There are several businesses in the marketplace that trade solely online. In setting up an online business, the owner will need to go through the same procedures as a traditional business, in formulating a business plan, by crafting a mission statement and through handling other administrative matters. However, there are a number of advantages and disadvantages of operating an online business, points worth considering as you prepare to launch your enterprise.
Advantages of Online Business
- Long term Cost
Online businesses have significantly lower operating cost compared to a traditional business. An online business require very small office space or there is no requirement for an office space at all. Hence, the businesses could eliminate the cost of renting physical premises.
Moreover, if there is no physical business premises eventually the expense of hiring employees are also lowered.
The level of satisfaction offered by an online business is far greater compared to a traditional office business. In fact, there is no there is no other business type that offers customization level as an online business.
In an online business, there are various customization options available for a customer. The customer has to choose one of those and make the order. With these simple procedure, the user experience is increased for a customer.
A business which runs through online does not face time restrictions. Unlike a regular business, it is not with opening and closing time. According to their convenience, customers can perform shopping anytime as long as they are having internet access. Since online businesses run 24/7, it provides more opportunity for sales.
Online businesses are also free from geographical restrictions. Customer will be able to place an order from any part of the world. But under the condition of having internet access. This is one of the reasons why organizations prefer online business strategies to target international customers.
When you own an online business, you have the right to adopt to the market requirements. Whether it can be a private blog or an e-commerce site, the user has the authority to make updates. Eventually after an update, the visitor can be notified immediately with e-mail marketing and other communication methods.
- Customer Data
An important part of every business process is to collect customer data. Online businesses allows you to gather customer data and behavior. That too under minimum effort. Using these information, the business could take necessary steps to enhance visitor experience. For an example, if it is an e-commerce site, the business can analyze what product the customers are mostly interested, from which country the most sales comes from and what is the most preferred payment method.
- Customer Reach
With an online business, it is possible to reach out customers across different parts of the world. Any visitor that comes from any particular location has a tendency to become your business customer. Even smallest business entities has a chance to reach international customers. Eventually, this can target maximum sales which cannot be easily achieved in offline business.
Disadvantages of Online Business
- Start up Cost
Although online business comes with long term cost savings, it is not the same when it comes to implementation. In here the business must be ready to manage huge start up cost since the website must be designed and maintained by a professional.
In addition to that, there are also cost inquired from hosting and search engine optimization all which can increase the overall expenses.
Not all the people are convenient about making transactions with online business. The rise of internet has got caught the attention of hackers. There are many fraud cases reported worldwide where fake businesses misuse the financial details . Due to this, customers are reluctant to provide sensitive information online.
Running an online business is not an easy process due to the competition involved in the internet world. Always the big companies comes up with better advertising, promotion and even cheaper products all which can take the business away from you. If correct business strategy is not implemented, the business could face substantial losses.
Online business is entirely an internet process. It does not involve any human interactions. Gaining trust from a customer is very difficult thing to build up here. Especially, for the start up businesses without a trusted brand name. It will take some time for the companies to prove that they are legitimate.
- Customer Satisfaction
Obviously, in online business like e-commerce sites, the customers are not provided with the chance to interact with the products physically. Once the products are delivered to the customer, there is no guarantee that they will be satisfied with it. If the customer do not get what they expected, they might return it possibly.
- Technical Problems
It is normal for any websites to experience downtimes. Similarly, if your online business site faces such problems, the customers can be greeted with an error message. If the error is not rectified, the same problem can be continued for several days. This could eventually stop customers from doing any business transactions or even visiting your site.
- Customer Support
In a contrary to a traditional business, an online business completely lacks face-to-face interactions. Now this is a big concern for the customers since most of them prefer direct communication.
Even though some online businesses offer the option of email, chat or phone call for the customer support still it cannot match the level of support given from a face-to-face communication.