What Are The Limitations Of eCommerce Businesses
eCommerce has become one of the most popular mediums of transactions in recent years. While it does offer quite a lot of benefits to both buyers and sellers, it is not totally free from disadvantages. By having an idea of these limitations, we can address them and come up with a solution.
Here are the top disadvantages and limitations for eCommerce businesses:
1. Security: One of the main limitations of eCommerce is security. In most cases, people are hesitant to provide their personal and financial details in spite of advanced data encryption security systems in place. Moreover, there are some websites that do not have the capability and features installed to authenticate transactions. As such, there are instances of fraudulent activities. The fear of providing financial information like credit card details hinders the growth of eCommerce.
2. Lack of Privacy: To some extent, the privacy of a customer is compromised in eCommerce. You need to provide your personal details, such as an address, telephone number, and so on to the seller. There are still lots of sites that do not have the advanced technology to protect sensitive information. Moreover, there are also sites that illegally collect consumer statistics without permission. This is one reason why people get skeptical while using eCommerce.
3. Tax Issue: In the case of different geographical locations, sales tax becomes an issue. Many a time sellers have faced problems in the computation of sales tax. Moreover, physical stores have a risk of losing business if online transactions are exempted from taxation.
4. Fear: In spite of the popularity, there still resides an element of doubt in the mind of people when it comes to online shopping. This is because the customer cannot physically examine the product and is not sure about the features and attributes. This is why a lot of people prefer shopping from physical stores.
5. Product Suitability: As already mentioned, it is not possible for people to physically examine the product in eCommerce. In many cases, the original product may not match the picture or specifications in the eCommerce site. This absence of ‘touch and feel’ creates a discouraging effect.
6. Cultural Obstacles: As the process of eCommerce encompasses customers across the globe, the habits, traditions, and culture differ. There may also be linguistic problems and all these may lead to issues between the seller and buyer.
7. High Labour Cost: In order to get the whole eCommerce and delivery process right, a specialized workforce is required. To get all these in the right shape, companies have to shed a good amount of money and employ a talented pool of people.
8. Legal Issues: A lot of legal compliances and cyber laws need to be taken care of in an eCommerce business. These regulations may vary from country to country. All these reasons deter businesses from going electronic.
9. Technical Limitations: eCommerce requires advanced technology platforms for better performance. Some limitations, such as lack of proper domain, network and software issues, and so on can affect the seamless performance of an eCommerce site.
10. Huge Technological Cost: Last but not the least; a lot of money needs to be invested to be built up the technical infrastructure needed to run an eCommerce business. Moreover, they need to be upgraded based to keep abreast with the changing technology.
11. Delivery Guarantee: Many people fear that their product might not be shipped or the website might be a fraud. Businesses need to work to build customer trust with reviews, testimonials, etc. to add more value to their website.
In order to minimize these limitations, an eCommerce business should have a proper business plan and implement them with proper strategies.