E-commerce, orthe act of selling goods or services online as opposed to selling at brick andmortar establishments, has reshaped the modern marketplace in recent years, butthis new form of trade comes with its own sets of strengths, weaknesses,opportunities and threats over traditional methods. It is important forbusinesses to look beyond the hype and develop their own perspectives on thetrue value of e-commerce—to business and to consumers—because interestingly,there are many strengths and opportunities for consumers that might actually bea weakness and threat for e-commerce businesses (Khurana. A, 2017).
Strengths Amongthe top strength for e-commerce is the price and product comparison. E-commerceprovides customers with multiple information that is valuable such as theproducts descriptions, the ratings of the products and the real customerreviews that will certainly help and affects a possible future customerdecision whether to buy the product or not. There are limitationsto the amount of information that can be displayed in a physical store. It isdifficult to equip employees to respond to customers who require informationacross product lines. E-commerce websites can make additional informationeasily available to customers. Most of this information is provided by thecompany and does not cost anything to create or maintain.Some customerswant to be sure that the product that is needed or wanted are the right productwith the best deal.
To purchase the right product from the many that a companyoffer, the customer need to be able to compare the product with differentoptions and the company need to continue the efforts of improving thedecision-making process. The best strength for an e-commerce is to be able toprovide the customers with different types of brand for the same product. Thisgive the right and opportunity for the customers to choose and compare acertain product based on its popularities, prices and discounts. E-commercehelps companies to overcome the limitation by geography. A traditional brickand mortar are usually limited for the customers that lives or works within thearea of the store or those that pass through while travelling (Yamarie.
G,2017). However, with e-commerce anyone in the world can be a customer withoutthe limitation of geography. Utilizing the online platform help the company bynot only being global but also strengthening the relationships with thecustomers.
A company can used the e-commerce localization concept to not onlywidening the customers bases but also the customers more likely to build trustin the company’s products. Only if the products descriptions are in thecustomer’s language and the price is in the country’s currency. Furthermore, e-commerce also helps with afaster buying procedure. With e-commerce everything become easy and faster buyjust a click away from the seller.
No physical movement is required and nohunting of right product at the right price is to be done by the consumer whichmake the buying process faster make the company’s business cycle going faster. Weaknesses While it may appear that e-commerce is the perfectchoice to solve the business problems, there are still several weaknesses toswitching from selling at a physical location to using online retail. Manyconsumers nowadays still prefer visiting brick and mortar shops because of thephysical touch with the products, such as the clothes and foods, and therelationship customers get to develop with a retail location. Additionally,many customers want to experience the product before purchase, especially whenit comes to clothing, but e-commerce eliminates that luxury.Increases of the operating cost is also one of theweaknesses of e-commerce. Even though developing an e-commerce platform itselfis not too costly, however because it is an extra cost on top of the alreadybuild physical store, it will increase the operating cost of a company. Tobuild, design, maintain and operating the website is a huge cost even more ifthe company does not have an experience with online services.
Moreover, acompany that want to involve themselves into e-commerce industry must also paya huge price for the marketing activities as the company must pay the cost toadvertise the new website and services. Shopping is all about instant gratification. However,with e-commerce the customers are left empty-handed for some time after makinga purchase on an e-commerce website as the customers must either pay more for afast delivery or wait for several days while the postal service does its job.
Sometimes the delivery time may extend to days or weeks which one cannot waitfor. This is because the task of delivery services is usually outsourced toother logistics company, who do not care about the timing of the seller. Additionally, if the customeris unsatisfied with the order, many e-commerce retailers have to issue arefund, which requires the company to expand its reverse logistics functions,meaning the shipping back of goods and refunding of costs. OpportunitiesE-commerce biggestopportunities is the less boundary access, in other word no brick structure ismandatory to do business, or no specific boundary is required. It enables allthe companies to expand the business to global market level without anyinterruptions. The widening of geographic retail markets may facilitate thedevelopment of global retailers. Furthermore, the customers do not need totravel a long distance to reach the preferred store for purchasing a product.E-commerce allows the customers to reach the preferred store virtually justwith a few mouse clicks.
By being open 24 hours and 7days a week, e-commerce helps attract customers that may have odd workschedules or who do not have time to shop in person. For example, a potentialcustomer in bed at 4 am, thinking of something to buy, search for it on thewebsite and make the purchase instantly. Business is open and in operation witheach and every click of the mouse. Those who are busy in day time and cannotspare time for them self, have all the opportunity to shop as per theirconvenient time even during late night hours. Furthermore, the company also donot have to pay for the resources, such as the employers and the utilities, tophysically keep a store open 24 hours a day. E-commerce makes marketing easier for a company toadvertise a product. By using the information that a customer provides in theprevious purchase or history, in the registration form and by placing cookieson the customer’s computer, an e-commerce retailer can access a lot ofinformation about its customers.
Which in turn help the company to easilyretarget or remarket a customer and can be used to communicate a relevantmessage. For example, if a customer is searching for a certain product onAmazon.com, the customer will automatically be shown listings of other similarproducts. Also, Amazon.
com may also email the customer about the same relatedproducts. ThreatsSecurity and credit card fraud are also huge risks when dealing with onlineshopping. There are some customers that concern about the safety of the privateinformation such as name, address and bank card number because the misuse ofthose information can lead to a spam e-mail and identity fraud. As a result, alot of customers prefer to go the physical store rather than an online storeand the company also needs to invest more money to make sure that the websiteis extraordinarily protected and verified for most customers to trust using it.The brick-and-mortar companies can sell the products only when the store isopen for the customers.
Similar is the case with e-commerce. There is apossibility of business happening only when their websites are accessible tothe users. An e-commerce business which is open to worldwide customers can goto zero accessibility in a matter of seconds. This is like shutting down abrick-and-mortar retailer store without notice causing inconvenience to theshoppers.
Even a few minutes of downtime could make significant negative impacton the sales of an online store. The effect of downtime could be more severeespecially in holiday season when maximum sales are expected to happen during alimited time. During peak days the website could get overloaded with hugetraffic spike and may break down abruptly. There are two possibilities ofdowntime either the site is completely down with no accessibility or the siteis impaired with performance issues.
Either way, the damages are substantialbecause it is the cumulative loss in terms of money, customers, sales andbusiness reputation.Along with local competition, global competition also exists. Competitionis increasing day by day either from a retailer that trying its luck one-commerce or from the original e-commerce company itself. For example,Walmart, an original brick and mortar company, can be seen to slowly involvingitself into the e-commerce and be a competitor to Amazon.com which is anoriginal e-commerce company.Another important threat to e-commerce is the laws and regulations of acountry. As mentioned before, e-commerce will certainly provide a global marketfor a company to sell its product. However, not every country applies the samelaws and regulations for an online business such as the taxes, shippingrestrictions, licenses, permits and payment getaways.
There are multipledifferences of regulations and taxation that comes with opening an e-commerce businessand sometimes companies are still not clear about the tax implications ofe-commerce transactions, which is especially true when the seller and buyer arein different territories.