Advantages and Disadvantages of Starting E-commerce Business

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Starting E-commerce Business

So, you’ve been thinking about starting your own e-commerce business -that’s great! But, perhaps are still unsure whether an e-commerce business is the right option for you. Don’t worry. I’m going to go through our list of advantages and disadvantages of starting your own e-commerce business. By the end of this article, you’ll have all the information you need to make the best decision for you and your business.

Let’s get started!

Advantage 1# Low Financial Cost

Generally, starting an e-commerce businesses cost a lot less money than a physical storefront would. If you were to get started with your physical retail store, you’d likely have to commit a large amount of money to rent and renovating a location renting storage space, and purchasing the products you hope to sell.

When you’re starting an e-commerce business, you won’t need to commit such a large upfront investment before you can start selling. Instead, you can use an e-commerce platform like Shopify, to set up your store with custom designs for less than $100.

Of course, you’ll incur monthly fees for your Shopify subscription, but this will likely be very cheap compared to what it would cost to upkeep a physical location.

Advantage 2# 24/7 Potential Income

Unlike physical retail stores, e-commerce stores are always open. This means that you have the potential to generate income 24 hours a day, 7 days a week. Think about it.

When you’re running an online store, it doesn’t matter when your customers want to shop -the choice is in their hands. Your marketing campaigns will be running all day so that they could purchase at 4 PM or 4 AM.

Now, compare this to physical stores which tend to be open from 9 AM to 7 PM. It’s clear that e-commerce entrepreneurs have so much more time every day to generate sales.

Advantage 3# Sell Internationally

From the very first day that you launch your e-commerce store, you’ll be running an international business. You can sell the customers in every corner of the world if you want. Or, you can sell to customers in one country -maybe even your own. The choice is yours!

If you decide to run a drop shipping business, it’s a great idea to take advantage of the ePacket delivery method. It’s a great way to ensure that your customers receive their products as quickly as possible.

Advantage 4# Easy to Showcase Bestsellers

When you’re running an e-commerce business, it’s fairly simple to showcase your best selling products to potential buyers. You can create custom graphics to promote them on your store’s homepage, build a dedicated category for them, and curate marketing campaigns to promote them.

Your bestsellers are proven products from your store, so lots of customers will be interested in them. They also say a lot about your brand, so ensure that they’re easily visible for visitors to your online store.

Advantage 5# You Can Encourage Impulse Buys

One great thing about e-commerce stores is that you can encourage customers to make impulse buys. If you provide them with an attractive product page some high-quality images, and the correct sizing for the products, they’re going to be much more eager to buy. But, it’s the scarcity tactics that you can use with your online store that will entice buyers.

You can add countdown timers to alert your potential customers that a sale is going to end or showcase that there are limited quantities of a product that they’re looking at. These work to create a sense of urgency, prompting your customers to click “buy”. If they’re interested in your products, they won’t want to miss out.

Advantage 6# Remarketing Possibilities

When you’re starting an e-commerce business, remarketing your products to buyers is a great way to generate more revenue. But it’s something pretty difficult for physical store owners. As an e-commerce entrepreneur, you can target people who abandon their cart while they were shopping at your online store.

You’ve already done the hard part -you’ve piqued their interest with your products, secure their interest enough to get them to the checkout stage, but they’ve dropped off for whatever reason. Maybe they were distracted at work, or their kids needed help, and they forgot about your store. But they were interested at one point. So send them an email and let them know that their product is still available. You’ll be surprised at how successful this tactic can be.

Now, when you’re running a physical store, this strategy isn’t possible. It would be the equivalent of running after a customer who was browsing your store and shouting: “Hey, I think you forgot something!”. Not many customers would respond by turning around and going back into your store.

Advantage 7# Scaling Your Business is Quick

Every entrepreneur wants their business to be successful. And when that happens, you want to double down on it. Eventually, you’ll find that you need to scale up your operations to meet customer demand, or you’ll end up missing out on potential sales.

Now, when you’re running a retail store, a lot goes into scaling your business. You’ll need a larger store, more storage space, more products from your suppliers, more sales staff… the list goes on. It can end up being a lengthy process. During that time, your business’s growth might stagnate.

On the flip side, when you’re running a dropshipping store, your primary concern when scaling your business will be making sure that your marketing budget is sufficient, and that your ads are optimised. All in all, it’s a lot easier to scale an e-commerce business.

As you can see there are lots of reasons why starting an e-commerce store has advantages over starting a physical storefront. However, there are some disadvantages to getting into e-commerce, and in the interest of being honest with, you let’s talk about some of those disadvantages.

Disadvantage 1# If Your Site Crashes You Can’t Sell

This is perhaps the worst part of starting an e-commerce business. If your site is down, you can’t make any sales. Not only will you miss out on sales during the time that your store was down, but you’ll also damage the reputation of your brand. That’s after you’ve worked so hard to draw on potential customers, and they might never return to make that purchase.

So, it’s clear that you’ll need a stable platform to host your store, if you want to starting an e-commerce business, like Shopify. If you use Shopify to create and run your store, you can rest assured that your store won’t be going down anytime soon. Their service will up and running even during peak shopping events like Black Friday and Cyber Monday.

Disadvantage 2# E-commerce is Highly Competitive

In the world of e-commerce, popular niches are much more competitive than physical retail stores. After all, you’re not just competing with stores in the vicinity. You’re competing with all the other online stores in the world. With this in mind, you’ll need to make sure that your store stands out from the crowd.

There are plenty of ways that you can make your store unique. For example, you can offer hard-to-find, high-quality products, you can launch engaging marketing campaigns, or you can build relationships with customers with fun social media accounts.

Disadvantage 3# Shipping Your Products

When a customer purchases at a physical store, it’s likely that they’ll be able to take the product home right away and start using it. But, when shopping online, a customer might not receive their product quickly, which could put them off making a purchase. It’s a disadvantage, but it’s important that you’re transparent about your shipping times with your customers. Let them know when they can expect packages, and they’ll be much more forgiving if the shipping process takes a little longer.

A great way to counteract this disadvantage would be to offer free shipping with all purchases. If you don’t charge your customers for shipping, they’ll be much more likely to finalise the purchase, even if you’re shipping takes a couple of days. And the best part, you don’t have to lose money to facilitate this tactic. Instead, you can just incorporate the shipping fees into the price of your products. This way your customers will love your service, while you maintain the margins you need to make a profit.

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