When the Internet first emerged, there were a lot of skeptics. But it persisted, and grew, and evolved. It did not take long before people realized that the Internet offered a very powerful opportunity to drive revenue, and eventually, online shopping (sometimes known as e-commerce) became a viable and safe way to purchase goods and services.
Most large retailers and service providers today have an online presence, where shoppers can complete purchases. But online stores are not for everyone, and it is important to understand ‘the good the bad and the ugly’ before taking the leap.
This blog post will explore what you need to know before you take the plunge and decide to build an online store.
The benefits of online shopping
By selling goods and services on the Internet, a business owner can literally become a global enterprise overnight. The reach of the internet crosses geographies and time zones. Businesses can extend their footprint exponentially by building an online store.
Furthermore, online shopping can dramatically reduce costs long term, especially when you consider the impact of rent or property ownership. Add to that the cost of insurance and sales staff, and a bricks and mortar shop can seem prohibitively expensive. An online store can level the playing field and eliminate barriers to entry.
Another benefit of e-commerce is an increased sense of visibility into the competition. Because the internet is so public, competitive pricing and service policies are readily accessible. Companies can easily make adjustments to enhance competitive advantage.
These benefits are significant, and compel many business owners to open online stores, however, there are disadvantages that also need to be considered.
The disadvantages of online shopping
While the long term costs may be lower, opening an online store isn’t without cost. It can be expensive to have a fully functional e-commerce site professionally designed, developed and maintained. Furthermore, the associated costs of having it strategically optimized for search, credit card enabled and properly secured can be high. Websites are also not ‘build it and they will come’ entities. They require advertising to drive traffic, which can cause costs to mount.
Customer support online can also be expensive. Depending on what you are selling, customers often expect 24-hour support online, and can become quite frustrated and outspoken if that is not provided.
Arguably the greatest disadvantage to selling online is the risk businesses incur as a result of security vulnerabilities. Fraud is extremely common online, and e-shopping businesses will bear a great deal of exposure along these lines. Another significant risk is the possibility of the website going down, as a result of hacking, server issues or other unexpected challenges. If/when this happens, the impact can be catastrophic. Lost business as a result of unanticipated downtime can cost a company significant revenues.
At the end of the day, whether or not you choose to open an online store will depend on many variables. But you will want to be sure that you have canvassed all points of view and taken potential benefits and disadvantages into consideration.
To explore whether an online store is a wise pursuit for your business, contact Miller Bernstein today.