Exploring the Advantages and Disadvantages of Ecommerce

Ecommerce is undoubtedly one of the most important retail sales channels you can have. With billions of people (2B according to recent estimates) making online purchases, setting up shop on the web allows you to have a store that’s open 24/7 and can reach customers worldwide].

That said, like most sales channels, ecommerce also has some disadvantages. While it certainly allows you to tap into new shoppers and cast a wider net, it can also create complexity in your operations and increase costs.

To help you weigh some of the benefits and struggles of setting up a shop online, here is a definitive guide to the pros and cons of ecommerce.

In this post, we’ll go over:

• What ecommerce is
• The advantages of ecommerce
• The disadvantages of ecommerce

What is ecommerce?

Before we jump into the advantages and disadvantages of ecommerce, let’s take a look at exactly what it is. At a basic level, ecommerce is the business of buying and selling products and services online. Some of the first ecommerce retailers to gain popularity in the digital age were Amazon and eBay.

In the years since, the ecommerce market has grown rapidly. Recent research shows that over 227 million Americans shopped online in 2020 compared to 209 million in 2016. This growth can be attributed to an increase in technological literacy, a growing proliferation of mobile devices and an increase in society’s value for convenience in completing day-to-day tasks. The result? An on-demand lifestyle, where anything is available with the click of a mouse or the tap of a button. 

For retail merchants who only sell in their brick-and-mortar locations, ecommerce can seem like an attractive option. Especially since the market is projected to grow significantly in the foreseeable future. But it’s important to investigate all of the advantages and disadvantages of ecommerce. 

The advantages and disadvantages of ecommerce

Now that we’ve covered the fundamentals, let’s dive into the pros and cons of ecommerce. Below are some key benefits and drawbacks to consider when deciding whether to launch an online store.

Need a TL;DR version? Here’s a quick overview of the advantages and disadvantages of ecommerce. 

The advantages of ecommerce

Here are some of the things you should consider when deciding whether or not to launch an ecommerce presence.

1. You’ll reach more customers

A major advantage of ecommerce is the potential to reach thousands of new customers daily. Traditional brick and mortar businesses are limited to the customer base that lives and works in the vicinity of the store, or those that pass through while traveling. However, if you start an online retail presence, you’ll never again be limited by geography. Essentially, if you can promote your shop online and people are interested in your products, anyone in the world could be your customer, provided you are willing to ship to them.

In a survey of store owners with a retail website, nearly half stated that they noticed a significant increase in customers after going digital, and 64 percent said they had a measurable increase in revenue.

2. You’re literally always open

The ability to have customers complete orders 24 hours a day is invaluable. A potential customer can roll over in bed at 4 AM, think of something they want to buy, search for it on your site and make the purchase instantly. And you, the small business owner, don’t have to pay for the resources to physically keep a store open 24 hours a day.

3. The cost is lower for both sides

On the supply side, ecommerce stores can remain open without paying staff to run the registers and manage the store. On the demand side, shoppers don’t have to pay travel costs to make a purchase.

A winter storm might stop a person from making the drive to a mall, or paying a visit to your local business, but it won’t limit a visit to an online store, reinforcing the effects of cost and convenience on the popularity of ecommerce in the modern era. 

Disadvantages of ecommerce

Thus far, adding an ecommerce website to your already successful retail establishment probably sounds like a great idea. But just as it is important to explore the advantages of ecommerce, it is also important to explore the disadvantages as well. 

1. Customers have concerns about privacy and security

Some consumers are still wary about giving out personal information, especially credit and debit cards, to online sources. The fact is, instances of fraud have increased with the growth of the ecommerce sector, so online stores have to have secure systems, encrypted payment software like Lightspeed Payments and other safeguards against online fraud. We’re not saying you won’t get orders purely because of security concerns. But it’s something to keep in mind. 

2. Lack of in-store engagement with customers

Especially for some certain industries like apparel, nothing can replace the personal experience that a brick-and-mortar store offers. In-store engagement with customers is something many businesses are trying to preserve, even as technology continues to change the retail space. 

The ability to speak with a sales assistant about your needs and issues is often more helpful than trying to find or compare products on your own. Of all the advantages and disadvantages of ecommerce, losing the ability to look your customer in the eye and explain to them the value of your goods is the biggest loss.

Also, online shopping only provides a handful of pictures of the product and information on size/fit/fabric. If you’re lucky, you might see a video. Many shoppers still need more information to make choices. Tactile considerations, such as how an item feels or how the texture comes into play, as well as how clothing will fit, all make a big difference when it comes to consumer purchases. 

