Advantages and disadvantages of eCommerce


Basics of eCommerce: Advantages and disadvantages Author Van Anh Chu Date 27 March 2023 Read time 7 Minutes Like 1 Share Subscribe to our newsletter subscribe In today’s world, having a strong online presence is crucial for businesses of all sizes. One of the most important components of a successful online presence is an eCommerce website. Having an eCommerce website will not only allow you to sell your products or services to anyone in the world, but also unlock endless possibilities to market your products or services online that you wouldn’t get in traditional brick-and-mortar stores. In part 3 of our Basics of eCommerce series, we’ll go through some of the biggest advantages of having an eCommerce website, its disadvantages and how to overcome these disadvantages as a business owner. You can visit Part 1: Types, Benefits and the Future of eCommerce, and Part 2: Top 3 eCommerce trends that will dominate 2023 here. Advantages of eCommerce Reduced overhead costs When you start your business by opening a brick-and-mortar store, you will need thousands and thousands of dollars. This sum includes, but is not limited to, paying rent, designing your store, and services that you never imagined even existed. Sometimes, these costs can be so high that it takes a long run to eventually earn back the money you’ve invested. And if you don’t have enough profit after a certain period of time, there is no ROI. While opening an online shop isn’t free, you’ll definitely need less investment. Not only do you not have to worry about finding a suitable store space and pay rent for it, you also don’t need to hire as many employees when you’re first starting out. In fact, your employees can work remotely, and you’ll have an easier time finding talents as they can be located anywhere in the world. That being said, the typical investments of building a virtual store would include your domain name, web hosting, the cost of building your website, your inventory if your business is products based (and possibly a place to store it), and some budget for digital marketing. If this sounds a tad overwhelming, you can get started by using a hosted solution. With a hosted solution, the website’s eCommerce functions and features are already built in and designed. What you’ve got to do is just to play around and customize your information until you’re happy with how everything works. Take a look at the Optimizely platform for instance. A hosted solution using Optimizely would provide you with the services and resources needed such as IP access, firewalling, backup, hardware, Microsoft licensing, antivirus and monitoring applications, to name a few. Choosing a hosting service would benefit you in the long run as they come with a managed security package, the benefits of which we’ll later discuss in the cons of eCommerce. Therefore, having an eCommerce website with a hosted solution is a great place to start for individuals and small-scale sellers who want to start a business but don’t know where to begin and only have small start-up capital. Ability to reach a broader audience Thanks to the internet, one of the biggest advantages of having an eCommerce website is that you can reach potential customers all around the world. Local stores now can sell worldwide with just one click. You don’t have to open a physical store overseas to make sales anymore. Studies have shown that around 87% of people start their shopping journey online. They’re either browsing, reviewing prices, or comparing products and services online. And even if any of these people don’t end up purchasing, they’re all potential customers. Having this advantage is definitely key to exploring new business leads and raising awareness of your brand, which will be discussed in the next section. Affordable advertising and marketing eCommerce marketplaces are visual channels. An eCommerce website has several affordable and quick ways to market your products or services online. For example, with Optimizely’s Digital Experience Platform, you can harness different features and tools for customizing media such as adding, editing or removing videos or images quickly and easily. You can change your product offerings, display graphics, and marketing content almost instantly. In addition, with a website, you can make use of digital marketing techniques to increase your organic traffic. Some of the ways you can get started are SEO, content marketing, email marketing and more. The possibilities to market your brand if you already have an eCommerce site is endless. One of the most successful practices in the long run is SEO. With good SEO, you can change the game on how your business ranks on Google, and ultimately, a little bit of patience, boost your conversion rates with organic traffic. Customer data Content is king. But nowadays, data is the equally important queen.The internet is a goldmine of data insights that you could not get in brick-and-mortar stores. Each and every website we access every day collects tons of data about us without us even realizing. This data can be demographics, shopping preferences or buying habits. So, if you own an online store, you’ll be able to do exactly this – to collect data on your customers such as what products or services they have looked at, how long they stay on your site, or even how far they’ve scrolled on your home page. This is going to give you direct insights into what makes your potential customers click on certain products or services, whether your CTAs are working, or what’s stopping your users from clicking the “Buy Now” button. These insights can also be used to predict the demand for a particular product or service, which helps you rethink your marketing strategies and reduce the risk of understocking or overstocking a product. And eventually, you can make use of this data to enhance the shopping experience of your site’s visitors and potentially turn them into your customers. For example, using data as a pinpoint, the Conversion Rate Optimization (CRO) Team at Niteco was able to conduct A/B as well as multivariate testing on Electrolux’s websites and get customer insights. These successful tests resulted in a 25% increase in Add to Cart actions while tests on the homepage brought 21% more clicks on featured products for Electrolux. Therefore, when it comes to decision making, data is something you’ll want to look into. Disadvantages of eCommerce Security concerns When you have a website, there are always loopholes for security threats. These loopholes can allow unauthorized users to gain access to your website and retrieve sensitive data either of your business or your customers. Not only start-ups and small businesses are likely to face these threats, but big companies or corporations are as well. If you haven’t heard, giants like Facebook and Microsoft have in the past faced some of the largest data breaches in the 21^st century. Therefore, a crucial part of learning how to build eCommerce websites is to learn how to make sure that the website application is secure, since there are always a few web application risks that allow hackers to force their way into the systems. This is the reason why some business owners prefer to hire professionals when it comes to web security and data protection. Shipping logistics With an eCommerce store, you will have to figure out all the logistics beforehand, since finding a seamless shipping solution for your business can be difficult and time consuming. And you don’t want to end up in the red due to high shipping costs. Limited connections with customers When you’re running an eCommerce store, you don't get to connect with your customers on a personal level. In certain industries like apparel, in-store engagement with customers is hard to replace, as the ability to talk to a sales assistant about your needs is sometimes more helpful than attempting to compare products from the internet on your own. However, to make the situation better, many eCommerce sites now leverage personalized features for a better customer experience. Thanks to data, we can retrieve user behaviors and analyze them for a better understanding of the customers. This way, you can turn the table and focus on improving your customer journey in the long run. Conclusion As more and more consumers are browsing and shopping online, having an online presence is a competitive advantage for your business. If you’re thinking of building on online presence or boosting the one you already have, there is no better time to do so than now. Even though there are concerns with security and limited personal connections, you can always consult trusted experts and professionals to find the many ways to minimize and overcome these drawbacks. At Niteco, we have a team of dedicated experts who actively monitor security and perform incident management around the clock following the highest security standards and practices. If you’re wondering how to get started, reach out to our experts and we’ll get back to you as soon as we can! Like 1 Share Subscribe to our newsletter subscribe Ecommerce AUTHOR Van Anh Chu Van-Anh Chu is an interdisciplinary creator who previously worked in the media industry in the Czech Republic and Australia. She can be found having her daily dose of caffeine, throwing philosophical questions out of nowhere, or just talking to her dog. × Subscribe to our newsletter Get the latest job openings and news delivered directly to your inbox subscribe Related Articles Why you should use a one-stop shop agency for your website Digital Marketing 18 January 2023 6 Min Read Take experimentation to the next level with these 3 essential tips Optimizely 25 November 2022 6 Min Read The End of Universal Analytics: Why GA4 is a huge step forward  Digital Marketing 26 July 2022 5 Min Read

