Sometimes, I get enquiries from people who are thinking of quitting their regular 9-5 day jobs and go into business and online business in particular.
They want to know what type of business they can invest in to make money.
Some are even specific and want to know what type of online business or e-business they can do to make money. These types of questions often lead me to tell them the advantages and disadvantages of e-business. So I have spelt it out for you all here.
With the pandemic crisis upon us, now is the time to put all your efforts into either starting or growing your business online.
What is E-Business?
In 1996, IBM’s marketing and internet team coined the term E-business. It stands for electronic business or online business. It is a business where the transaction takes place online, and the buyer and seller need not meet in-person. Electronic business is a part of E-commerce, i.e. electronic commerce.
An E-business from the Merchant’s Perspective
Let’s start by considering the advantages and disadvantages of online business or e-business for you, the merchant.
Advantages of E-business for the Merchant
The benefits of online business or e-business for the merchant are often a simple decision, especially when most people work from home because computers, internet access and online banking have become part and parcel of our daily lives.
These advantages include:
Your website is an invaluable e-business tool. There is no e-business model or e-business owner that does not have a website. Having your website opens the door to more business advantages.
Once you have your website or social media channels up and running, your online business is open for online transactions 24/7 around the clock with no business hours restrictions. This 24/7 availability is a crucial advantage of having an e-business. There is no restriction to the regular 9to5 that you see in a traditional business.
Having a traditional business or physical brick and mortar retail shop means you need to pay staff to come to work to sway customers to buy goods and services. But with your online store, it’s easier for your customers to do their online shopping at your online store at their convenience regardless of the day or time. This helps to improve the customer experience with your brand. All they need to transact business with you is internet access, an internet-connected phone or computer, their debit or credit card.
Though your physical products will still have to be stored in physical stores, storage spaces for businesses are often cheaper than retail spaces, and you won’t have to worry about factors like foot traffic and parking spaces for potential customers.
Through the internet, you can reach a worldwide audience for your product or service. There are no physical restrictions on a specific geographical region that you see with a traditional business.
However, according to these stats for a dropshipping store, startup costs are estimated at $418 in 2019 and e-commerce stores only pay $3192 a year on Shopify at most for virtual rent’.
Whether it is your website, blog, or social network channels, you have access to make quick updates and order processing on things like promos, holiday specials, and so on. Email marketing is another excellent channel for sending out quick updates to your audience worldwide.
If you have an e-commerce site using various digital marketing strategies, you’ll be able to collect data on how long visitors or customers stay on your site, what pages they look at, and how they go about making purchases.
The more data you have on your customer base, the better you can tailor your product or service to meet their requirements. Therefore, an e-business makes it likely to capture relevant data about your customers when they visit your website, use your app, or engage with your brand on social media. Such data is necessary to have an appropriate business plan.
You can use the information you gather to improve your customer’s journey and shopping experience. The better a visitor’s experience on your online store, the greater your chances of turning that visitor into a customer.
According to this article, whether you’re sending visitors to your eCommerce website through organic search, PPC ads or a good old postcard, there is a way to track your traffic and customers’ entire user journey to get insights about keywords, user experience, business marketing message, pricing strategy, marketing strategy and more. You can hire SEO experts if you need help with this.
Customer profiling is difficult for traditional business unless you want visitors to label you a creep or worse.
Customer profiling is the foundation for wonderful marketing strategy and customer service. And having a good customer service system in place is critical to the survival of your physical business or e-business.Operating an e-business saves time and cost since your customers can quickly reach you and make their purchases online. Click To Tweet
No Location Disadvantage
With a brick and mortar store, the location of your business is essential. Having a store in a high street shopping mall will be more lucrative than a place difficult for your customers to reach you. It can also affect your supply chain. However, this is not the case if you operate an e-business.
You can create a bot or hire a virtual assistant to handle customer service or other activities on your website on a 24-hour basis.
Saving Time and Cost
Operating an e-business saves time and cost since your customers can quickly reach you and make their purchases online, and you can dispatch to their desired location. All this with the click of a button!
Merchants can scale up or down their operation and take advantage of the unlimited virtual storage space to respond to market trend and consumer demands.
Disadvantages of E-business for the Merchant
Certain disadvantages are present for the merchant that is operating an e-commerce business. These include:
Quicker Market Share Loss Because of the Competition
With an e-business, there is the danger of corporate vulnerability as you stand to risk of speedier market share loss because of competition from home and abroad. So you have to always be on your toes (so to speak) and think of innovative ways to keep your customers’ patronage. This is the only way to avoid a substantial loss to your business.
