Sometimes, I get enquiries from people who are thinking of quitting their regular 9-5 day jobs and go into business.
They want to know what type of business they can go into to make money.
Some are even specific and want to know what type of e-business they can do to make money.
These type of questions often lead me to tell them the advantages and disadvantages of e-business. So I have decided to spell it out for you all here.
An E-business from the Merchant’s Perspective
Let’s start by considering the advantages and disadvantages of e-business for you the merchant.
Advantages of E-business for the Merchant
The benefits of e-business for the merchant are often a no-brainer especially these days that the computer and the internet have become part and parcel of our daily lives.
These advantages include:
Once you have your website or social media channels up and running, then your business is open 24/7 round the clock. This 24/7 availability is a crucial advantage of having an e-business. There is no restriction to the regular 9to5.
Through the internet, you can reach a worldwide audience for your product or service. There are no physical restrictions to a specific geographical region.
Whether it is your website, blog, social media channel, you have access to make quick updates on things like promos, holiday specials, and so on.
The more data you have on your customers, the better you can tailor your product or service to meet their requirements. Therefore, an e-business by its very nature makes it likely for you to capture relevant data about your customers when they visit your website, use your app or engage with your brand on social media.
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 that is difficult for your customers to reach you. However, this is not the case if you operate an e-business.
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!
Disadvantages of E-business for the Merchant
Quicker Market Share Loss Due to the Competition
With an e-business, you stand to risk of speedier market share loss due to 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.
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 marketing cost. Where you cannot outspend your competitors, you will need to be creative and look for other avenues to outthink your competitors to gain your audience attention.
There is a limit to how you can describe a product on screen. So when the product eventually reaches the consumer and it 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 think deeply about these things when adopting an e-business especially if you are going to be dealing with physical products.
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. You have to be innovative to get and keep your customers otherwise you lose market share to other brands.
Customers Can Remain Anonymous
Depending on the type of e-commerce platform or CRM platform that 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 in some cases, 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 perspective of the merchant.
Now let’s turn our attention briefly to consider the advantages and disadvantages of e-business from the consumers perspective.
Advantages of E-business for the Consumer
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 round the clock via your website, app or even your social media channels.
Easy to Transact Business Internationally
Now whether your customers are in Australia, China, Antartica, New York, Singapore or London, they can do business with you online. They do not need to 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 a level playing field regardless of the socioeconomic status.
Immediate Price Comparison
Your customers can go online and compare your prices with your competitors to ensure they are getting a fair deal.
Disadvantages of E-business for the Consumer
Regardless of how well you try to describe your product or service on your website or social media channels using multimedia, this cannot compare with your consumers being able to experience 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 or not.
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.
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5 Tips for an Efficient E-business
- Communication: You should maintain regular communication and customer dialogue (via customer feedback and contact forms) for inquiries and complaints.
- Software: You must implement a robust Customer Relationship Management (CRM) software with capabilities for online chat and ticketing systems. This CRM will help to ensure e-commerce communication.
- Web Controlling Solutions: You must implement additional software to analyse website traffic, user behaviour and improve your online shop quality.
- Regular Testing: Both internal and external employees must be engaged to carry out a test of your entire e-business solution and processes to ensure proper security measures are in place.
- Patience: You need to devote much time to building your e-business. The time required to grow your brand online can range from several months to several years! E-business is not a silver bullet to success.
These are some of the advantages and disadvantages of e-business from the perspective of merchants and consumers.
There you have it! The advantages and disadvantages of e-business.
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