Understanding the Pros and Cons of Starting an Online Business


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Pros and Cons of Starting an Online Business

Two years into the global pandemic, businesses are still reeling from the gaping impact it left worldwide. Even giant brands weren’t spared when mandated shutdowns were implemented to prioritize safety. It was even worse for small businesses. The sector experienced the most permanent closures, crippling revenue losses, and record-high layoffs.

Moving their operations online became a necessity to exert business continuity and remain market competitive. According to the McKinsey Global Survey, executives admit that their companies’ digitization in customer interaction, supply-chain networks, and core internal processes (e.g., back-office, R&D, production, etc.) accelerated by 3 to 4 years.

However, even before COVID-19’s disruptive turn of events, eCommerce had already been taking root. Since 2018, 64% of small businesses already have a website. Still, this doesn’t cancel out consumer preference to shop in-store. Despite the significant number of people making online purchases, in-store shopping still takes the lead, with a recorded 80.91% in offline sales compared to 19.1% online.

One question remains: should you invest in an eCommerce business? Delve into the business model’s pros and cons so you can make the best investment decision.

The Two Sides of an eCommerce Business

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The Good

Low Starting Capital

Forget about shelling thousands on renting a commercial space and hiring extra hands. Setting up an online business means no rent is due nor do you need to take care of staff. Single-handedly launch your brand in the comfort of your home and follow the footsteps of the greats with your very own garage success story.

You can also allot more of your funds to product development and supply acquisition with zero spend on human resources and leasing.

There are affordable web hosting plans and domains available for you so you can get your website up and running in no time. Another option is to leverage popular marketplaces, such as Amazon and eBay, where you only need to pay a small amount per item purchased.

Open for Business 24/7

The peak hours for online shopping are from 8 P.M. to 5 P.M. High volume of traffic comes in starting at 3 P.M. and dwindles at 10 P.M. These are odd hours for brick-and-mortar retail stores that generally clock out at 5 P.M. 

An online business won’t limit your sales opportunities to rigid store hours. The available eCommerce automation technologies eliminate the need for constant supervision. You won’t lose a wink tending to manual and menial tasks such as receiving orders, processing payments, and sending purchase confirmations.

Wide Customer Reach

Selling online thrusts your brand to a wider audience. You won’t only be catering to customers within your vicinity or to people who would hopefully seek out your store. When you go live on the world wide web, anyone looking for your specific products and services anywhere around the globe can get to you.

You’re looking at boundless opportunities for expansion. With the right digital marketing efforts targeted at different locales, your business is well on its way to scaling into a global brand.

Personalized Shopping Experience

Customer data collection has never been easier with an online business. Tools such as Google Analytics facilitate a data-driven understanding of how customers interact with your business. Whereas traditional ads aim to catch attention, introduce what’s new, and offer promos, digital marketing is more intentional. It aims to meet every lead at every stage of the buyer’s journey.

This enables customers to have a more personalized shopping experience. You can recommend products based on valuable insights such as their location, purchase history, and buying habits. From there, you’ll be able to send more targeted promo offers, send cart reminders for abandoned products, introduce new products that they might be interested in, and more. This boosts page engagement and raises the chances of lead conversions and sales.

The Bad 

Technical Issues Directly Affect Sales

Much like a physical store, a website needs maintenance and constant upkeep. However, while minimal issues such as plumbing concerns, broken machines, and fixture repairs don’t necessarily have to deter the shop’s operations, a website is more vulnerable. Slow loading times and website crashes will hurt your sales. The longer your website is down, the more potential revenue you’ll lose. 

Frequent downtimes and a laggy webpage also put your business’ stability in question. Customers won’t trust transacting with a faulty website. They won’t hesitate to bounce off your website for another brand with a more optimized browsing quality.

Constant Susceptibility to Security Threats

A recent report on online security shows that the average cost of data breaches rose to a whopping $4.35 million. Even with security measures in place such as an SSL certificate and malware scans, you’re never completely safe from data theft, phishing, hacks, and other forms of online threats.

While the detrimental cost is a dire concern, losing your business credibility is among the most harrowing aftermath of a breach. Customers would be rightly hesitant to leave their data (e.g., bank details, address, contact, etc.) with a website that had been previously hacked. A single break-in can damage your brand forever.

Countless and Bigger Competitions

Getting on Google means being accessible to customers at a global scale. You’ll also have more competitors locally and abroad. For every query lodged on Google, millions of results turn up. Only ten make it to the first page of the search engines results page (SERPs). 

Your competitor pool includes household brand names that have combined years of digital marketing experience and a dedicated team of experts pushing their websites up the search rankings. Your chances of taking over their lead can look grim.

Without SEO, paid search, lead generation and other digital marketing efforts, you’re practically invisible online. Your best shot at online success is to leave your website to a seasoned team of digital marketing experts. They know best on how to ramp up your sales, boost conversions, and increase return on your ad spend so you earn your business’ best value.

Lack of In-Person Shopping Experience

According to Raydiant’s 2021 survey on consumer behavior, a good 46% of customers still favor in-person shopping compared to transacting online. This shows that despite online shopping’s sheer popularity and growth, there’s no exchange for the in-store retail experience.

Buying online boasts the convenience of easily finding the right products without leaving the confines of one’s home. However, customers still find that the tactile encounter is still worth the trip to stores. Moreover, the instant gratification of having to bag the product right away trumps waiting several days for the parcel to arrive, plus the unfortunate possibility of shipment issues.

Our Recommendation: Go Online!

In a digital-first world, bringing your business online might not just be an option. The steady growth of online shoppers is pointing to eCommerce as a necessary innovation for businesses. It’s how they grow, stay relevant, and streamline their process along the rapidly changing entrepreneurial landscape.

If you’re a budding entrepreneur, start online. Leverage the low overhead costs, ease in market entry, and the convenience of eCommerce automation in managing your business. If you already have a physical store, expand digitally. Scale your brand into an omnichannel retail model and earn more from search and foot traffic.


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