Weighing Up the Pros and Cons of Starting an Online Business
There are many advantages to turning to an online business. Whether providing your customers with online purchasing options, or building a business that exist solely online, there are several advantages that exist over traditional brick-and-mortar stores.
Online Stores Have Fewer Limits
When it comes to the obvious practical benefits of an online business versus a traditional one, online stores do not suffer from the same time constraints as brick-and-mortar ones.
With any traditional business, there will come a regular point in time during the day that business simply cannot happen. Employees go home and customers must wait until they come back again to make purchases. With online stores, this isn’t a problem, as retail websites are open all day, every day, all year long. This is more convenient to the customers, which translates into more sales.
Compounding this advantage is the fact that there are also no geographical constraints to an online business. With a physical store, you limit your customer base to those people who are already close enough to frequent your shop. When you go online, you make the whole world your potential customer audience. There are effectively no limits to where or when online businesses can draw their customers.
Online Stores Are More Cost-Effective
One major and tangible advantage that any business owner can see with an online store is the lower costs involved with opening, running, and maintaining it. This reduction of business comes from:
Real Estate – Since online stores do not need a physical building in which to exist, there are no real estate costs involved. Website hosting and registration fees will almost certainly be less expensive than paying rent.
Staff – With an online store, many processes are automated for both customer and business alike. These include operational processes such as inventory management, billing, payments, and checkout. This in turn lowers the number of employees that the business needs to function.
Marketing & Advertising – Many channels of advertising for online businesses can prove much more cost effective than with traditional businesses. Traffic from sources such as social media sites, pay-per-click advertisements, and search engines are all either free or very cheap.
These cost savings can be passed on to the business’s customers in the forms of better deals or lower prices. In this way, online businesses can turn their own lowered expenses into even more customer traffic.
Online Stores Offer Better Convenience
For many customers in many ways, online businesses are vastly more convenient than traditional businesses with physical limitations. For this reason, simply being online is often enough for a business to draw in customers that it might not otherwise have had.
With a well put together online retail business, customers can find your products almost instantly with just a few clicks. There are no lines, no crowds, no waiting times, and no need to travel out of their way. They can also more easily compare products and find relevant information on them as necessary. All in all, for those who embrace it, online shopping is much less of a hassle in many respects than traditional shopping.
Like any business model, though, online retail is not perfect. While it has many advantages over traditional, physical alternatives, online business does come with a few disadvantages that business owners need to consider. These include the following examples.
Customers Cannot Try Before They Buy
Unless your product is purely visual, there is no way for your customers to experience it fully for themselves before buying it. They cannot try on clothes, test out electronics, or flip through books that they buy over the internet. For some customers, this can be a turnoff to online business, especially when it comes to major purchases.
Online Purchases Take Time
The tradeoff that online retail makes to gain many of its time saving conveniences is a bigger delay on customers actually receiving the product. They can shop, compare, and buy relatively quickly, but for any tangible product, they must then wait for their purchase to ship to them. For this reason, customers may prefer to simply go into a physical store and buy it so that they can walk right out with it in their hands.
Security Concerns Are Greater
It’s probably a safe bet that most customers worry less about being robbed in a store than they do about having their information stolen online. With online businesses, customers have to write out their personal information to complete many transactions. This can naturally make many customers uneasy, as this information may possibly then be stolen by a third party and used to commit identity theft.
Fortunately, businesses can take steps to emphasize the advantages of their online stores while lessening the drawbacks. With careful planning and consideration, almost any business can utilize online commerce to their developmental benefit.