High Startup Costs Especially with Marketing
With an e-business, the merchant is competing against other merchants worldwide. This global competition increases your startup cost and your digital marketing cost for search engine optimization. Where you cannot outspend your competitors, you will need to be creative. Look for other avenues to out-think your competitors to gain your target audience’s attention. Pay per click advertising is an effective way to ensure that you only pay for adverts viewed by actual humans.
There is a limit to how you can describe a product on screen. So when the product eventually reaches the consumer and is not what they were expecting, they will return it. Is your business ready to accommodate these returned products? Is your company capable of absorbing all the requests for money back? You need to meditate on these things when adopting an e-business, especially if you will deal with physical products.
The poor handling of returns and chargebacks can have long-term legal and financial implications for your business.
With an e-business model, it exposes you to a global competitive field, and there is a tendency for your brand’s voice to be drowned out in a sea of several thousand competitors. This situation leads to constant pressure to innovate. Be innovative to get and keep your customers; otherwise, you lose out to the competition. It would help if you also innovated your supply chain to meet your customers’ expectations.
Customers Can Remain Anonymous
Depending on the e-commerce platform or CRM platform you use with an e-business, there is the tendency for your customers to stay anonymous since you are not relating to them face-to-face, and sometimes, their business interaction with you might be a one-off affair.These are some of the advantages and disadvantages of e-business from the perspective of merchants and consumers. Click To Tweet
An E-business from the Consumer’s Perspective
In the paragraphs above, we have considered the advantages and disadvantages of e-business from the merchant’s perspective.
Now let’s turn our attention briefly to consider the advantages and disadvantages of e-business from the consumer’s perspective.
Advantages of E-business for the Consumer
There are innumerable advantages of e-business not only for the small-business owners but also for the consumers. Some of these include:
Saving Time and Cost
Here again, just as it is with the merchant, from the consumer’s perspective, an e-business helps the consumer to reduce time and cost since they do not have to go physically to your brick and mortar store to do their shopping. They use their mobile device or computer to go online and do their shopping from your website or app. It is that simple.
With an e-business, your customers can transact business with you from the comfort of their home or offices. This convenience, in most cases, is what attracts many consumers to this e-business. The more convenience your brand offers your customers, the more they are likely to do business with you and be advocates for your brand.
Not Dependent on Opening Hours
With an e-business, your consumers are not relying on opening hours of your business since they can transact business with you around the clock via your website, app, or social network channels.
Easy to Transact Business Internationally
Now whether your customers are in Australia, China, Antarctica, New York, Singapore or London, they can do business with you online. This reduces transaction cost since they need not go to your physical office to transact business with you.
These days we live in an interconnected world, and your data is precious to advertisers and so on. Therefore, many consumers are concerned about their privacy. With the right processes in place, an e-business affords your customers the ability to remain unknown. Your customers, therefore, get to feel that they are transacting business with your brand on fair competition regardless of socioeconomic status.
It would help if you implemented additional software to analyse website traffic, user behaviour, and improve your online shop quality.You must implement additional software to analyse website traffic, user behaviour and improve your online shop quality. Click To Tweet
Immediate Price Comparison
Your customers can go online and compare your prices with your competitors to ensure they are getting a fair deal or the lowest price. You will also see a lot of low-cost items online, more than you will see in-store.
Disadvantages of E-business for the Consumer
Regardless of how well you try to describe your product or service on your website or social networks using multimedia, it cannot compare with your consumers experiencing your product or service in-store physically. Your consumers cannot make any assessment of your product quantity and how it compares to others. Your consumers cannot have access to the physical product until it reaches their doorstep. It is only then that they can decide whether it meets their expectations.
Cost and Shipping
Factors such as exchange rate, taxes and shipping might sometimes make your product unaffordable for your consumers living in another geographical location.
After considering these issues, if you still wish to go ahead with your e-business, here is an infographic with 5 Tips for an Efficient E-Business to help you out.
Infographic: 5 Tips for an Efficient E-business
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5 Tips for an Efficient E-business
Maintain regular communication and customer dialogue (via customer feedback and contact forms) for inquiries and complaints.
You must implement robust Customer Relationship Management (CRM) software with an online chat and ticketing system’s capabilities. This CRM will help to ensure e-commerce communication.
Web Controlling Solutions
It would help if you implemented additional software to analyse website traffic, user behaviour and improve your online shop quality.
You must engage both internal and external employees to carry out a test of your entire e-business solution and processes to ensure proper security measures are in place in your online store.
It would be best if you devoted much time to build your e-business. The time required to grow your brand online can range from several months to several years! E-commerce is not a silver bullet to success.
These are some advantages and disadvantages of e-business from the perspective of merchants and consumers.
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