In today’s world, having a strong online presence is crucial for businesses of all sizes. One of the most important components of a successful online presence is an eCommerce website. Having an eCommerce website will not only allow you to sell your products or services to anyone in the world, but also unlock endless possibilities to market your products or services online that you wouldn’t get in traditional brick-and-mortar stores.

In part 3 of our Basics of eCommerce series, we’ll go through some of the biggest advantages of having an eCommerce website, its disadvantages and how to overcome these disadvantages as a business owner.

You can visit Part 1: Types, Benefits and the Future of eCommerce, and Part 2: Top 3 eCommerce trends that will dominate 2023 here.

Advantages of eCommerce

Reduced overhead costs

When you start your business by opening a brick-and-mortar store, you will need thousands and thousands of dollars. This sum includes, but is not limited to, paying rent, designing your store, and services that you never imagined even existed. Sometimes, these costs can be so high that it takes a long run to eventually earn back the money you’ve invested. And if you don’t have enough profit after a certain period of time, there is no ROI.

While opening an online shop isn’t free, you’ll definitely need less investment. Not only do you not have to worry about finding a suitable store space and pay rent for it, you also don’t need to hire as many employees when you’re first starting out. In fact, your employees can work remotely, and you’ll have an easier time finding talents as they can be located anywhere in the world.

That being said, the typical investments of building a virtual store would include your domain name, web hosting, the cost of building your website, your inventory if your business is products based (and possibly a place to store it), and some budget for digital marketing.

If this sounds a tad overwhelming, you can get started by using a hosted solution. With a hosted solution, the website’s eCommerce functions and features are already built in and designed. What you’ve got to do is just to play around and customize your information until you’re happy with how everything works. Take a look at the Optimizely platform for instance. A hosted solution using Optimizely would provide you with the services and resources needed such as IP access, firewalling, backup, hardware, Microsoft licensing, antivirus and monitoring applications, to name a few. Choosing a hosting service would benefit you in the long run as they come with a managed security package, the benefits of which we’ll later discuss in the cons of eCommerce.

