E-business is a business that operates using the Internet and electronic media, first appearing in the 1990s and being widely accepted since. It is usually associated with virtual companies.
This article evaluates the pros and cons of an e-business.
Companies benefit from e-business by reaching customers worldwide at a low cost and without geographical boundaries. They gain flexibility and efficiency in terms of time management and communication. On the other hand, challenges are high operating costs, technological limitations, and security issues.
I often receive inquiries from individuals contemplating leaving their traditional 9-to-5 jobs to start a company or an online business. They usually ask what types of companies may lead to financial success. They are tired of being employees and want to start making money for themselves.
E-business is an option for those seeking to generate income, but one must ensure they know the advantages and disadvantages before proceeding. This has been explained in detail below.
In light of the pandemic crisis, businesses should focus on developing or expanding their online presence.
Table of Contents
What is E-Business?
In 1996, IBM’s marketing and internet team created the term ‘E-business’. It refers to an electronic or online business where transactions are done online between a buyer and seller who do not need to be present in person. E-business is part of E-commerce, which is electronic commerce/online commerce.
An E-business from the Merchant’s Perspective
When assessing the benefits and drawbacks of online or e-business, consider how it affects the merchant, specifically in business-to-business (B2B) and business-to-consumer (B2C).
Advantages of E-business for the Merchant
Adopting e-business offers a variety of advantages to merchants, especially given the ubiquity of computers, internet access, and digital banking.
These are the top 10 benefits of e-business:
24/7 Availability
A website is essential for any e-business model or owner, providing various business advantages.
An e-business enables 24/7 availability, unlike a traditional business that adheres to regular 9-to-5 hours. This is the most significant advantage of having an online store.
Running an online store means customers can shop conveniently when it suits them, without needing to pay for staff. This improves customer experience and loyalty. They only require internet access, a phone or computer, and online payment options to receive debit or credit card payments.
Businesses may find features like storage spaces for their physical products more cost-effective than retail spaces as they do not have to factor in considerations such as foot traffic and parking for potential customers.
Global Reach
The internet allows companies to expand their customer base beyond geographical boundaries. Such businesses can track visitor engagement with tools such as Google Analytics.
According to survey data, the startup costs for a drop shipping store in 2019 were approximately $418. Shopify-hosted e-commerce stores generally incur a yearly virtual rent expense of no more than $3192.
Quick Updates
You can update promos, holiday specials, shipping costs, and other marketing content on websites, blogs, social networks, and digital campaigns. Email marketing is another excellent way to inform your audience about updates worldwide. An eCommerce business can benefit significantly from email campaigns. Additionally, if you have a physical store, you can encourage people to visit it through email marketing.
Customer Profiling
Digital marketing strategies used on your eCommerce platform allow you to monitor visitor or customer behaviour, such as time spent on the website, pages viewed, and total amount paid.
Data on your customer base is invaluable. It enables you to customise your product or service to fit their needs. You can capture such data through websites, e-commerce stores, apps, or social media accounts connected to your business. This data is crucial for creating an effective marketing and business strategy.
Utilising customer information can enhance their online shopping journey, increasing the likelihood of converting visitors into customers.
This article explains how tracking user journeys from online sources, such as organic search and PPC ads, can help reveal insights about keywords, pricing, user experience and more. SEO experts can assist if required.
Profiling customers can be demanding for traditional businesses unless they wish to be seen as intrusive.
Customer profiling is essential t a successful marketing strategy and customer service. A well-built customer service system is necessary for the success of both physical and digital business operations.
Operating an e-business saves time and cost since your customers can quickly reach you and purchase online. Click To TweetNo Location Disadvantage
Physical location is crucial if you operate a physical store. A high street shopping mall store will be more profitable than an inaccessible one. This can influence your supply chain. On the other hand, this does not apply if your business operates online.
A bot/app or virtual assistant can provide 24-hour customer service on a website.
Saving Time and Cost
E-business can help save time and cost, allowing customers worldwide to purchase your products conveniently. Purchases can be made with one click, and items can be dispatched to locations of the customer’s choice.
Merchants can leverage digital technology to effectively and cost-efficiently adjust their operations. This technology provides unlimited storage, allowing businesses to respond to market changes and customer demands quickly.
Scalability
When a physical store grows to cater to the mass market, more resources are needed, and it becomes more challenging to manage during customer spikes. An advantage of online commerce is that it is easier to expand an online store.
Additional inventory, digital enhancements, and storage space may be necessary. A different store may not be required, given existing connections to the international marketplace.
Reviews & Ratings
Customers are encouraged to leave feedback on online stores about their product and service experiences. Product reviews on e-commerce websites or review websites can help customers evaluate whether the product meets their needs. Both customers and sellers gain from using reviews as it helps to enhance products and services.
When shopping in physical retail stores, customers cannot access ratings or reviews of products. As such, they must seek advice from friends who have purchased and experienced the products. Buying items online, however, allows customers to read product reviews without needing the opinion of family or friends to make decisions based on their preferences.
Increased Profit Margin
Setting up and running an e-commerce store is less expensive than setting up and operating a traditional store. This also translates to savings on marketing, labour and overhead. Online stores provide dashboards and reports that simplify the management of finances. Inventory management costs are also lower when compared with a traditional store.
E-commerce websites enable increased profits through increased revenue and lower prices due to their 24/7 availability.
