“Digitalising”, “going online”, “turning virtual” – These are terms very much being heard all around the world in this day and time.
Have you digitalised your business? Do you plan to go online? Or are you at the stage of weighing out the pros and cons of doing so? What are the advantages and disadvantages of digitising businesses? Here’s what we think…
Benefits of bringing your business online:
1. Greater brand awareness
Having an online store automatically spreads your brand and products to a wide range of audience. The digital world of going online is a borderless platform. Unlike physical stores, there are no limits to the amount of customers you can cater to at any one second. Taking your store online opens up a variety of platforms for you to build brand awareness. Businesses can grow their business online using content, for example:
- Have your customer reviews published
- Use write-ups and testimonials to gain trust in your brand
- Have your product postings shared across social media
- Your business will be easily searched and reached when you’re online
2. Selling internationally
A physical store located in one place restricts the number of customers to those who are within reach. When you take your business online, there are no barriers to where your customers are from. Anyone from anywhere can start to buy your products and enjoy over at where they are. All you need is a website that is able to accept all methods of payment, and a logistic partner who can ship your products worldwide. With these ensured, you have opened your doors to the world, to anyone and everyone who is interested in your products. You will in time see the increase in your audiences, and naturally bring in more sales for your business.
3. Increase revenue
Building an online store also means that you are having your business operate 24 hours. Your shop will now be open 24 hours a day, 7 days a week. Shoppers can now shop at any time of the day they wish to, wherever they are at. The worry about your shop’s opening hours for shoppers no longer exists.
With a store that operates 24 hours, you can now cater to customers from different time zones. Your business is capturing transactions, bringing in revenue while you’re sleeping or busy dealing with another matter.
4. Reduce financial costs
One of the biggest benefits in starting up an online store is that you do not need a large amount of startup cost. Unlike physical stores where you will need to prepare a lump sum for premise rental, renovation and other upfront costs such as store signs, store design, store equipment set up, sales equipment etc, an online store only requires a one-off set up cost, that costs much less than premise renovation, and a small monthly maintenance fee.
Physical stores also require you to pay staff to work on-site. To run a physical store, the least you may need is a couple of sales assistants, a cashier, and possibly a security guard depending on the value of your products. On the other hand, if you’re running a startup online store, you may not even need to employ just yet. With most things handled and automated by systems online, you will be able to self-manage up to the day when your business grows bigger, and an extra pair of hands is needed. The key is to start off with low operating cost so it’s more manageable for your business to sustain.
5. Standardise and automate business processes
When a business is operated online, business owners would have started off by inserting all relevant information into its system, instead of overloading one’s mind or having piles of paper. The advantage of having all your business details and information recorded online is that you can access your information at any one time, and share them to your colleagues whenever needed.
When you operate an online store, all your sales will be automatically captured and recorded, as and when there is a movement on your website. Data such as daily, weekly, monthly sales are made available on your backend system whenever you need them. Reports on how your business is performing, or which are your best-selling products are just a click away. You no longer need to contact your customers one-by-one to thank them for their purchase, or get their feedback. Your online store will allow you to set up an automation system where these will be done for you automatically.
6. Understand consumer behaviour
One of the miracles you see from having an online store is being able to track your customers’ behaviours when they browse in your online store. Whether a customer abandoned their desired items in their shopping cart and not checked out, or left without selecting any items can come as an indication for your next step. You will also be able to trace how an individual found you and from which source they entered your website.
7. Easier retargeting and re-marketing
What’s important to know are your customers’ favourite items. By understanding your customers’ shopping behaviour, you will be able to retarget them when an item of their interest arises, or re-market similar styles to them.
The methods of retargeting and re-marketing are useful elements to catch the interest of your customers, and at the same time, it will show personalisation, and understanding of what they like. You can create retargeting ads to reach out to customers and make it one of the most profitable e-commerce benefits. You can create Facebook ads and retarget using the data you get from Facebook pixel.
With an online store, you can retarget people who have added products to cart but do not buy, or those who have visited a blog post but did not buy. You can also trace from your email marketing newsletter how many of your recipients have opened your email, clicked into your website and the amount of revenue your newsletter has achieved.
