Thinking about buying (or potentially creating) an online business? E-commerce businesses are everywhere in 2022, and for good reason. They’re cheaper to establish, have a range of growth options and allow the owner a chance to establish the work-life balance of their dreams. But are online businesses all smooth sailing? There are many pros and cons of online businesses, so let’s take a closer look!
Here at Core Business Brokers, we wanted to break down the pros and cons of online businesses, to allow you to make the best possible decision when it comes to entering the market.
Pros of an online business
- Set up time
Unlike their brick and mortar counterparts, online businesses don’t need to wait for council approval, landlord permissions, internal fit-outs and other physical barriers most of which are beyond their control. Once you’ve got access to stock (if selling a product), the website is created and all business ownership aspects are in place, you’re ready for business!
- Lower overhead costs
With no physical premises, online businesses steer clear of costs such as rent, building insurance, utilities and more. Plus, with less of a physical footprint, the business is more environmentally friendly too!
- Ability to analyse customer behaviour and collect customer data
If the online business is set up with the correct tracking capabilities (such as Google Analytics), there are a multitude of opportunities to analyse customer behaviour. From what pages the customer visited, to whether they abandoned their shopping cart, what device they used, their location and more. This can then help to improve the online business to cater to their target customer in the future.
- Opportunities to expand
If an online business wants to expand into a new area or location, whether it’s local or further abroad – it is much quicker, easier and less expensive than if a traditional business wanted to do the same. It’s all made possible with a click (or two) of a button! Whereas a physical brick and mortar store has limitations on space.
- Potential for better work-life balance
No office, no problems! Owners of an online business can potentially work anywhere in the world with the help of cloud-based systems, decent internet connection and phone service. Sounds idyllic, doesn’t it!?
- Bigger customer reach
Online businesses can be found by anyone, at any time and from any location in the world. With online advertising campaigns at their disposal, they can reach new customers every single day. Unlike physical shopfronts that must rely on foot traffic or those customers willing to travel to their business.
Cons of an online business
- Building credibility can be challenging
Unless the business falls under the brand name of a well-respected and known company, building a trusted brand identity can be a challenge for online businesses. With scams and other security issues at the forefront of everyone’s mind in 2022, consumers are wary of unknown brands collecting their payment details online. This may be the roadblock that stops the growth of the online business, with many failing within their first 120 days [reference: Comma Consulting].
- Customers may be deterred by the lack of face-to-face interaction
Relating to the above point about brand credibility, many customers may be deterred by the lack of ‘real person’ energy behind the business. Whether the customer is security conscious, or simply a little old fashioned – many consumers prefer a handshake approach to business.
- More competition
Gone are the days of competing with the other businesses in your area. Online businesses are competing with a wider market of competitors. In fact, they’re competing with all other online businesses (and there are a lot out there!).
If you’re thinking about buying or creating an online business and want to discuss your options with a team of professional business brokers with a wealth of experience, look no further than Core Business Brokers. Rad, Roy and the team have an abundance of knowledge to share and are always happy to guide you in your purchase journey.