The Hype of E-commerce
Electronic commerce (ecommerce) refers to the buying and selling of products and services, or the transmitting of funds or data with no barriers of time and distance, over an electronic network, largely the internet. The terms e-business and e-tail are also used in reference to transactional processes for online shopping. Amazon and eBay are noted to have revolutised the e-commerce market in the 1990s.
Its key attraction hence is that of convenience, whereby consumers can purchase endless amounts of items simply with just the touch of a finger! The potential is there but however well enticing this method of shopping may be, thorough research on how to implement and run an e-commerce business and proper understanding of ecommerce laws and policies are important factors in ensuring the success of your virtual business.
Let’s explore some of the advantages and disadvantages when opting to run an e-business which would hopefully help you make the best decision that works for your company.
Pros and Cons of Ecommerce for Businesses
- Cost Savings. Running an ecommerce business can help you save money as there’s no need for a physical store which cost overheads retailers need to bear. As Ajeet Kurana (2016) puts it in one his articles on ecommerce, “ecommerce has liberated businesses from the shackles of location”.Besides, ecommerce help businesses to reduce the cost to create process, distribute, retrieve and manage the paper based information by digitising the information.
- Abundant in choices and limitless shopping time. Given the fact that virtual stores are limited in the size of a physical store, the list of items and product options up for sale could be way high in volume than a conventional retail store. Apart from that, online shopping is usually available 24 hours which eliminates consumers feeling time constrained.
- Ability to analyse buying patterns of costumers. In an online store, it is easy to track the buying habits of your customers; analyse the items bought and how frequently they are bought as opposed to this being done in a physical store. Therefore, this information helps ecommerce business owners to understand what their buyers desire and to then provide it.
- Allow individuals to buy and sell from one another. Ecommerce business has opened new prospects for customers and consumers to purchase and sell products to each other through auction and listing sites. An example of such ecommerce business exchange can be seen with eBay.com.
- Credit Card Fraud. Ecommerce business owners have to be vigilant of the risks of credit card scammers as it’s very prevalent with online shopping. “The use of stolen credit cards on the internet is rising, as criminals make more fraudulent purchases online to bypass stricter in-person retail security measures” (Hawkins, 2016).
- Lacking the Personal Touch. In comparison to retail stores, e-commerce lacks a personal touch and human relationship. In a survey by IMShopping and Harris Interactive, both are social media shopping companies show that out of 2,2745 American adults surveyed, 52% did not make purchases online sometimes was due to the inability to receive assistance from another human. 16% of the sample said their decision not to shop online at all was due to the same fact, the demise of human interaction (Leggatt, 2009).
- No internet=No shopping. Ecommerce can only happen with internet connectivity and devices which can work as a hindrance when these are not available at all or at a given time when consumers the intent to make an online purchase.
- Issues on Taxation. The issue on regulations and tax implications is still a grey area in the world of ecommerce especially so of transactions between different territories. This can cause multiplicity on taxations and higher expense on accounting and compliance.
Weighing the pros and cons of running an ecommerce business is the first step in gearing you towards making the right decision in starting up your own online business. I’ll end with a quote by the founder of eBay.com, Pierre Omidyar,“People were doing business with one another through the Internet already, through bulletin boards. But on the Web, we could make it interactive, we could create an auction, we could create a real marketplace. And that’s really what triggered my imagination, if you will, and that’s what I did.”