What Is E-commerce And Its Benefits?

Distinctive features of e-commerce

The purpose of e-commerce is to optimize sales processes so that related companies can make more sales. Companies, online stores, markets (e.g. Amazon) or auction platforms (e.g. EBay) gain new customers through social media, digital ads, and newsletters, and use automated CRM systems to maintain countless customer relationships with relatively little effort.

Benefits of E-commerce :

Time-efficient purchasing process:

E-commerce allows shopping without delay. Those who want to buy do not need to go to a bricks and mortar store to buy a product. Instead, you can order at any time of the day from the comfort of your home or on the go. You will immediately receive an order confirmation through a store system. Service providers can also offer their services online. For example, a travel agent can provide online advice to interested parties and accept bookings.

Electronic commerce reduces transaction costs:

E-commerce can make it unnecessary to open new companies and warehouse locations. Inventory, payment, and store systems automatically track inventory and cash flow. This facilitates the coordination of different company areas and provides space for new business models. Small and medium-sized companies can now collaborate with online service providers to increase their competitiveness: For example, if they use the Amazon marketplace or eBay auction platform instead of their own online stores, they outsource some of the sales and also benefit from high-access Trading Sites.

Overcoming spatial distances:

The Internet makes retailers independent of a fixed sales position. You can open new sales markets beyond regions or internationally. The sale of physical goods still requires an expansion of logistical capacities, but no new locations need to be opened. Online communication makes even business trips redundant. From the consumer’s point of view, online commerce has the advantage of choosing from a very wide range and directly comparing quality and prices.

Long-term advertising:

Social media, blogs and your own company website offer cheap ways to draw attention to your own offering. Companies that are active on Facebook benefit from the network’s high reach. Search engine marketing and online ads can often be successfully implemented with a smaller advertising budget than traditional print ads or TV advertising. In addition, online advertising is easier to personalize than classic advertising.

Simple multichannel marketing:

Combining the online and offline world and using several channels works. If you use an online store and social media in addition to fixed retail sales, there are more touchpoints for consumers to decide on your offer.

More customer proximity:

You can use social media to communicate more personally with potential customers and improve your company’s image. Monitoring and analysis tools make it easy to collect personal data and create more precise customer profiles. This makes it easy to plan ad campaigns and tailor the range to demand. CRM systems make it easy to keep in touch with customers.

Higher customer satisfaction:

Email support, online contact forms, or chats remove the blocking threshold for interested parties to seek advice. With these technologies, customers can query around the clock and get a faster response. Simplified ordering and payment processes reduce workload for both customers and companies.

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Disadvantages of E-commerce :

Payment and data security:

There are still Internet users who are reluctant to shop online for security reasons. They don’t want to pass on contact information and payment details.

Effort and expert knowledge for advertising:

The extent to which online marketing saves costs depends on the industry. In highly competitive markets, companies must also compete to attract attention on the World Wide Web. A one-time ad campaign with Google AdWords is not enough in this case. In addition, smartphones and social media have shortened users’ attention spans. On the other hand, professional search engine marketing requires knowledge or sometimes more expensive support from a specialized institution. Here, small companies often cannot compete with large companies.

Increased competition and price pressure:

Global online commerce is increasing the number of competitors. Supply exceeding demand puts companies under enormous price pressure. With price comparison portals, it’s easy for consumers to choose the cheapest offer. In the fashion industry, for example, cost-effective manufacturing facilities in Asia undertake all their sales without intermediaries. They often waive customs duties and shipping costs from their customers and offer their products on the internet at an unbeatable low price. For local companies, it is very difficult to win and profit from such price wars depending on the sector.

Complex application:

Building a digital infrastructure requires time and money. Not every small retailer has the appropriate know-how, staff and financial capacity to set up an online store or manage social media channels regularly. Maintaining a website occasionally has little meaning. Shipping methods and complaint efforts can also be a travel hazard in e-commerce.

Lack of personal advice:

Not every online retailer can offer 24-hour customer service or have the resources to integrate service chatbots into their own websites. Unlike the showroom, there is no direct contact with customers. From the customer’s point of view, sales advice from trained staff is more persuasive and effective in most cases than, for example, a chat conversation. E-commerce cannot replace on-site consultations, especially for products and services that require a lot of disclosure, such as beauty products or medical technology devices.