Running an online business has its advantages and disadvantages, as does any kind of business. Let’s review what an online business is before we start looking into the pros and cons of an online business. In layman’s terms, an online business is a business that significantly relies on the Internet as the key platform to conduct business. This could be a website where internet users can purchase products or order services. It could also be a platform where customers can download content like eBooks or music. So, with that in mind, let’s look into some of the benefits and challenges.
Some Key Benefits Of An Online Business
Significant Increase In Market Accessibility
The first and most obvious benefit is the size of the market you have access to. As a result of the high level of technology used all over the world, businesses now have the ability to market their products and services directly to multitudes of customers with the click of a button. Anything you need as a consumer can be found online and ordered within a couple of minutes. Businesses in the past were often confined to the customers that came through the door or customers who could reach them by phone to place orders. This means the business had a set market limited by geography and conventional marketing. Today, almost anyone in the world can buy your goods or services if they wish to, and they manage to find you online. For example, compare a bookmaker from 1920 taking bets on sporting events with a modern online sports betting company. The difference is vast. The benefits of running an online sports betting business are clear for all to see; with access to millions of potential betters all across the globe, the profits are through the roof.
Less Start Up Capital Required
The modern business landscape is making entry into markets a bit easier. The old adage ‘it takes money to make money’ is finally losing its grip on modern entrepreneurs. With the potential to start an online business, prospective business owners don’t need to have deep pockets like in the past. Many modern businesses don’t pay rent and other overheads as their business processes are all taking place online. While there are still challenges with this way of doing things, the marketplace has become more accessible to the average Joe who doesn’t have a massive budget to set up shop.
Easy Integration Of Product Visibility With Marketing Tools
In the past, marketing efforts were mostly used to increase brand awareness and highlight unique selling points of products in a competitive advertising market. Today, it’s a whole new thing. Businesses can market products directly to customers through various new technologies, like cookies on a website. This helps businesses understand the buyer persona of their customers and their needs. With that knowledge, they can digitally advertise to the specific customer profile they want to target and make a sale within minutes. And this all happens without one customer walking through the front door. Think of the last time you saw an ad on Facebook or Instagram and thought, wow, that is exactly what I’ve been looking for over the past couple of days.
Disadvantages Of An Online Business
Although there are numerous benefits to running an online business, there are also some drawbacks that should be considered before starting one.
Building Trust Can Be Tricky
One major disadvantage is that customers may have difficulty trusting your business due to security concerns. As more and more people shop online, the amount of fraud and theft has grown considerably. Customers may be reluctant to share personal information when using an unfamiliar website or buying goods from a business they don’t recognize. Additionally, there can often be language barriers if you are dealing with customers from other countries. You will need to make sure that your customer service team is well-equipped to handle inquiries from around the world in multiple languages.
Delivering The Goods Can Be A Hassle
One of the bigger challenges online businesses have faced over the past decade is the ‘logistics’ issue. In the past, customers would walk through the front door and leave with a neatly branded bag and the goods they bought. Today, your customer might be 300 miles away, living on a remote farm. Many third-party shipping companies have managed to build extensive shipping networks all over the world, making online business owners’ lives easier. Shipping isn’t the hassle it used to be, but it still does need to work to be seamless.
Online Businesses Deal With Massive Levels Of Competition
This is perhaps the biggest challenge any online business faces today. Just as you have the advantage of marketing globally, others with often bigger budgets do too.The modern business environment has forced many people to play in niche areas where competition is low or to deliver world-class customer service, to build loyalty with customers to gain some market sustainability.
Starting and running an online business is often seen as a very easy thing to do; however, as mentioned in the challenges section above, it isn’t a walk in the park. You will need to work hard to ensure you have a solid business plan, market well to customers and deliver goods and services with a smile. It has been done many times in the past and can still be done today.