11 pros and cons of launching an e-commerce store

As the Internet has grown in usage, so has the prevalence in e-commerce stores. Shopping online has become so normalized these days that many can make all their purchases without leaving their house or entering an actual store.

And stats indicate that the e-commerce industry will only continue to grow. According to Forbes, worldwide e-commerce sales are predicted to grow from $5.2 trillion in 2021 to $8.1 trillion in 2026. Furthermore, 20.8% of all retail purchases are expected to happen online in 2023. 

If you’ve ever considered opening your own e-commerce store, now may be the time to do it. But it’s always good to weigh the pros and cons before pursuing any business venture.

Read on for some aspects you should consider first. 

Pros

Let’s start with the best aspects of launching an online store.

1.Low start-up and overhead costs

This is one of the major pros of starting an online retail business vs a physical one. For most people, the high overhead associated with opening a bricks-and-mortar store will lock them out of it immediately. The cost of launching an e-commerce store is far lower in comparison, allowing more people to become business owners if they want to. While the cost of website hosting can vary, it’s still no comparison to the hefty sum it takes to keep a real-life establishment running. 

With an online store, you don’t need to worry about footing the bill for rent, bills, furnishings, staff, warehouses, or security personnel. Upfront, you’ll just need to pay for the domain name, hosting, web design (if you don’t do it yourself), and inventory. This inventory cost becomes even lower if you sell digital items or become a drop shipper. 

2. Larger potential customer base

When you open a real-life store, your customer base is limited to those living in your local area. Even if you have the ability to open multiple stores in different locations, your sales will still be limited by geography. The size of the store itself will also determine how many people can actually come inside. 

With an online store, you can target people across the country or even internationally rather than just those who happen to be situated nearby. And there’s no limit to the number of people visiting your online store in a day. This means your online store has the potential for faster massive growth than opening an IRL store does. 

3. Easier scalability

If an IRL store is doing well, ramping things up quickly is difficult because you’re limited by the size of your store. If you want to sell more, you’ll probably have to move locations and find somewhere new to store your stock. A lease may also limit you. This is both expensive and a logistical pain. 

Scaling up your business is far easier with an e-commerce store, because it’s cheaper and you’re not beholden to your physical surroundings (unless you are storing stock at home, in which case you may have to eventually rent a space to store it.) All you need to do is upgrade your hosting plan to allow more visitors and expand your inventory offering. 

4. Unlimited shopping hours

Online stores can be open 24 hours. Technically, so can bricks-and-mortar stores, but there are so many more factors to consider. For one thing, if your store is located in a mall, there might be limitations to the hours you can open. Another factor is who is running the store.  By the time you’ve forked out money for overtime for your employees and security staff, as well as electricity bills for keeping the store open all night, the expense is probably far more than the income you’ve made for stock sold during the night. Because, really, who goes out shopping at night?

But people do go online shopping in the middle of the night. Also, there are those international shoppers we mentioned a couple of points back. With an e-commerce store, you can earn money 24 hours a day without any extra work on your part. 

5. You can automate tasks

With an IRL store, there are many tasks you must do physically, from ringing up an order to data entry. With an online store, there are many tasks you can set up to do automatically, freeing up your time. Shoppers complete the order themselves, while a payment merchant will ensure everything is paid for properly and automatically sends a confirmation email with a receipt without you having to do a thing. You can even set up a chatbot to take care of them if they need customer support.

5. Personalized shopping for every customer

With a physical store, there’s no possible way to change the layout and highlight specific products to cater for the tastes of each customer segment every time they enter the store. With an online store, you can. You can segment your email list into different categories to target each segment based on their demographic, location, past purchases, and abandoned carts. You can also create different landing pages based on each segment. 

Cons

Here are the factors that may put some people off creating a store online. 

1.It requires a certain level of tech know-how

While it’s easier than ever to launch an online store fast, you still need to be aware of the skills required to both run a website and a business, as well as knowing what to do if the website ever faces issues. You need to know what to do if the website crashes or there’s an issue with the payment processor because each minute of downtime means less revenue. Familiarize yourself with these potential issues in advance and have someone to call if it’s not something you can handle yourself. 

2. Potential security issues

Both types of stores come with the potential of experiencing security breaches, though they are a little different in each instance. While in a physical store, your biggest threat might be shoplifters, with an online store, you could face issues with hackers or threat actors anywhere in the world seeking to steal your site or its customers’ data. Protect your store from the start by:

• Encrypting your site’s connection with an SSL certificate
• Using a respected payment merchant
• Implementing a web application firewall
• Backing up your site regularly 
• Updating and patching your site continuously
• Installing a good antivirus that regularly scans your site

3. High competition

The ease of getting started with an e-commerce store is not just appealing to you but to everyone. The online store market is generally crowded, so you’ll have to judge whether it’s worth trying to make a name for yourself in your specific niche. To be successful, you’ll have to find a way to stand out from the crowd and likely work on your marketing skills. These days, it’s impossible to make an income simply by starting a store without considering brand strategy. 

4. Shipping and returns

The downside of online shopping is how long it can take customers to get their product. Because there’s no option to try out an item before you buy, this may increase the likelihood of returns too. In contrast, shopping in a store means you can test an item and then have it right away. Depending on your customers’ location, delivery and returns can take even longer and be even more expensive. If you ship internationally, you may have to add even more expensive shipping and customs fees to the mix, which customers won’t be happy about if you don’t warn them in advance. Informing customers upfront about extra costs, expected delivery times, and a shipment tracker will help make the process easier. 

5. Limited customer services

No matter how you try to frame it, an automated chatbot that’s available 24/7 will not compare to a real salesperson advising a customer in person. Depending on your budget, you can try to offer a more personal touch by hiring customer representatives, but it will likely never compare to talking to a salesperson in-store. 

The takeaway

In the end, one person’s pro may be another person’s con, so it’s up to you to determine what does and doesn’t appeal to you about the realities of opening an online store. Hopefully these pros and cons help you on your way to making a decision.