8. Gain customer data for analysis
Individuals who shop online will automatically have to feed your system with some data, for example, name, address, email address, contact number. These are crucial information for you to communicate with your customers, as well as for the buyers’ products to be delivered to them. From here, your system would have captured each customers’ personal data.
As mentioned previously, tracing of customer behaviour on your website is possible. With these captured data, you will be able to understand your customers better, and analyse the patterns of each of them.
9. Possibilities of scaling your business easily
With an online store that is borderless, you are able to scale your business easily, whenever needed. You do not have to worry about moving to a bigger or smaller premise, or have the issue of visibility for where your physical store is based.
With an online store, you can choose to increase the budget for an ad that is performing well and bringing in sales. You do not have to worry about keeping up with the demand. As long as you have the items uploaded on your website, customers can shop away, and your sales come flowing in. There will be no embarrassment of over-promising and running out of stock as the smart system will do the calculation for you, and indicate on your website.
10. Possibility of processing high number of orders
No more long queues and long waiting time! With an online store, you can serve as many customers as you have at any one second. As long as your website hosting is a secured and stable one, you are set to “serve” however many customers you have in your online store, at any one time.
Disadvantages of going virtual:
1. Highly competitive
Finding the right niche is another challenge in the list of ecommerce disadvantages. Usually the best niches are the most competitive, that’s why people are drawn to them. The more competitive a niche is, the harder it is for your brand to fight for a chance to float above.
There are a couple of ways to go around this. First, you can target a different audience from those of your competitors. If your competitors are reaching out to your audience through a medium you’re looking at, you may opt for an alternative medium, eg. SEO optimization.
Second, you may retarget your customers by venturing into email marketing and SMS marketing as your direct channels to communicate with your customers. With these, you can achieve a personal touch with all your customers that will in return create a bond and increase loyalty.
2. Customers get impatient
The commonness problem online businesses face is impatient customers. When customers are browsing and shopping on your online store, they are bound to have questions, which they expect to be answered immediately. This is not an issue for physical stores as there would be sales assistants available around the store to offer assistance and answer queries.
To ensure your customers shop and make a transaction before leaving your site, your team must be ever-ready to be responsive to all questions asked by your customers. When there is a delay in responding to their questions, they may get impatient and shop somewhere else. Having your customer service be online 24/7 is important.
To alleviate this burden, as none of us can be working 24/7, especially if you are a small business and you do not operate with a big number of manpower, you may use a live chat software. This is a useful tool to set up, as with this, you would not need to worry about missing out on customer enquiries or leaving your customers unattended. Automated replies are possible for frequently asked questions.
3. Shipping period
Shipping period comes as one of the biggest downfall for customers. When a customer shop in-store, he/she brings home the items immediately and has access to their purchase straight away. When they purchase online, it usually takes up to a week or more for customers to receive their shopping.
It is important for businesses to engage the right logistics partner to avoid further delays in delivering customers’ purchase. Use a reliable courier service that will not let you and your customers down.
The key to this is to be clear and transparent with your customers. Let them know how long to expect. The tip is, always under promise. For example, when you’re estimating 5 days before your products get to your customer, tell them 7 or 8 days. And when they receive in less than 7 days, that will come as a good surprise to your customers, and in turn, brings you a happy customer!
4. Sales will stop when there’s a site crash
The worst scenario that can happen to an online business is when no one can browse and buy from your store if your site crashes, or is facing technical issues. It is very important to make sure that your website is hosted on the right and secured platform. For example, if you’ve selected a hosting plan that serves the minimum, and your website gets a surge in traffic from an ongoing advertisement, this will very likely cause your website to crash. Detailed advice is very important for when you decide on the most suitable plan for your business.
5. No trying for customers before purchase is made
One of the main disadvantages for consumers when they purchase online is not being able to try on their selected items before paying, nor have a touch or feel of the item. When shopping in a physical store, a common thing shoppers will do is to pick up the items that catch their eyes, and have a proper look.
This is not all impossible now that augmented reality is starting to be a convenient tool for some businesses. With augmented reality, online stores are starting to add this feature for customers to try on products. This also creates a more interactive experience with your customers. When shopping in-store, consumers will find similar items being placed next to each other for easier comparison. On online platforms, suggested matches are possible, but not just quite as near.
These are some of the advantages and disadvantages to running an online store. For further clarification or questions, contact us for free advice.