E-commerce has become a trend today for many people. There are numerous advantages of having an online business. Setting up an online business is not so easy as it seems like. Product sourcing is an important part of it. Sellers will get the business if they have done the work on their e-commerce website or on any other e-commerce portals. As a seller, you must consider various resources whether you are thinking to sell on amazon india or on any other e-commerce portal. There are both advantages and limitations of e commerce.
The number of online shoppers or buyers have increased on the majority of e-commerce websites like Amazon, Paytm, Shopclues, Snapdeal, Flipkart, etc. People are searching for different products all over the web. People can buy the products online from any part of the world. The online thing matters is that the seller is able to ship the item to the serviceable destination. Because of many logistic services It has become very easy to deliver the products to various locations.
As there are many advantages of e-commerce, there are some limitations of e-commerce also. These limitations have to be understood by any individual who wants to step into online business. It is always better to look for the resources which can be easily available after analyzing the business strategy.
Top 10 Limitations of E-commerce:
1. Cost of Employees
Depending on the workflow of the business, the hiring of employees should have to take place in the first stage. If the business wants to establish on e-commerce portals along with social media platforms like Facebook and Instagram, then a dedicated team has to be hired for posting the content regularly on the platforms.
The cost of the employees can be high if the workflow has many tasks in it. Labour cost is one of the top limitations of e commerce industry as it requires more money to invest for executing different levels of tasks. E-commerce business includes many recurring tasks such as product listings, managing the orders, packaging, shipping, customer service, etc. Business owners must hire professional people for the execution of different tasks.
The startup business may be small and may not include more task when operating offline. But when it comes to setting up an online store, the costs are going to soared for the resources, employees, etc.
However, the ROI will be definitely achievable if the work is executed upto the mark on various sources of sales channels.
2. High cost of Technology
The use of the latest technology includes many use of the resources which are also high in terms of investment. Because of 4G Internet connectivity and increase in data usage for the online work, the costs have become so much higher for the work execution. However, It can be easily minimized even for small portion of work in the startup.
It is quite obvious that using high internet speed connectivity and other hosting services require good investment that will definitely provide productivity in the business. The advanced technology in all the sectors has made online business more easy to operate. It has given many advantages to make the flow better and always productive in business expansion whether it operates offline or online. For some businesses this should also fall within the limitations of e-commerce.
3. Shipping cost
Shipping of items in online business is a major challenge for all the sellers who are dealing in b2c and in b2b business type. The cost of shipping for the b2b business type does not make any much difference as the vendor is transporting the goods in bulk and the profit margin would be high in a particular order. But for b2c business orders, It might happen that the shipping cost covers the big amount from profit that eventually decreases the overall margin.
The cost of shipping the products will sometimes have benefits and limitations of e-commerce. The final charges of transporting any goods will depends on the size and weight of the product. It can cost higher in b2c orders when compared with processing b2b orders.
4. Fulfillment cost
Sellers must have to purchase a physical location store for storing the products or there is also an option to rent a store which would help them in managing the orders from a single place for their business operations. The cost of fulfillment also comes in limitations of e commerce sector. This cost have to be paid by the business If it operates in any mode. i.e. offline or Online. Depending on the location of the store the cost of the rent will vary.
For Fulfilling b2b orders, It is always advisable to go with those locations which are not situated in the area where the commercial properties prices are high. Most businesses are having their own warehouses which are located very far from the actual city. The reason behind having a warehouse outside the city is only because it does not include the high cost of storing Inventory. This would certainly help the businesses in reducing the cost. This fulfilment cost does not weighs high in limitations of e commerce operations.
5. Cost of Advertising
Businesses need to invest money in advertising and promotions in the initial stage. This is only because they can reach a maximum audience and let them know about the brand and the products that they want to offer to the customers. The advertising cost weighs much more high in limitations of e commerce tasks execution. This can be minimized only by getting a certain amount of results expectation.
This limitations of e-commerce impact is really observed in online business. It is expected to soar the advertising cost only if the organizations are able to make the business deals convertable. The advertising budget depends on the various factors. The channels where the items are advertised charges from the businesses varies according to pay per click or through Impressions.
6. E-Commerce platform policies
E-commerce companies like Amazon, Snapdeal, Shopclues, Paytm, Flipkart, etc have their own policies to operate. Sellers register their business on different platforms with their policies in the mind. Those policies are also treated as limitations of e commerce as it does not give full rights to the business owner who is registered on the marketplace.
There is also a reason for setting up different policies at the same time. E-commerce marketplace have to deal with many vendors to execute the tasks on the platform. Sellers have to deal in a very good way for their customers on E-commerce portals. Violating policies on the marketplaces may result in the permanent account suspension. So, It is never a good idea to think about violating the terms and conditions of e-commerce marketplaces.
7. Packaging cost
The cost of packaging also comes in the benefits and limitations of e-commerce. Packaging cost of the items does not involve such a high amount. However, It may cost high only if the items are large and heavy in nature. Along with heavy packaging cost, It also affects the shipping cost of the item which will increase the overall cost of transporting it.
B2C orders do not cover huge packaging costs. If the products are dispatched in bulk quantity then only it will have a certain rise in the cost of packaging it. There are easily available low cost packaging materials which will help the businesses to invest a very small amount of money.
8. Security of Information
When it comes to providing the security to the customers database, e-commerce marketplaces have to invest huge amounts of money in it. It is must required investment in e-commerce business as it has to save many kinds of information which may be customers name, email address, phone number, address, transactional information, etc.
The cost of servers on which the website is situated may charge high because of the regular visits through all sources of different channels like Google, Facebook, Instagram, and other channels. Having a good layer of security of data in any organization is very important. The data should be stored in secure locations where it can be accessed easily and can be only accessible by two or three level of authentication.
9. Flow of Sales
The flow of sales is a big limitations of e-commerce and it is only because the traffic which will drive sales will vary from marketplace to different channel involvement. According to the user demands the sales will actually flow and It observes the full flow business. The sales are only going to rise in e-commerce if the listings are properly done in the marketplaces.
Businesses can only expect high sales in the initial stage only if promotions and advertising are done correctly. Brand building is a very important task for any startup business and for big organizations too. Through Brand building, the companies can acquire the customers regularly regardless targeting them with advertising.
There are big social media platforms like Instagram, Facebook, Linkedin, etc on which all types of products can be advertised and the getting the business from these channels become much easier by spending a good amount of time and money. It can happen that the sales flow you will see on a single platform will produce good results for business. It is always recommended to know the audience first for the products that you want to promote on different platforms.
10. Marketing on Different Channels
Marketing is very important to explore your business and products to a very large audience. There are many ways developed in the marketing sector via email, affiliate, online, social media, etc. Search engines and social media are the key channels for marketing the products and services. Google, Yahoo, and Bing are the top search engines which offer advertising methods of marketing and that will drive more traffic and sales to the business.
Marketing budget should be prepared well in advance before targeting ads on the various channels. There are chances that some marketing channels will cost you much more in reaching the real audience for the business which will definitely take actions on your marketing campaigns.