Why don’t you start your own digital business?

What is e-commerce?

E-commerce refers to commercial transactions conducted online. It is currently one of the most important aspects of the internet to emerge. E-commerce allows consumers to electronically exchange goods and services with no barriers of time, or distance.

It was on 11 August 1994, around noon that day, Phil Brandenberger of Philadelphia logged into his computer and used his credit card to buy Sting’s “Ten Summoners’ Tales” for $12.48 plus shipping. That story may not sound too exciting today, but at that time, this particular transaction made history for it was the first time that encryption technology was used to enable an internet purchase. That moment can be considered as the first “true” e-commerce transaction, and the e-commerce has grown by leaps and bounds since then.

Advantages and disadvantages (challenges) of e-commerce

The advantages of e-commerce compared to traditional commerce are really powerful as follows.

More clients – There is no local store, or company with sufficient offices in different cities that compares with e-commerce’s reach. The possibility of selling and buying from any part of the world expands the target public and allows the company to gain more clients.
No schedule – E-commerce does not run on schedules, whereas it is nearly impossible to find a traditional store that is open 24/7. Websites are open all day long and clients can buy whatever they want whenever they want it.
Less costs – Not needing a physical store reduces the costs of running a traditional business.
Bigger profit margin – Cost reduction and market extension mean that, even with lower prices, a bigger profit margin can be obtained than with a traditional store. More products are sold and more money is made.
Scalability – This means that you can sell to either one, or to a thousand people at the same time. In a physical store there is always a limit to the number of clients that you can assist at the same time. On the other hand, with e-commerce, the only limit is your ability to attract clients. Well, that and your server.

The disadvantages (challenges) of e-commerce compared to traditional commerce are as follows.

Lack of trust – Although payment platforms have evolved to the point of being as secure as any physical business, or even more so, a lot of people still think that less payment security, lack of trust. It can be solved by adding an SSL (https) certificate that encrypts the transferred information as well as by adding other stamps that transmit the necessary trust.
Products and services that “cannot be seen, or touched” – Everyone likes the feeling of making a good investment. A way of making that feeling real is by seeing and touching the products with our hands. That tangible feeling is missing in an e-commerce shop. It can be solved with very thorough product cards and by adding images, videos, and very detailed descriptions of the products.
Requiring access to the internet – This is obvious, but to be able to buy and sell, you need a connected device. Nowadays, the large majority of people have this kind of access, but there are some sectors in which the target audience is either older, or less “techy”, which could be a problem.
Technical problems – Any type of entrepreneurship, whether it is offline, or online, implies dealing with unfamiliar issues. In the specific case of an e-commerce shop, the technological part requires a minimum knowledge that not everyone has. The best way to solve this is by outsourcing that part, although, of course, that carries a cost.
Competitors – The initial investment in order to start an e-commerce is not as high as the initial cost of a physical business. This means more competitors.
It takes time to get results – When a physical store is opened, the products are being shown to potential clients right from the very first minute. For an e-commerce, gaining visibility is more difficult than most people may think. You could have a great product and a great platform, but if you don’t work on your visibility, nobody will see them.

Nevertheless, there are significantly more advantages than disadvantages. In fact, improving the return policies and the evolution of the security system will end up eliminating these disadvantages.

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