3. The added cost of operating an online store

Web hosting for online stores is not as expensive as, say, keeping a physical store open at all hours, but the costs of setting up and maintaining an ecommerce site do add up. It also means you, the small business owner, either have to add more hours of work to your own plate or hire someone new to set up, operate and manage your online store. You’ll also need more skilled labor trained in digital marketing and technology to make sure you get the most out of your ecommerce investment. For some small business owners, this is too much to add to their already full plate. 

The alternative is to choose a POS system like Lightspeed that includes an integrated online store.

This approach is much easier and usually more affordable than building an online store from scratch using one of the dozens of dedicated ecommerce platforms out there. You’ll also get the added bonus of having your store and POS system linked together which can simplify inventory management and improve business reporting among many other benefits. 

Plus, it helps you avoid unnecessary fees and streamline operations by managing everything from one platform.

“As a non-profit, maximizing our funds and giving the most back is important to us. Traditional ticketing platforms would deduct a significant percentage of our ticket sales,” says Lukas Volk, Marketing and Events Coordinator at Aspen Gay Ski Week.

“That’s when we switched to Lightspeed’s eCommerce shopping cart to sell our tickets. They are easy to use and don’t charge any unnecessary fees.”

4. Could add complexity to your operations

If you already have a brick and mortar store, adding an ecommerce store could make your workflows a bit more complex. That’s because managing separate inventory, sales and customer data across multiple platforms can lead to inconsistencies and require more manual effort.

The good news? You can sidestep this ecommerce disavantage by adopting a soluton that seamlessly integrates your online and offline channels. That way, all inventory, sales and customer data are kept in sync and you don’t have to worry about manual data entry and errors. 

Just ask Tori Erickson, Founder of Loyal Tee, who experienced firsthand how integrating ecommerce simplified business operations.

“With Lightspeed, I’m able to sync our in-store inventory with our online store. That really helps me reach online consumers. I feel confident that the inventory levels that I and my sales associates see on the POS and that customers see online are accurate. It’s super user-friendly,” says Tori. 

It also helps to use a platform that works with your existing systems, so you can maintain smooth operations without needing to overhaul your current setup. Take, for example, Aspen Gay Ski Week, which leveraged Lightspeed eCom to simplify ticket sales and set up shop online. 

“Lightspeed eCom is a quality product that is easily manageable and very easy to set up on WordPress. It is just like advertised: you can have a store running in minutes, and every year, it just keeps getting better,” remarks Lukas.

5. Increased competition

Since the barrier to entry for ecommerce is low, online stores often operate in a crowded marketplace where businesses have to compete with many others, including global giants like Amazon.

To compete, you need a strong and differentiated brand that clearly communicates your unique value proposition and resonates with your target audience.

Having great customer relationships is also beneficial. Loyal customers are more likely to make repeat purchases and refer your brand to others. A good way to do that is to implement customer loyalty initiatives such as a reward program that offers perks to your loyal customers. 

Oh, and running a cohesive marketing strategy that covers multiple channels—including in-store, email, and SMS marketing—is a must.

For best results, use a solution like Lightspeed Advanced Marketing, which offers all the tools you need to increase shopper retention and drive repeat sales. This includes a built-in loyalty program and marketing automation tools. 

You can streamline your marketing with customer segmentation and templates to enhance the customer experience. Collecting customer feedback and tracking purchase history is made easy, so you get to know your customers better. 

Finally, Lightspeed Advanced Marketing also enables you to communicate on all channels, including email and SMS, to cover all your bases with customer communications.

Best of all? It keeps all your channels in sync, so you can deliver a seamless and consistent experience across every touchpoint. As Wilfredo Rodriguez, CFO, Sunmed, Your CBD Store, puts it:

“Without the Lightspeed platform enabling [data collection] for us, none of the customer engagement and education that we’ve been able to accomplish through email marketing over the past six months would have been possible. The email marketing and the engagement has improved customer retention and has helped us grow revenue and stores.”

Final words

Ecommerce offers exciting opportunities to expand your business and reach new customers, but it’s essential to weigh the pros and cons to ensure it’s the right move for you. With the right strategy and tools, you can overcome the challenges and make the most of online selling. Lightspeed’s integrated solutions make it easy to get started and keep your operations running smoothly.

Ready to launch your online store? Talk to a Lightspeed expert to learn how our retail point of sale and integrated eCommerce store can help you get started.