Pros and Cons of E-commerce Businesses
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Pros and Cons of E-commerce Businesses

We live in a digital age, where we can purchase items from around the world at the touch of a button (or two!). So, it’s no surprise that e-commerce businesses have risen in popularity over the past decade, and for good reason! These online businesses have an extensive list of advantages. But it wouldn’t be a Core Business Brokers blog if we didn’t transparently highlight the disadvantages too. So, keep on scrolling to read our list of pros and cons of e-commerce businesses.

Pros of e-commerce businesses

Pros and Cons of E-commerce Businesses
  1. Low start-up cost

Unlike brick-and-mortar businesses, there is no lease on an e-commerce business. Unless, of course, the business required a warehouse to distribute its products. There are also 3PL options for product distribution to consider.  With most online stores starting with a team of one (the business owner), this eliminates many overheads. Such as rent, wages, electricity and more. With the foundations in place (such as a great website from a reputable website developer), products and shipping sorted – you’ll have lower start-up costs than other business sectors.

  1. Scale gradually & grow while you sleep

E-commerce businesses have the power to scale gradually while allowing the business to work 24/7 (meaning growth while you sleep!). As the business becomes bigger and more profitable, you can bring on more team members in remote positions (and offshore assistants) to help you grow the business even more. It’s a win-win!

  1. Diversify your offering

Online businesses allow you to swap and change your product or service offering quickly and relatively easily. If a service isn’t selling, you can alter your pricing or package to entice new customers to the table. If a product isn’t suitable, you can change tact and head in a slightly different direction with ease. This is the approach many online businesses took during the Covid-19 pandemic in order to survive (and thrive).

  1. Branch into new markets and areas

This style of business can easily branch into new areas and markets, both nationally and internationally. This allows for incredible growth prospects for the right business owner. We highly recommend doing your due diligence before expanding into new areas, to ensure you’re abiding by all rules and regulations of that particular territory.

Cons of e-commerce businesses

  1. You’re reliant on technology

If the internet goes down or your website gets hacked, what are your next steps? E-commerce businesses are heavily reliant on technology, which is both a pro in some instances and a con in others. It’s important to have a strong team of technical experts on your side and a decent plan in place to combat any disruptions or technical challenges. Consider paying a technical web team to manage your website’s security each month, to stay on top of website updates and ensure your website is as secure as possible.

  1. High levels of competition

A quick Google search will show you the level of competition in your industry. As part of your initial business planning, we highly recommend a thorough competitor analysis before you begin. A saturated industry can be harder to break into – and high levels of competition can bring significant risk.

  1. Little room for error

Whether it’s your online shopping funnel or your customer care team, there is little room for error when it comes to online business. Customers are used to getting what they want in record time – and when a new e-commerce store gives them anything less than the effortless online experience they’re used to, it’s highly unlikely that they will return (and word-of-mouth reviews can spread like wildfire).

  1. Your customers cannot test or try before they buy

With no ability for customers to try before they buy, it’s important to have clear terms and conditions available that outline your policy when it comes to returns, exchanges or cancellations. For some customers, this may be enough to deter them from purchasing.

Although we live in a digital world, some consumers still prefer the interaction and personality of brick-and-mortar businesses. The most important consideration when looking at purchasing an e-commerce business is the planning and research involved before embarking on this new endeavour. For the right business owner, this sector can prove fruitful and successful, if all variables align. For more information, contact the Core Business Brokers team today, at (02) 9413 2977. Alternatively, you can email [email protected], [email protected] or [email protected] to discuss our latest e-commerce business listings.

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