There are many businesses in the marketplace that trade uniquely online. In setting up an online business, the owner will need to go along the same course of action as a conventional business, in formulating a business plan. E-commerce eliminates the requirements for physical stores and allows businesses to extend their customer base On top of eliminating the possibility of long lines, e-commerce sites offer great advantages. It is not unknown that the explosion of the internet has irreversibly changed the face of business. Even though it may seem like the internet is the quintessential element of business activities, it is always best to take into count the requirements of the business and consider the pros and cons of counting the internet in the business model. The e-commerce industry is extending, but the only way to take part in that growth is by strengthen the opportunities and reducing the risks.
The pros of running an online business
There is a reason many entrepreneurs launch e-commerce companies every year. But when cut straight to the fundamentals, there are specific advantages to running an online business.
Low overhead costs
The greatest advantage of operating an online business is that there is no need to absorb the excessive overhead costs that consumer-to-business firms must cover to keep their doors open. From expensive storefront real estate and physical signs to customer-facing staff and various insurance policies, physical businesses have a wide range of overhead costs that disintegrate their profit margins and drive up prices for the customers.
Potential to collect customer data
The amount of data to be collected about online shoppers can be remarkable, and if the advances in customer intelligence and data analytics tools over the last couple of years are any proof of the subsequent innovations come for some greater opportunities in the future. Being able to collect customer data permits constructing a detailed portrait of the target market: who they are, and what makes them tick. By assembling this intelligence, a detailed customer profile can be created to guide landing page optimization, online advertising, and even product development.
When a customer walks into a store looking for a particular product, the retailer either has the item in stock or does not. If the product is not in stock, the customer has to resolve for a different option or wait for the desired item to come in stock, either way, the customer is not fully satisfied. With an online retailer, customers can tailor their orders, choose the exact products they want, and have them shipped to them. The result is a satisfied customer.
With an online business, there is an opportunity for virtually unlimited reach. Given today’s supply chains and shipping abilities, even the smallest online firm can handle international sales. This extends the possible target market from only thousands to millions.
Some cons of online businesses
It is not all cakewalk for online operations. The fact that 90 percent fail within the first 120 days should tell that entrepreneurs also face some distinct disadvantages. Knowing how to address and diminish these challenges will increase the chances of continuation.
Lack of credibility
With a consumer-to-business company, a certain level of trust exists fundamentally between the customer and the business. Since the barriers to entry are so low in e-commerce, one does not usually enjoy the same level of credibility. Many online businesses find it challenging to prove they are legitimate mainly when they are small and just starting to scale up.
Customer service challenges
Even though there are certainly online businesses that have a reputation for excelling at customer service, Zappos is the most famous example to overcome the lack of face-to-face interaction with customers. Some customers prefer to speak with a person, shake a hand, and have the ability to set up a personal appointment. Online businesses often do not have the resources or capabilities for utilizing email, chat support, or halted phone lines.
Making the most of the situation
We live in a world that entrepreneurs from preceding generations could have never dreamed of, business can be launched from the living room sofa and expand into a highly successful organization without ever stepping foot outside your door, when thinking about it, it is truly astonishing. But to be successful in the online business arena, there needs to be a pragmatic perspective. So, it is crucial to understand the advantages possessed while also acknowledging the disadvantages. In doing so, an entrepreneur can develop a growth strategy that is both rational and durable.