Targeted Marketing
You don’t need to spend a fortune selling products and services online to reach everyone. Content and digital marketing can be expensive, but targeting potential customers is possible with PPC/CPC advertising platforms. You can get people based on their keywords, age group, geography, hobbies, and interests. Digital advertising gives your business a better return on investment than traditional methods like having a physical store.
Disadvantages of E-business for the Merchant
E-commerce brings certain disadvantages for merchants who operate online businesses. Factors such as high initial costs, limited customizability and data security concerns should be considered when starting an e-commerce business.
Quicker Market Share Loss Because of the Competition
When running an e-business, corporate vulnerability is a considerable threat as competition from both domestic and foreign sources may result in quicker market share loss. It is thus essential to develop creative strategies to maintain customer loyalty to prevent potential financial damage to the business.
High Startup Costs, Especially with Marketing
When operating an e-business, the competition is global. This results in increased startup and digital marketing costs for search engine optimisation. To stay competitive on a budget, one must be creative to reach your target audience. Alternatives to simple spending include pay-per-click advertising, which ensures one pays for adverts seen by people.
Handling Returns
When selling products online, it is essential to consider if your business is ready for potentially returned products. Can your company handle refund requests? These considerations are crucial for those with physical products when launching an e-commerce business.
Incorrect management of returns, chargebacks, and other financial processes can have lasting legal and financial repercussions for your business.
Innovation Pressure
Brand voices can be overshadowed in the highly competitive global e-business model landscape. Innovating is essential to maintain customers and staying ahead of competitors. Furthermore, streamlining the supply chain to meet customer expectations is necessary. Lastly, even with online retailers, a personal touch should be provided to replicate the physical retailer experience.
Customers Can Remain Anonymous
Customers may remain anonymous when using digital platforms to conduct e-business, as they do not interact directly with the business. Furthermore, their interactions may be limited to one transaction.
These are some of the advantages and disadvantages of e-business from the perspective of merchants and consumers. Click To TweetAn E-business from the Consumer’s Perspective

This discussion has examined the potential business benefits and drawbacks of e-business from the merchant’s point of view.
Let’s examine the benefits and drawbacks of e-business from the viewpoint of consumers, such as current and prospective customers.
Advantages of E-business for the Consumer
E-business offers numerous advantages for both small-business owners and consumers, such as the following:
Saving Time and Cost
E-commerce transactions offer consumers convenience and cost savings, as they can purchase goods without going to a physical store. Shopping can be done through a mobile device, desktop/laptop, or other digital devices with an easy-to-use website or app.
Convenience
E-businesses attract customers because they conveniently transact with businesses from their homes or offices. Providing access to convenience can increase the customer base and promote brand advocacy.
Not Dependent on Opening Hours
E-businesses allow for 24/7 consumer access, as customers can use websites, apps, or social network channels to do business with them.
Easy to Transact Business Internationally
Customers in various international locations can do business with you via the internet, thus reducing transaction costs associated with physical office visits.
Anonymity
Data is valuable to online companies, leading many people to worry about privacy and identity fraud. An electronic business assures customers of anonymity so they can trust that the transaction is conducted fairly, regardless of socioeconomic status.
Incorporating software to analyse website traffic and user behaviour would help enhance your online shop’s quality.
It would help if you implemented additional software to analyse website traffic and user behaviour and improve your online shop quality. Click To TweetImmediate Price Comparison
Customers can check competitors’ prices to obtain the best deal, and they will find a wider variety of low-cost items online than in-store.
Disadvantages of E-business for the Consumer
Product Description
Describing a product or service with multimedia cannot compete with the in-store experience. Consumers cannot measure quantity to make comparisons. Moreover, they must wait until the product arrives at their doorstep before deciding whether it matches their expectations.
Cost and Shipping
Exchange rates, taxes, and shipping can affect the affordability of your product for consumers in different locations.
Poor Internet Connection
Global internet connectivity has advanced, but some countries and territories still have poor internet connections. This limits customers’ ability to interact with businesses and e-commerce portals online.
If you are moving forward with an e-business, the following infographic provides 5 Tips for an Efficient E-Business.
Infographic: 5 Tips for an Efficient E-business

Share this Image On Your Site.
5 Tips for Successful E-Commerce Sites and Efficient E-business
Communication
Stay in touch with customers and be receptive to their inquiries and complaints by regularly engaging with them through customer feedback and contact forms.
Software
Implement a Customer Relationship Management (CRM) system, which includes online chat and ticket capabilities. This will help optimise e-commerce communication, providing an advantage in digital marketing.
Web Controlling Solutions
Implementing additional software to analyse website traffic and user behaviour would assist in improving the quality of your online shop.
Regular Testing
To ensure g security protocols for your online store, you must involve internal staff and other stakeholders in testing the entire e-business solution and processes.
Patience
Developing an e-business requires significant time and effort; success cannot be guaranteed.
Final Thoughts
The advantages of e-business, such as time and resource savings, better customer service, cost reductions, increased profits, and improved efficiency, have been established.
An e-commerce business may not possess the same level of security as a brick-and-mortar store, and there is a risk of losing customers should the website crash.
This is an overview of the advantages and disadvantages of e-business for merchants and consumers.
Establishing an e-commerce site and online sales may be challenging, but the potential savings in sales taxes and shipping costs could be considerable.
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