges of mobile shopping, and the difficulties of marketing online. It’s also a challenge to manage the crossover from e-commerce to physical products.

The Website Is All You Have

The old adage is true: you never get a second chance to make a good first impression. Yours, as an online vendor, is your business’s website. Your site is the customer’s introduction to your product and brand, as well as how you make sales and collect payments, so you want to make sure you get it right. Brick-and-mortar stores may also have websites, but they also have a physical presence to back it up. If you go with an online presence only, then your website is all you have. If it’s slow, unappealing, poorly-designed, or doesn’t work right, your visitors aren’t going to stick around. An e-commerce business can’t survive without a strong website.

To make your website work for you and not against you, you have to consider:

Navigation

Your goal is a pleasant experience for all your visitors, with ease of navigation. If your customers come to your site and can’t use it easily, or can’t locate what they’re looking for, you’ve lost a sale. Think about the structure of your site and the way your products are organized. You want it to be as easy as possible for your users to find what they’re looking for.

Simplicity

You want your website to be clear and user-friendly, and that means keeping it simple. The fewer times your customers have to click to make a purchase, the easier it is for them to do and the more likely they’ll go through with it.

Stability

Your site needs to be stable – that means it doesn’t crash or take forever to load. Make sure your site is technically sound so your customers don’t hit a virtual brick wall. Check the functionality of your cart and payment sections to make sure the transactional components are flawless and smooth. You can’t make a sale if your cart keeps crashing or your customer can’t enter their payment info.

Security

Data breaches and hacks have made the news a lot lately. Just look at the fallout from Target. The harsh reality of doing business online is that your site may get hacked. Customers want to feel secure when they make an online purchase and want to be reassured that their financial information won’t be shared or compromised.

Post a clear privacy statement on your site about who has access to your customer’s information. Then, follow through with it. Take steps to protect customer data and personal information. That includes regularly changing your passwords on your site to discourage breaches and closely monitoring your reports and data to identify any security risks. By remaining vigilant and being proactive, you can protect your site, which in turn protects your customers and builds trust and loyalty.

Some of this is highly technical, which means you may want to hire a webmaster or an outside company to audit and maintain your custom site’s security. That costs money, but a security breach can cost you your whole business. If you’re using a hosted solution, make sure to stay in close contact with your hosting company to address any potential security concerns.

Credibility

No matter what industry or market you’re in, business is about people and relationships. Creating those relationships can be more challenging in the e-commerce world because of the lack of face-to-face connections. Unlike a “Main Street” vendor, your business website and online marketing tactics are your ways to build relationships. Aim for professionalism and credibility in your website and online marketing.

Try to obtain customer testimonials so customers can identity with others and their experiences. If a customer emails you, respond immediately. Join a best practice organization, such as the Better Business Bureau, and display that badge on your website.

Customers have a lot of choices when they’re shopping online, so you have to give them an excellent experience to make sure you stand out.

Your Shoppers Are Mobile

These days, we are all on the go, all the time. Accordingly, mobile access has now exceeded desktop computer use. Your customer needs to be able to access your site, browse, and make purchases from cell phones and other mobile devices. This means your site needs mobile optimization.

This is something you’ll need to keep in mind when you’re first building your e-commerce website. If you have a custom build, make sure your web developers know that you want your site to be responsive for mobile devices. If you want to use a hosted solution, make sure that the host supports mobile sites.

Customers have a short attention span, especially when they’re on the go. That means your website has to be extremely efficient at giving them the information they need as quickly as possible. The mobile aspects of your site need to run perfectly or you’ll lose the sale.

How to Attract Online Customers

Brick-and-mortar stores tend to have local customers. People know what stores are in the area and they know where they can go to get what they need. The Internet, on the other hand, is anything but local. You may have the best e-commerce site and the best products around, but none of that does you any good if no one knows about your business. Online marketing is tough because there are so many potential customers and so many competing businesses. How can you get your site noticed?

The first step is to figure out who your customers are. Ask these three simple questions:

• Who are the target customers? Describe their life (or business).
• What do they want?
• What needs do they have that aren’t being met?

The answers to these questions can help you look at not only the demographics of your e-commerce customers, but their also lifestyles, so you can target your products accordingly. Now that you know who your customers are, you have to find a way to reach them.

Start With SEO

You do that with a process called “SEO,” or search engine optimization. The idea behind SEO is making sure that when your target customers search for your product online, your business is the first thing that comes up. How often do you go past the first page of search results to find something? Not often, and you’re not alone. The good news about SEO is that you can do it yourself. There are plenty of great tutorials online from places like Moz or Distilled on how to start your own SEO efforts. You can also hire an outside SEO agency to manage it for you.

Social Media Strategy

Whoever your target customers are, chances are high that they’re involved in some sort of social media. So, your social media strategy is going to be an important part of tracking down customers. You’ll need to create and maintain profiles for your business on social media sites of  your choosing, such as Facebook, LinkedIn, Twitter, or other social sites. Make sure the information on each profile is complete and consistent.

Your customers will come to social media platforms to look for products, find information about companies, and read reviews. Clean up your business page, make it engaging and attractive, put all pertinent information front-and-center so your customers can easily connect and shop. When visitors do engage with your profiles, engage back! Respond to their questions and requests promptly. It can take some work, but it will show your customers that you care about your business and about them.

The trick is to get the word out there about your business and your products. Remember, one of the advantages of e-commerce is how quickly you can react to the changing business world. If something isn’t working in your marketing strategy, change it! If an opportunity arises for you to get your name out, take it!

Digital Sales, Real Products

You have your mobile-friendly website. You have your digital marketing strategy. Now, you have to manage the logistics of the actual sales. In a physical store, your customers walk in, hand you the money, and walk out with their products. In e-commerce, that’s not the case. You’ll have to figure out how to manage your inventory and get your products to the customers. That means dealing with the shipping companies (and shipping costs) to make sure that the things people order arrive when they’re supposed to. It also means you’ll have to be really good at handling customer service.

In a physical store, a sale is a sale. In e-commerce, the sale itself is only half the battle. If you can’t follow up with delivery, you’ll lose your customers. If you’re creating something by hand or from your home, you can manage your orders yourself. If your products are being manufactured somewhere else, you’ll need to find a way to make sure you’re getting the right inventory and that it’s going to the right place.

E-Commerce Has Great Advantages

Any business will face challenges and all businesses need solid business plans, good management, and plenty of hard work. E-commerce can offer your business some serious advantages. It’s cheap, it’s fast, and it’s incredibly flexible. It also presents some unique challenges. You’ll need to really commit to building a great website and a strong online presence. You’ll need to be responsive to the needs of your business and your customers. You’ll need to be open to keeping up with the latest and greatest Internet marketing trends.

You’re an entrepreneur. You’re ready to open your own store. Take some time to decide whether brick-and-mortar or e-commerce is better for your company, and then get started! We know you can do it.

Next Article: E-Commerce 101