Advantages and Disadvantages of E-Commerce in 2023
Updated March 13, 2023.
The four business models making up the e-commerce industry are based upon transferring products or services directly from a vendor to a consumer with the help of modern tech and without ever having to visit a physical store or location.
If you’re considering whether this business venture is a good fit for you, understanding the major benefits and drawbacks of e-commerce can help you make the right decision.
5 Advantages of E-Commerce in 2023
1. Enhanced Customer Experience
The advantages of e-commerce to consumers mainly deal with user experience and convenience. Not only can customers shop whenever and wherever, but they also have more options to compare products and prices. From reviews to detailed product descriptions, customers can access a range of information.
Whether it be the convenience of shopping from home, the 24/7 availability, or access to a wider range of products that simply aren’t available downtown, more and more people are preferring to shop online over traditional brick-and-mortar stores.
2. E-commerce Benefits Businesses
Businesses can use conversion and tracking technologies to monitor how their customers use their websites. This can provide insight into their customers' shopping behaviors, which can then be used to personalize the shopping experience for each customer with more relevant product suggestions and personalized offers. This can boost sales and revenue by building customer loyalty and increasing customer satisfaction.
Social media and multi-channel strategies, such as email marketing, offer extended reach and loyalty for businesses to approach potential customers and talk to current ones. These strategies can assist e-commerce enterprises in increasing sales by raising brand awareness.
» Leveraging social media? Find out if Facebook or TikTok ads for e-commerce are best
3. Businesses Can Target a Global Audience
Rather than being subject to the limitations of a finite localized customer base, e-commerce grants budding and established online stores the ability to reach an international customer base - meaning anybody with an internet connection is now a potential customer.
4. E-commerce Benefits the Government Sector
It’s not only customers and businesses that can reap rewards. Since the operation of e-commerce can minimize paperwork and make it easier to organize paper-based information, it also benefits the government sector. Increased resources and efficiency mean that delivering public services, like education and healthcare, is a more achievable outcome.
5. Fewer Overheads and More Savings
No rent, no building or contents insurance, and fewer staff wages all mean that e-commerce expenses are comparatively less and the stores are cheaper to establish and maintain. These savings are great for business owners and also a tremendous bonus for customers as the savings are reflected in product and service costs.
4 Disadvantages of E-Commerce in 2023
1. No Brick-and-Mortar Store to Browse Through
One of the major disadvantages of digital business and online shopping is that customers can not see the product in real life. For example, if you’re selling clothing and accessories, customers won’t be able to try on an item first to make sure it fits. If they're unhappy with the product, it could lead to refunds, returns, and bad reviews.
2. Shipping Times
Unlike in-person shopping, customers don’t get the product immediately. In fact, shipping times are one of the worst technical disadvantages of e-commerce to consumers. While same-day shipping is offered as an option by some online businesses, customers typically receive their orders locally within 2-7 days, while international shoppers have to wait between 2-4 weeks. Additionally, shipping costs can be a costly drawback. It's up to you to balance customer satisfaction with business expenses and decide what percentage, if any, of the shipping costs will be covered by you.
» Learn how to improve your e-commerce order fulfillment process
3. No Sales During a Site Crash
Sure, you’ll have the advantage of being open round the clock, but one of the more technical disadvantages of e-commerce includes site crashes. If your site unexpectedly goes down, you won’t be able to process any sales. Worse yet, potential customers won’t even be able to browse your product range and wish list items for later purchase.
4. Inflation concerns
With 26% of small business owners stating inflation is their biggest concern in operating their businesses, it's unsurprising that post-pandemic inflation has led to consumers becoming more careful with their spending.
E-commerce businesses can adjust to account for inflation by adjusting their product offerings. For example, they may choose to focus on selling lower-priced items or offering more sales and discounts to attract price-sensitive consumers. However, these adjustments can negatively impact e-commerce businesses, as they may lead to decreased profit margins and increased competition with other businesses.
» Discover the best conversion rate metrics for e-commerce startups
Is E-Commerce Worth It Despite the Disadvantages?
The seemingly limitless potential of the e-commerce space—from multi-channel approaches to site personalization—offers room for e-commerce businesses to have wider reach and innovative options to promote their brand. With metric tracking through platforms like BeProfit, e-commerce businesses can also continually monitor, manage and improve their strategies to help improve sales and revenue.
Plus, considering that there are ways you can reduce the impact of the disadvantages, such as improving your system security to limit the possibility of a site crash or improving your digital marketing strategies, the advantages of e-business can make it a lucrative venture for an entrepreneur with limited funding.
