What are the advantages and disadvantages of ecommerce?

Introducing or growing your ecommerce business has many benefits for your customers and your own organization. In this section we provide a number of benefits but also highlight some of the challenges of ecommerce.

 

The benefits and challenges mentioned below are not meant to be an exhaustive list, but should give input in your internal conversations if it is the right time to invest in ecommerce.

 

Consumer benefits

 

We all see the benefits as a customer of ecommerce: never to stand in queues to check out, the breadth of product options to compare and choose from (and from all over the world!), convenience due to numerous digital channels to shop from, "stores" are open 24/7 and especially digital goods (eg music, movies, insurance, etc) are available to you right away. Sharing purchases and offering feedback is also made easier. Also in an omnichannel environment, the customer is provided with choices to optimize their important shopping parameters, which sometimes is price, or convenience, or newness, or ...

 

However, there are also possible downsides for your customer

 

Key downsides of ecommerce for customers are the Internet access you need, both connectivity and (the right) device, the inability to try / feel / smell the product before purchase, lack of person-to-person interaction, security and data privacy concerns and also a delay between purchase and delivery.

 

Benefits for retailer or consumer goods (services) organizations

 

In ecommerce it is possible to sell unlimited variation of products, without the physical constraints stores have. Also other challenges in managing physical stores (eg employees, property management, etc) are not or less present. Due to a high level of automation to serve the ecommerce customer, much data about the customer (eg search engine data) and your own performance (eg supply chain) is collected and can be used for further improvement of your internal operations or support of the customer shopping experience.

 

Challenges for retailer or consumer goods (services) organizations

 

Besides the costs and time to estabilish ecommerce capabilities, there are also operational challenges to resolve. The risk profile of your operations (eg data-security, operational dependency on IT, charge-backs, etc) require specialist skills you might not have within your organization and is also difficult to attract. Also establishing additional supply chain capabilities (inventory management and reverse logistics) and tax and legal implications need to be well understood before pushing your strategic ecommerce ambition.

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