Ecommerce is the process of purchasing and selling goods or services online. It has gained popularity as a means for businesses to reach more prospects and/or improve their overall efficiency. With that said, ecommerce is not always the right option for all businesses. That means it’s important to determine if it’s a good fit for you before you commit to it.
Here, Tracy Hill, Marketing Manager at Car Mats UK shares her insight into the world of eCommerce.
Advantages of e-commerce:
Wider reach and potential for increased sales
Ecommerce enables businesses to broaden their customer base beyond what is possible with traditional brick-and-mortar stores. For some businesses, this may literally open up the opportunity to sell worldwide. For others, it may simply mean selling to customers in the UK but outside their local area(s).
Lower overhead costs
Online stores generally have far lower running costs than bricks-and-mortar stores. In particular, they have far lower overhead costs. For example, the rent on a warehouse is likely to be much lower than the rent on a shop in a high-traffic area. The cost-efficiency of ecommerce can be very useful to businesses with concerns about their cash flow.
Greater flexibility in product offerings and pricing strategies
Ecommerce allows businesses to offer a wider range of products and services than traditional stores. Online stores can also be updated quickly and easily to reflect changes in inventory or pricing. This flexibility can allow businesses to be more responsive to changes in the market and to offer their customers a wider range of products and pricing options.
Personalised customer experience
Ecommerce provides businesses with a wealth of data on customer behaviour, preferences and purchasing habits. This data can be used to improve marketing efforts, better understand customer needs and make informed business decisions.
In particular, it can enable businesses to adapt their product offerings and marketing strategies so that they are in better alignment with their customers’ requirements. This improves the customer experience and hence can improve revenue for the business.
Disadvantages of e-commerce
Although ecommerce offers numerous benefits to businesses, it also comes with some potential disadvantages that should be considered. Here are the four key ones.
Lack of face-to-face interaction
One of the major drawbacks of ecommerce is the lack of face-to-face interaction between businesses and their customers. While online communication and customer support can help mitigate this, it can be challenging to build a personal connection with customers through a screen. This can lead to a lack of trust and loyalty, especially if customers have issues with their orders.
Dependence on a reliable internet connection
Online stores and payment processing require stable internet connectivity to operate correctly and any disruptions can result in lost sales and negative customer experiences. Businesses need to have contingency plans in place to handle any potential internet outages or issues that may arise.
Potential for online fraud
The risk of online fraud is a significant concern for businesses operating in ecommerce. Hackers and scammers can target online stores to steal personal information or carry out fraudulent transactions. To prevent such incidents, businesses must implement robust security measures like SSL encryption, two-factor authentication and other fraud prevention tools.
Need for secure payment processing
Finally, ecommerce businesses need to ensure that their payment processing systems are secure and reliable. Customers expect safe and convenient payment options when shopping online and any issues with payment processing can result in lost sales or negative reviews. Businesses need to work with reputable payment processing partners and invest in security measures to protect their customers’ financial information.
Factors to consider before implementing e-commerce
Before implementing ecommerce, businesses need to carefully consider several factors to ensure that they are making the right decision for their specific needs and goals.
Nature of products or services offered
Ecommerce may not be suitable for all types of products or services, particularly those that customers prefer to see and touch before making a purchase. For example, customers may prefer to buy clothes in a physical store where they can try them on before buying. By contrast, digital products like ebooks and software can be easily sold online.
Target audience and their shopping habits
Businesses also need to consider their target audience and their shopping habits. Are customers comfortable buying online? If so, what are their preferred payment methods? What factors influence their purchasing decisions? By understanding the answers to these questions, businesses can tailor their ecommerce strategy to align with their customers’ needs.
Industry competition
If your competition already has a strong online presence, then you will be playing catch-up. This can be a lengthy process. You should think carefully about whether or not you’re ready to take on the challenge before you commit to it. By contrast, if there is little to no competition in the online space, then entering could give you a meaningful competitive advantage.
Cost of setting up and managing an ecommerce website
While ecommerce generally has lower costs than running a physical store, there are still costs associated with it. For example, you will need to pay for website development, hosting and payment processing. It’s therefore important to consider whether or not you can afford this upfront investment right now.
Skills required for ecommerce operations
Running an online store requires a slightly different skill set than running a bricks-and-mortar shop. The main differences are the need to manage the website itself and the need to manage shipping and returns. You will also need to think about the practicalities of providing customer service remotely.
Tips for optimising ecommerce operations:
Have a well-designed and easy-to-navigate website
This is essential to providing the sort of experience modern customers expect, demand and deserve. It’s also an important ranking factor for search engines. In particular, make sure that your website displays well on mobile and that your checkout process is straightforward.
Offer well-known payment options
The major payment companies are globally-recognised brands. Working with them will give your website credibility.
Offer free shipping
Customers hate being stung by shipping costs, especially at the end of the transaction process. If you really can’t offer free shipping, at least offer a shipping calculator.
Provide excellent customer service
Modern customers are often happy to shop online but they still want to be treated like humans.
Leverage social media
Many social media platforms offer free business accounts. These can be connected to your website. This can enable you to direct prospects from the platform to your website.
