E-commerce - benefits and limitations in e-commerce

Service Business

Online trade on the Polish market has been operating for many years and is becoming more and more popular every year. In the previous article, we mentioned e-commerce sales models and choosing a trading strategy. In this part, we focus on presenting the most important benefits that an e-shop offers for the company and the customer. In addition, you will also learn about the disadvantages of online sales and how to analyze customer behavior on the store's website.

Internet trade - the most important benefits from the company's point of view:

  • Lower business costs and increase in sales. The ability to perform the online sales process means that we save on the fees for a stationary store (rent, utilities, staff, warehouse). There are also free options to set up an online store in Poland, e.g.Pasejo, which significantly reduces the operating costs of this type of e-commerce activity.

  • Shortening the distribution channels, i.e. improved logistics. There is no need to transport goods to different stores, long storage, etc. Distribution can be carried out almost in real time, which greatly reduces costs.

  • Increasing and expanding the availability of the commercial offer. Contrary to a traditional (stationary) store, the online store is not limited by the current inventory. If a given product is not in the traditional store, the customer will not buy it. If the customer orders the goods in an e-commerce store, he will receive it in a few days. The time allocated to the execution of the order and shipment of the goods allows for quick completion of the offer and delivery of the purchased product on time. The possibility of presenting the offer is also virtually unlimited (it is not determined by store shelves, but the capacity of e-commerce store servers), so it can practically be huge, it can be millions of products, like in the case of network e-commerce giants such as Amazon.

  • Global reach and unlimited time. The reach of an online store can be niche, local or global, it all depends on the owner's marketing strategy. The Internet offers the possibility of e-commerce of any territorial or linguistic range, etc. The advantage over the costs of creating such a range in traditional trade is obvious. Time is a measurable value in sales. Online commerce allows the e-shop to operate 24 hours a day. In short: you are asleep and your e-commerce store makes money for you.
  • Speed, individualization and interactivity of contacts with the client. The speed of concluding commercial transactions in e-commerce is an advantage that cannot be overestimated. Systems of the so-called virtual shopping cart guides the customer through the sales process. Moreover, IT programs of trading platforms and e-shops offer many possibilities of individual contact. The obtained customer data and customer information can be used both for personalization of contacts (automatic messages, addressing the customer by name, reminder e-mails, etc.) and for after-sales service and further marketing activities.

The most important benefits of e-commerce from the customer's point of view:

  • Cheaper shopping. Estimated data show that shopping in e-commerce stores is at least 15% cheaper than traditional shopping. This is confirmed by the opinions of e-commerce customers themselves - 60% say that they buy online because of lower prices.

  • Unlimited shopping time and convenience. This is another argument for an e-commerce customer. He purchases at any time of the day or night without going to the store, looking for a parking space, a product in the store, standing in lines, having problems with paying, carrying home purchases, etc. These advantages of e-commerce are indicated by 65% ​​(time) and 61%, respectively. (convenience) of customers.

  • Availability of a wide and up-to-date offer. The benefit is obvious - Internet trade is usually characterized by a much wider offer than in traditional trade. It is much more up-to-date, together with the availability of all new products. This also applies to niche products or services, the finding of which in the traditional market is sometimes almost a miracle.

  • The ability to easily compare competing offers. All types of price comparison websites or auction portals offer the possibility of instant comparison and segregation of e-commerce stores' offers. So if a customer is looking for a specific product, it won't take long to find a low-cost offer in e-commerce.

E-commerce restrictions for the company:

  • Strong competition in the market. E-commerce is millions of sales platforms and smaller online stores. It is a global market and global competition, even if we choose to operate in only one country. Hence, setting up an online store is only the first step, the next one is to gain a competitive advantage over other similar stores, which is a task worthy of a good e-business marketing strategy.

  • High cost of delivery - most products still have to be delivered by post or courier. Such a solution generates additional costs, which also hinder the sales process. Shipment deliveries may also result in damage to the goods or their loss. Hence, many complaints in e-commerce stores relate to deliveries.

  • Delivery time - is also an important factor influencing the customer's purchasing decision. In a stationary store, the goods are usually available immediately. If a customer buys in an online store, delivery will take some time. Unless the product is immediately transferable electronically, e.g. file type. Then online trade has a huge advantage in speed over traditional trade.

  • Price war. Since the customer can easily find pricing information for the same product in different stores, they most often make purchasing decisions based on the lower price. Therefore, e-commerce requires lowering the margin of your e-commerce store to stay competitive. Of course, this is not a necessity. You can choose a strategy based not on a price war, but on other competitive advantages.

  • Legal Restrictions. Some of the products are banned online, which limits the offer. In addition, there is a provision that the buyer may return goods purchased online within 14 days (this applies to mail order).

E-commerce restrictions for the customer:

  • Inability to see, try on or try the product directly. Unfortunately, only photos or videos showing the product are available on the internet. Therefore, the biggest problem may be clothes and shoes that are difficult to fit without measuring. And yet, online trade in these products is booming. How is this possible? Well, some customers know these goods from traditional stores. An interesting phenomenon occurs here: some customers look at products on the Internet and buy in real life, and vice versa - some watch in traditional stores and buy online. A simple conclusion: sometimes it pays to combine both forms of the company's activity in order to take advantage of this synergy effect.

  • No direct contact with the seller. Sometimes the client looks for information or answers to his doubts, which in traditional trade is answered by talking to the seller. Online trade does not always provide the possibility of e-mail or telephone contact with a specific person, which makes such personal contact difficult.

  • Uncertainty about the reliability of the store, the quality of the goods, the security of payment transactions and deliveries. Of course, most e-commerce stores are great at dealing with these difficulties, but the aforementioned customer fears are a psychological factor that hinders online commerce.

Virtualization of commercial activities in e-commerce

Information technology related to the Internet offers indispensable tools for any enterprise in the e-commerce industry. The first is the automation of sales and inventory management processes - simple and easy handling of orders, sales, shipping, and warehouse management that require minimal staff participation. Among other things, the software of online stores is used for this, but also more advanced systems, such as CRM - systems managing relations with business partners and customers. Another important element is the automation of payment and accounting systems. Online payment systems and extensive IT accounting systems enable quick and easy management of the company. Another virtualization tool is the automation of both after-sales and after-sales customer service systems. For example, it can be follow up mailing - automatic dispatch of transaction confirmations, answers to questions, reminders about the need for another purchase, etc.

Internet trade and consumer behavior

The tools offered by e-commerce software offer a hitherto unknown marketing potential. For example, this is behavioral targeting. Very accurate statistical information, which is automatically provided to us by the IT systems of e-shops, also suits the analysis of customer data and their purchasing behavior. We can find out how many times they visited our website, how long they were on the home page or on subpages, what products they viewed, what and when they made a purchase, what form of payment and delivery they chose. Some of this information is also provided to us by the Google Analytics system. All of this and other information is important for optimizing your e-commerce marketing strategies. They allow not only to reach the target group, but also to adapt to their decision-making and purchasing behavior. Effective analysis of data on the behavior of our customers in an online store is the basis for optimizing its marketing strategy. In this, the most important are: optimization of the offer of services or products, i.e. its adaptation to the needs and behavior of customers and improvement of the functionality of the e-commerce store. The primary goal of online customer behavior analysis is to draw conclusions and increase conversions, and more specifically sales. If we know the behavior of our store's customers at various stages of the sales process, it will be easier for us to persuade them to buy or return to the store. Marketing activities, such as tracking advertising, resembling e-mail campaigns, text messages, etc., also play an important role here. So how to effectively manage e-commerce? Read on in the next article.