E-commerce vs. Offline Retail Business: 5 Pros and 5 Cons

Written by
Zachary Pestana
Last Modified on
January 22, 2024

With a tech-savvy population willing to part with its relatively high disposable income, it is no wonder that the e-commerce economy is booming in Singapore. With many companies adapting to offer their products or services online, let’s examine the pros and cons to see the right moves you can make for your business.

5 advantages of e-commerce business

1. Reaching a larger market

While a regular brick and mortar store is dependent on foot traffic and peak shopping periods, e-commerce allows you to reach out to customers at any time and place. This convenience is what draws people to online shopping as they can easily purchase whatever they want from the comfort of their own home.

2. Fast response to changing consumer trends

With the advent of social media and constant exposure to the lives of online influencers who greatly influence the purchasing habits of their followers, trends can easily come and go. Businesses especially those who engage in dropshipping, can respond quickly to these trends and consumer demands. They can also create promotions and deals on the fly to their customers, attracting more sales in the process.

3. Personalised experiences for customers

Online sellers have the opportunity to create personalised content and product recommendations for their regular customers. Once a customer is registered onto an e-commerce platform or website, sellers can use the data from previous purchases to provide special deals or recommend similar items so as to entice the customer to keep purchasing from that particular seller. By being shown content that is the most relevant to them, customers can feel a stronger connection to that particular e-commerce brand or business.

4. Easier access to customer insights through tracking and analytics

Compared to traditional advertisements on newspapers, radio and television, reaching out to customers in this day and age is a whole new ball game. Be it through paid ads or Seach Engine Optimisation (SEO), online merchants can now not only track the traffic on their e-commerce website but also gain access to their customer’s entire user journey to see how they can improve on their conversion rates. These insights can help them make better business decisions and improve their marketing efforts.

5. Lower Costs

As e-commerce platform technologies continue to develop, the barrier to entry for aspiring e-commerce sellers becomes lower and lower. They don’t have to worry about spending a lot of money on advertising their products and they can even save money on hiring staff as well as rental fees as opposed to setting up an offline business.

5 Disadvantages of e-commerce business

1. Lack of personal touch

While a lot of customers prefer the convenience of buying things online, some of them may feel like they are missing out on the personal experience they get from visiting a physical store and interacting with sales associates. This is especially so for customers buying high-end products as having a great experience during the buying process adds to the feeling of luxury that they are looking for.

2. Limited brand experience

Most online sellers go all out in providing photos, videos, infographics as well as detailed product descriptions to attract their customers but that can’t take away the fact that customers still can’t touch or feel the product. This is particularly important for items that rely on tactile or olfactory senses such as clothes or perfumes.

3. Price and product comparison

Customers who shop online can easily compare the many products available to find the best deal. This can lead to price competitions between online merchants and drastically reduce their profit margin.

4. Online security issues

There have been numerous cases of businesses who have been preyed on by hackers who are able to steal customer information from their databases and commit credit card fraud. This is not only legally and financially damaging for businesses but it can also damage the company’s brand reputation that they have worked so hard to build.

5. Over-reliance on technology

Sellers dealing with e-commerce obviously means that they are reliant on technology to run their business. Customers expect a smooth user experience and fast loading times so any lagging or other technological hiccups can lead to a substantial loss in sales or customer dissatisfaction.

While there clear benefits of running an e-commerce business, there are also challenges that come along with it. Knowing them early on will help you navigate the process and avoid common pitfalls so that your e-commerce business can be a true success.

Are you an E-commerce Business? We might have something for you!

Aspire is Southeast Asia’s 1st business neobank that serves e-commerce sellers with convenience and simplicity to manage their finances with the Aspire Account. Opening an account is free, 100% online, and done within 5 minutes!

Powered by Transferwise, the account presents the lowest FX fees in the market, up to 7x cheaper than most banks, available to transact across 50+ currencies.

It comes with the Aspire Credit Line offers an easy and affordable working capital financing solution to help you grow your business.

Finally, the Aspire Visa Card is a virtual debit card that offers cashback on a large set of qualified merchants for digital marketing and software subscription spend.

The only card to offer e-commerce business cashback that actually matters. Start making those spendings into savings, today!

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About the author
Zachary Pestana
is a seasoned writer in market trends and business thought leadership. With a writing history at Incorp Global, MOQdigital, and AIESEC Australia, Zachary leverages his broad range of experiences to stimulate industry conversations and engage audiences.
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