Pros and Cons of Starting an Online Sales Business

Want to start your own business?

Great idea. We’ve all seen numerous online stores popping up all over the place and making decent money. Why not join them, right?

Before you do that, spend a minute reading the advantages and disadvantages of such a project. By the time you’re done, you’ll have a much better idea of what you might be getting into.

Advantages of Starting an Online Sales Business

Doing business online is a great idea because of these reasons.

1. Quick Start

Starting an online business is super quick. Thanks to eCommerce platforms like Shopify and BigCommerce. You can have your online store up and running in one day. This is exactly how eCommerce platforms market themselves, as you can see below.

What eCommerce platforms give you is a basic online store that you can customize any way you want. You can change the design, add products, branding elements, company info, and add functionality with dedicated apps.

That’s why anyone without previous experience can start an online store quickly. Want to have an order tracking page? No problem, just add a special app. Want to have someone write your blog content? Hire the best essay writing service. Need to start a customer loyalty program? Get an app to do that automatically.

2. Sell More Products

Online stores of all sizes enjoy the greater freedom to sell products than brick-and-mortar businesses. The lack of space in a physical store isn’t even a problem here because online businesses can use warehouses of partners.

Take dropshipping stores as an example. This type of business is served by dropshipping partners who manufacture, ship and deliver products to customers. A dropshipper needs to watch over the quality of products and deliveries to make sure that everything goes great.

Dropshipping partners also allow the addition of tens of thousands of products to stores and sell them without even having to store them in a warehouse. This means that a dropshipper can reduce business costs while having a decent range of products to sell.

Oberlo, a well-known dropshipping app, promises “millions of products” on their website, as you can see below.

3. Access to International Customers

Online sales businesses partner with international courier services to make deliveries in pretty much any country. Most stores ship internationally to at least a few countries, but going global isn’t a problem, either.

Let’s take a dropshipping online store once again as an example. A dropshipper can partner with product manufacturing facilities in different countries and have them ship orders to local customers. In this case, the business owner can expand their store and get access to international customers without having to physically go outside their home country.

Managing order management experience would also be fairly simple. Delivery partners typically provide order tracking pages for customers and other handy resources, so you can automate and simplify most sale- and delivery-related processes.

4. Get More Customer Insights

Brick-and-mortar stores get customer insights from a limited number of sources. For example, they can survey customers both online and in-person, study usage patterns in applications, and study historical information like sales volumes.

Online businesses, on the other hand, have access to more customer insights. Having a website is a huge advantage here because it gives such information as browsing history, order history, customer satisfaction scores, upsell and cross-sell statistics, and numerous other analytics.

Live chat is a brilliant example of how online sales businesses can get customer insights every day in real-time. A business owner can start a conversation with a website visitor via a live chat widget. They can ask questions or have the customers’ questions answered, which might provide a ton of useful information.

5. Automate Business Processes

As mentioned, online businesses take advantage of website applications to take care of repetitive business processes. A website app is super easy to install and can be like a personal assistant to website owners.

Here are several examples of automation with apps:

• Chatbots can automatically share customer survey requests, discounts, welcome messages, product news, and announcements with website visitors
• Accounting apps can calculate basic financial reports automatically to provide business owners with the essential information about the health of their business
• Referral program apps can encourage customers to refer their family members and friends to get incentives like discounts and free products

Having a toolkit of apps to take care of essential business processes is a great idea for online stores of all sizes. Thanks to them, numerous processes can be either partially or completely automated, so business owners can focus on more important tasks.

6. Manage Discounts Easier

Discounts are a big deal for many customers. eCommerce studies show that up to 80% of customers are likely to buy from a new brand if it offers a discount for the first-time purchase. So, discounts are always a major part of any business’s marketing strategy.

Distributing discounts is much easier for owners of online businesses. They can change prices for hundreds of items in a few clicks and create thousands of discounts in minutes. In the case of brick-and-mortar businesses, doing the same isn’t always as fast and easy because coupons might be printed and distributed via other channels.

7. Share Coupon Codes With More Customers

Okay, so creating coupon codes is easy for owners of online businesses, and, obviously, the same applies to sharing them with customers. An online business owner can use any marketing app — be it for email, SMS, push notification, social media, loyalty program, or others — to share codes with a subscriber list of any size.

For example, let’s say you’d like to share codes with emails. Go to your email marketing app, create an email using the editor, and add a discount code to that message. Sending that email as a part of an email marketing campaign gives you a great opportunity to score more sales.

See also: 7 Steps to Start An Online Business

Disadvantages of Online Sales Businesses

Starting an online sales business sounds pretty simple with apps and tools. Yet, there are some cons to know before you open your wallet.

1. Online Fraud + Cybersecurity

Every day, more than 30,000 websites get hacked. Although many of them are abandoned websites and blogs, some belong to online businesses. Every website is at risk, and cybercriminals are getting increasingly better at hacking.

That’s why online businesses face the extra costs of cybersecurity. This includes secure hosting and protection from online attacks from hackers. Besides, there’s always a risk of online fraud. Hackers can use fake credit cards, false identities, and other schemes to target eCommerce websites.

2. Fierce Competition

This disadvantage applies to brick-and-mortar space, too, but competition is extremely high in many eCommerce niches. With online stores becoming increasingly available thanks to eCommerce platforms and dropshipping services, the number of new businesses is as high as ever.

In fact, research says that 90% of dropshipping online stores fail within the first month. That’s a staggering figure, and competition contributes to many of those closures.

3. Customer Trust

That’s another issue that stems from the crazy competition in eCommerce. With so many stores around, getting customers to trust you is extremely hard. Besides, there can always be problems with shipping, order fulfillment issues, and dozens of other obstacles.

The abundance of online businesses also has customers searching for the best deals. Even if they buy from your store once, that doesn’t mean they’ll return for the second one. That’s why having a customer loyalty program is becoming essential in eCommerce.

Pros and Cons of Starting an Online Businesses: Summary

Hopefully, this quick guide has helped you to get some perspective on your online business project. In most cases, however, the advantages outweigh the disadvantages, because the starting costs are fairly low.

Smart planning also helps to reduce the risk even further, so doing your homework can really increase your chance of success.

BIO:

Donald Fomby is a professional copywriter, content creator, and editor. He is a passionate and dedicated writer who aims to provide his readers with practical, up-to-date tips, trends, and information. Donald spends his free time honing his article and case study writing approach through research and life-long learning.