Nowadays, everything is available online, from a toothbrush to LED TV. E-commerce has become a new trend and is the future. However, starting an online business is not everyone’s cup of tea. It requires immense hard work and a strong business sense. It involves product sourcing as well.
Numerous e-commerce websites available today, like Amazon, Flipkart, Paytm, Snapdeal, Flipkart, Myntra, etc, have taken over the internet.
People are always searching for new products and can buy online from any nook and corner of the world. There are numerous logistic services available today which have made it very easy to deliver products and services to different locations.
There are many advantages of e-commerce, but along with that, there are some limitations of eCommerce as well.
These limitations or disadvantages must be thoroughly understood by anyone wanting to set up an online business. It is always a wise idea to do a SWOT Analysis and look for different resources that are easy to access.
Some limitations of eCommerce
1. Huge technological cost
Since everything is online, it requires the use of creative resources and also a large amount of investment. The costs have become very high due to an excessive 4G and 5G data usage for online work.
Also, a huge investment is required for using advanced and high-speed internet connectivity. Advanced technology has given the business better productivity, posing an advantage in the long run.
This is one of the most common issues that many e-commerce businesses and customers face. There are many websites that are not capable of authenticating transactions nor have those features.
This may lead to numerous fraudulent activities and threaten the business. Also, many businesses need to save various customer information like customer’s name, address, contact number, email id, age, etc. This requires a huge investment to secure the data, so it is not misused.
3. Employee cost
Employee cost is also a limitation of e-commerce business. For any business, whether online or offline, having dedicated employees is crucial. You need a professional team to execute different tasks and fulfill the organization’s objective.
Whether your startup is small or big, you need employees to yield great results. Therefore you will have to incur costs on hiring and paying employees’ remuneration.
4. Huge advertising cost
In order to promote your business, a lot of money has to be spent advertising initially. Advertising has the potential to increase your reach, and this way, you can reach maximum people. However, advertising in several mediums can be expensive.
Advertising costs can pose a disadvantage if the business cannot make the deal convertible. Various advertising mediums have varied costs, and many online advertising portals usually charge on a pay-per-click basis.
5. High shipping cost
Shipping can be a major challenge for most e-commerce businesses. When you are delivering B2C orders, shipping can pose a major challenge and disadvantage.
Often, shipping cost involves a large part of your profit which may, in turn, decrease your overall margin. Shipping cost, however, usually depends upon the size and weight of the product. It can cost higher in B2C orders as compared to B2B orders.
6. Cost of packaging
Packaging, whether Primary, Secondary, or Tertiary, involves a lot of costs. The cost depends upon the nature of the product. It may cost a lot if the package is bulky and large.
Heavy items may even involve a higher shipping cost, increasing the overall cost of transporting the product. B2C transactions have a lower packaging cost since a few products are being dispatched. However, B2B products or transactions involve the high cost of Packaging.
7. Warehousing cost
This is also a limitation of e-commerce. E-commerce sellers must have a physical location or warehouse where they can store their products. This would help them manage their operations from a designated location. This cost of warehousing has to be borne by the business itself.
The cost of storage will differ from location to location. It is always advisable to find a warehouse that doesn’t involve a high inventory cost. This is the reason why a majority of warehouses are located outside the city.
8. Marketing cost
Along with advertising costs, a business must incur additional costs in marketing its product. Social media, emails, search engines, etc, are some ways through which you can market your product easily and effectively.
Google, Yahoo, and various other search engines offer methods to effectively market your product and drive more traffic to your website. Every marketing channel differs in cost according to its popularity and reaches; hence marketing budget should be prepared accordingly.
9. Complicated eCommerce policies
Every e-commerce portal has its policies that the seller must comply with. Companies like Amazon, Flipkart, Paytm, Myntra, etc, have business policies.
Sellers register on these platforms, and often these platforms do not give them full rights to operate in the marketplace. This limits their business, and if they violate these rules, their account may be permanently suspended.
10. Sales flow
A diminished sales flow can pose a great disadvantage to the business and thus acts as one of the limitations of eCommerce business. It is extremely important to have traffic on your website as it helps in driving sales. Also, if your listing is not done properly, your sales will likely fall.
Proper advertising and sales promotion can be a great way to improve your sales initially. Hence you should always try to promote your product on varied platforms as any single platform may yield a good amount of sales flow for your business.
A business can effectively minimize the above-listed limitations of eCommerce if they have a proper business plan and good implementation strategies. NotifyVisitors can help you overcome the above-listed limitations. You can schedule a demo to learn about us.
1. What is e-commerce?
E-commerce, also known as electronic commerce, refers to buying and selling products or conducting marketing activities online, usually over the internet.
2. Is e-commerce suitable for every business?
The answer is Yes! E-commerce is suitable for almost all business types, whether small scale or large scale. E-commerce stores will help your business grow better.
3. How to develop an e-commerce website?
E-commerce website development involves logo designing, hosting server, domain name, extensions, etc. A proper SEO is required to get a higher ranking. Thus a systematic approach is required to develop an effective e-commerce website.