Advantages of eCommerce to your business

About eCommerce

In the first part of this eCommerce series, we had a look at the basic concepts of eCommerce including the different eCommerce models, some eCommerce trends, and a few popular eCommerce marketplaces. We reviewed the popular eCommerce models including B2B (business to business), B2C (Business to Consumers), C2C (Consumers to Consumers), C2B (Consumers to business), and D2C (Direct 2 consumers).

In this part, we will have a look at the advantages of eCommerce for businesses and consumers. 

Why are more and more consumers going online?

A couple of decades ago, our team had launched India’s first online stock trading platform. There was a lot of scepticism about the success of the venture because of obvious reasons. The Internet was a new thing and very few people had access to the internet. People were using low-speed dial-up modems for time-critical operations on the internet. It was not easy for people to transition from the prevalent physical stocks to the new paradigm of electronic stocks. Cheques and cash were the primary modes of payments, and people were not comfortable with online transactions.

However, despite all the naysayers predicting an untimely demise of the platform, the venture was and continues to be a roaring success. Customer acquisition went through the roof and we were doubling the number of trades every month. The organisation grew manifold within a short time. 

Some of the reasons that led to the success of the platform continue to be relevant in the current times. Online shopping is convenient and saves a lot of time. Customers do not have to visit a shop or stand at the checkout to complete their shopping. Online shopping offers more variety and options all in one place. Customers can take advantage of reviews and ratings before buying a product. These advantages will continue to drive consumers towards eCommerce in the future and therefore businesses must adopt eCommerce as a significant sales channel.

Advantages of eCommerce to business

Now that we have discussed the benefits of online shopping to customers, let’s have a look at some of the advantages and disadvantages of eCommerce for a business.

Lower financial cost

Ecommerce solutions are relatively inexpensive compared to traditional brick-and-mortar shops. The startup cost of an eCommerce business is much lower than a physical store. 

Physical stores may incur start-up costs in terms of deposits for the premise, interior design, store signs, inventory, and other equipment. In addition to start-up costs, other recurring costs include rent for the premises, staff salary, and the cost of maintaining an inventory. These costs could result in a delay in realising the return on investment.

Ecommerce shops are relatively less expensive to set up, and typically include the cost of designing or developing an eCommerce solution. In some cases, you can take advantage of an existing eCommerce marketplace, like Amazon, and register your business as a vendor on such portals. That would reduce the start-up cost even further. 

Recurring costs for eCommerce businesses include the cost of maintaining the digital infrastructure, maintenance costs related to the portal, and marketing costs. ECommerce businesses typically require a lesser number of back-office staff. There may not be a requirement for stocking large inventory as we would normally do in a physical retail store.

Reach a larger customer base

Unlike a physical store that can be accessed by a limited number of customers who stay within proximity of the shop, an eCommerce shop is easily accessible to anyone with an internet connection. This is of great benefit to the business as an online store can potentially sell to a far larger customer base. 

This of course depends on the product or service that you are selling. Typically sale of service is limited to a location, say a city, whereas products can be sold and shipped to the entire world.

Although eCommerce portals have a larger reach, customer acquisition comes at a cost. We will discuss customer acquisition later.

Your shop never closes: 

A physical store is open for business for a limited period. The volume of sales depends on the customers that can access the store during the open hours. 

Unlike a physical store, eCommerce portals are always open for business. Customers who cannot take the time to visit a physical store can still access the online store at their convenience. Sales can happen any time of day or night and across time zones. That potentially increases the opportunity for sales manifold.

Showcase your bestsellers

Your best-sellers are products that have been purchased by other customers in the past and have received good reviews. You would want all your visitors to know about your best-selling products. 

Ecommerce portals allow you to customize your shop front and other product pages, so the best-sellers are showcased appropriately to prospective customers. This increases the potential for selling these products even faster.

Offer personalised experience to customers

One of the biggest advantages of an online shopping experience is that you can personalise the entire eCommerce portal as per your customer’s preferences and needs. 

Some of the basic customer personalisations may include displaying the customer name and allowing a customer to select a colour scheme, language, and currency of choice. Customers may also want to save their preferred payment method and their billing addresses saved in the portal for future purchases. All of these personalisations go a long way in making the purchase experience easy and enjoyable for the customer.

Some of the more complex and subtle personalisation would include displaying products or services based on past purchases or searches. For instance, some online grocery stores allow customers to save their shopping lists online so that they can easily customise their lists for future purchases. Other portals may display supplementary products based on the purchases that are already made.

In addition to personalising the eCommerce portal, you can also personalize marketing campaigns as per your customer’s preferences.

Easier to induce impulse purchase

Online eCommerce portals often adopt various innovative methods to induce customers to purchase from their portals. 

Attractive use of imagery for a product could be a very effective way to induce customer decisions. For instance, a furniture store may display a piece of furniture in different home settings, so that the customer can identify the one that closely resembles their home. 

Often an eCommerce portal displays the stock availability for a product, or the time left to avail an offer. This is an effective scarcity tactic that induces customers to panic purchase. Some eCommerce portals sell more products during the offer period than they do during the entire year.

Access to customer data

Ecommerce portals have ready access to customer information including contact details, location, buying history, and search patterns. These pieces of information can be used to run effective and targeted marketing campaigns. 

For instance, an eCommerce portal may run a campaign to get all customers who had abandoned their shopping cart to return to the portal and complete their transactions. Another way to use customer data effectively is to display previously searched products on the portal home page so that customers can restart the purchase process from where they left off. Often eCommerce portals also display products that are supplementary to previous purchases to induce a need for the product. All of these can only be done if the eCommerce portal has access to customer information.

Scale your business quickly

Ecommerce businesses incur lower operational cost. These businesses can be managed with fewer employees. Ecommerce businesses also and have lesser inventory requirements than retail shops. Portals can process a high number of orders within a limited time because there is no manual intervention. The visits to an eCommerce portal can also be enhanced through inexpensive marketing campaigns like blogs. It is therefore relatively easier to scale an eCommerce business compared to a retail store.

Disadvantages of an eCommerce business:

Before you consider starting an eCommerce business, you should be aware of some of the potential pitfalls. Ecommerce is a very competitive space, and thousands of businesses are trying to sell products or services similar to yours. Your eCommerce business is technology-driven and therefore technical issues could have devastating effects on your business. eCommerce businesses often fail to address some niche customer behaviors, for instance, some customers like to try products before they buy.

We will learn more about the potential pitfalls of eCommerce business in the next part of this eCommerce series.

Part I: Get started with eCommerce

At Pentechs, we create bespoke eCommerce solutions. If you are a startup or an enterprise looking to launch your eCommerce portal to grow your business, feel free to contact us. We can help.  We also automate business processes through our automation platform called FLOW. No coding is required.

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