Advantages and disadvantages of E-commerce websites

 Advantage of E-commerce website 

1. Lower Set Up & Running Cost Than An Offline Business-

The whole sales system for your business is automated online. You will therefore save on staff, wages and other business costs, which are usually an expense such as electricity, rent and heating costs. The money that you have saved can then be used to develop your e-commerce website and product range further. E-commerce websites will also help you expand your product offering faster than is normally possible within an offline business situation. 

2. The System Can Be Operated From Anywhere-

E-commerce websites reduce any geographical restrictions you would normally face with an office based business. You can be anywhere around the world and still successfully oversee your e-commerce business. The essential items you need in order to oversee your e-commerce website from anywhere are; having access to emails, the Internet and phones.

3. Scale-Ability-

E-commerce websites are very effective in allowing you to determine which products are selling successfully, to ensure the stock levels of these products are increased. Additionally how these successful products can be diversified to develop a larger range of products to sell through the website. This will allow you to grow your business in terms of sales, customer base and profits. Amazon’s online shopping website has developed successfully around scaling their product range, and monitoring closely what is selling with customers. This has consequently allowed them to dramatically diversify their product range into many sectors.

4. No Opening Time Restrictions-

With ecommerce websites you are not restricting your potential customers, as they can view your website at any time of day. This means as a business, you are maximising your sales and profits. How can your sales be further maximised? You can do this through a range of sales initiatives such as special offers and online marketing initiatives.

5. Less Time Intensive-

Once your ecommerce website has been initially set up, you should not have to invest too much time into running it. This is because the whole process for customers ordering and making payments will all be activated through the online system. This will give you more time to determine new products you want to sell, special offers you want to launch and to track how successful your sales are. You will also be able to determine any trends in terms of which products are selling most successfully.

6. More Measurable Than Other Sale Approaches-

You may be thinking how do I know it will be successful, how will I measure the results? E-commerce websites are in fact extremely measurable and trackable through systems such as Google Analytics. You can view statistics including how many orders are processed through your site, average cart total, cart abandonment rate and percentage of total revenue your website has achieved at regular intervals.

7. Higher Margins & Better Cashflow-

If your business is involved and sells within the trade industry sector, an e-commerce website will allow you to sell at higher margins. This will make the profits you make on your products even higher. The shopping cart and payment options on these websites also mean you are gaining a 100% payment from the customer straight away. This will improve your cash flow, particularly when customers normally provide you with payments in several instalments.

(Williamson, W. 2023)

Disadvantage of E-commerce website

1. Transaction fees-

One of the disadvantages to ecommerce is that you will have to pay transaction fees. Plus, some banks may charge extra for international transactions as well.

2. Fierce Competition-

When you are selling your product on ecommerce, the competition is fierce. You will be up against big brands such as Amazon and Walmart, which are both able to offer better prices that you can.

3. No Human Interaction-

This is the removal of middlemen, before and after production. With ecommerce, you do not have the same kind of relationship that a physical store would offer to its customers because there are often no people physically present in an ecommerce store. This can be bad for customer service. You may want to consider hiring someone just for this!

4. Technical Difficulties- 

This is the removal of middlemen, before and after production. With ecommerce, you do not have the same kind of relationship that a physical store would offer to its customers because there are often no people physically present in an ecommerce store. This can be bad for customer service. You may want to consider hiring someone just for this!

5. Security Issues-

When you are selling your products on the internet, it is important to keep an eye out for potential security issues. Every company is at risk for security fraud and phishing attacks from hackers. If you collect sensitive information, it must be protected with proper safeguards to avoid being a victim of these crimes.

6.  Interruptions In service- 

If there’s a power outage or some other type of disaster, ecommerce stores may not be able to function at all! This can result in lost revenue and frustrated customers. A typical problem is due to server issues, which can mean that your store is down for an extended period of time.

7. It Doesn't Suite Every Business-

For some people, ecommerce is the best option because it offers convenience and accessibility. However, there are certain products that can’t be bought or sold online due to their sensitive or perishable nature.

The convenience of an ecommerce store is one thing that should be on your mind when deciding if it’s the right fit for you. For example, even though you can sell luxury chocolate online, it’s not great if your customers receive a lump of chocolate that melted during delivery.

(Timothy, A. 2021)

Reference:

Williamson, W. (2023) 7 benefits of Ecommerce websites: Why you should sell online, 7 Benefits Of Ecommerce Websites: Why You Should Sell Online. JDR Group. Available at: https://blog.jdrgroup.co.uk/digital-prosperity-blog/ecommerce-website-benefits (Accessed: January 21, 2023). 

Timothy, A. (2021) Ecommerce advantages & disadvantages, WebCitz Blog. WebCitz, LLC. Available at: https://www.webcitz.com/blog/ecommerce-advantages-disadvantages/ (Accessed: January 21, 2023).