Therefore, having an eCommerce website with a hosted solution is a great place to start for individuals and small-scale sellers who want to start a business but don’t know where to begin and only have small start-up capital.

Ability to reach a broader audience

Thanks to the internet, one of the biggest advantages of having an eCommerce website is that you can reach potential customers all around the world. Local stores now can sell worldwide with just one click. You don’t have to open a physical store overseas to make sales anymore.

Studies have shown that around 87% of people start their shopping journey online. They’re either browsing, reviewing prices, or comparing products and services online. And even if any of these people don’t end up purchasing, they’re all potential customers. Having this advantage is definitely key to exploring new business leads and raising awareness of your brand, which will be discussed in the next section.

Affordable advertising and marketing

eCommerce marketplaces are visual channels. An eCommerce website has several affordable and quick ways to market your products or services online. For example, with Optimizely’s Digital Experience Platform, you can harness different features and tools for customizing media such as adding, editing or removing videos or images quickly and easily. You can change your product offerings, display graphics, and marketing content almost instantly.

In addition, with a website, you can make use of digital marketing techniques to increase your organic traffic. Some of the ways you can get started are SEO, content marketing, email marketing and more. The possibilities to market your brand if you already have an eCommerce site is endless.

One of the most successful practices in the long run is SEO. With good SEO, you can change the game on how your business ranks on Google, and ultimately, a little bit of patience, boost your conversion rates with organic traffic.

Customer data

Content is king. But nowadays, data is the equally important queen.The internet is a goldmine of data insights that you could not get in brick-and-mortar stores.

Each and every website we access every day collects tons of data about us without us even realizing. This data can be demographics, shopping preferences or buying habits. So, if you own an online store, you’ll be able to do exactly this – to collect data on your customers such as what products or services they have looked at, how long they stay on your site, or even how far they’ve scrolled on your home page. This is going to give you direct insights into what makes your potential customers click on certain products or services, whether your CTAs are working, or what’s stopping your users from clicking the “Buy Now” button.

These insights can also be used to predict the demand for a particular product or service, which helps you rethink your marketing strategies and reduce the risk of understocking or overstocking a product.

And eventually, you can make use of this data to enhance the shopping experience of your site’s visitors and potentially turn them into your customers. For example, using data as a pinpoint, the Conversion Rate Optimization (CRO) Team at Niteco was able to conduct A/B as well as multivariate testing on Electrolux’s websites and get customer insights. These successful tests resulted in a 25% increase in Add to Cart actions while tests on the homepage brought 21% more clicks on featured products for Electrolux. Therefore, when it comes to decision making, data is something you’ll want to look into.

Disadvantages of eCommerce

Security concerns

When you have a website, there are always loopholes for security threats. These loopholes can allow unauthorized users to gain access to your website and retrieve sensitive data either of your business or your customers. Not only start-ups and small businesses are likely to face these threats, but big companies or corporations are as well. If you haven’t heard, giants like Facebook and Microsoft have in the past faced some of the largest data breaches in the 21^st century.

Therefore, a crucial part of learning how to build eCommerce websites is to learn how to make sure that the website application is secure, since there are always a few web application risks that allow hackers to force their way into the systems. This is the reason why some business owners prefer to hire professionals when it comes to web security and data protection.

Shipping logistics

With an eCommerce store, you will have to figure out all the logistics beforehand, since finding a seamless shipping solution for your business can be difficult and time consuming. And you don’t want to end up in the red due to high shipping costs.

Limited connections with customers

When you’re running an eCommerce store, you don't get to connect with your customers on a personal level. In certain industries like apparel, in-store engagement with customers is hard to replace, as the ability to talk to a sales assistant about your needs is sometimes more helpful than attempting to compare products from the internet on your own.

However, to make the situation better, many eCommerce sites now leverage personalized features for a better customer experience. Thanks to data, we can retrieve user behaviors and analyze them for a better understanding of the customers. This way, you can turn the table and focus on improving your customer journey in the long run.

Conclusion

As more and more consumers are browsing and shopping online, having an online presence is a competitive advantage for your business. If you’re thinking of building on online presence or boosting the one you already have, there is no better time to do so than now. Even though there are concerns with security and limited personal connections, you can always consult trusted experts and professionals to find the many ways to minimize and overcome these drawbacks.

At Niteco, we have a team of dedicated experts who actively monitor security and perform incident management around the clock following the highest security standards and practices. If you’re wondering how to get started, reach out to our experts and we’ll get back to you as soon as we can!

Ecommerce

AUTHOR

Van Anh Chu

Van-Anh Chu is an interdisciplinary creator who previously worked in the media industry in the Czech Republic and Australia. She can be found having her daily dose of caffeine, throwing philosophical questions out of nowhere, or just talking to her dog.