The Pros and Cons of Doing Business Entirely Online Without a Physical Storefront or Presence

The Pros and Cons of Doing Business Entirely Online Without a Physical Storefront or Presence

There are many pros to doing business online and unfortunately many cons. Let’s start with the good news. One of the things that have attracted me to the world of online business is that a website, which is a virtual storefront, does not have the expensive start-up costs and monthly expenses that a physical site has. Renting space can be an expensive process and owning the space, to ensure you don’t get booted for some reason or another, a lot heftier. Considering a website business the cost of renting space on the internet is far cheaper; the cost of buying the domain name ($10-$12) secures the place and to turn the lights on so to speak (hosting) an additional $10 a month. Granted this is for a low-maintenance kind of website and depending on functionality will become increasingly more expensive but still it will be less than the rent you would pay for a physical storefront.

On the flip side owning a virtual storefront means it is considerably unlikely that someone might happen to come across your website like passerby’s would in the physical world. This fact must be taken into consideration and in turn marketing is a must along with good search engine optimization in the development of your website. “Internet marketing in the old days has not been seen as a strong marketing mechanism. Now, it has continuously dominated the arena of online business.”(1) The internet is no longer the vast wasteland it once was and to get into your customers heads you’ve got to spend money so that people know who you are and what you represent. Even though typically physical stores could choose to market or not I have listed this as a con because it is almost absolute in the virtual world unless you can be highly creative or have something so solid that word of mouth carries you.

Wouldn’t it be nice to be open 24/7/365 and whenever you’re at “work” you’re wearing pajamas and at the same time hundreds of miles away from the person who just bought your goods? Yeah, that sounds pretty nice to me too. You can’t get this from owning a physical store. The cost of hiring enough employees to cover a 24 hour period would be a hefty price to pay and at best you can only service people that are in your general area unless you have a mail order catalog. However there is a con that lies here and that is that there is limited customer interaction. One of the things that keep me coming back to the same coffee shop is that my buddies go there or I like the people who work there and they always treat me like I’m special. Selling physical goods online rarely comes with a smile and a “how are you today Joe? And how is the family?”

A major con I believe exists in the online world is that you are in a highly competitive market where all other online businesses are just a click away. Websites like Amazon and EBay are like the Wal-Mart’s and McDonalds of the physical world. Mom and Pop Shops and restaurants have to compete against these giants who are in virtually every neighborhood across the nation. In this highly competitive environment where physical location is displaced having a niche product is imperative in my opinion. I do almost all my shopping on Amazon because almost anything I need I can find on there and typically at the lowest cost. Another reason why I shop at Amazon is because of their buyer protection services. This can be an additional hurdle but a strong motivating factor for people to come back to you if you can incorporate buyer protection services. Because of Amazon’s policies I am 100% confident that no matter what I’m shopping for I am protected no matter the worst-case scenario.

There are many challenges to overcome selling in the virtual world but if done so with skill and thought can prove to be a very lucrative and worthwhile endeavor. The flexibility, mobility, and rapid development, and deployment of an online business can be cheap to start up but without a quality or niche product selling online can be extremely difficult to make a decent living at. If you can be creative and have the time to learn the environment and technology than there is a good chance that you can be successful selling online. Either way I believe the pros outweigh the cons and are worth taking a shot at.

Internet Marketing 100 Success Secrets – By Jason Harris Pg 12

http://www.ecommerceoptimization.com/articles/main-pros-cons-of-an-online-retail-business/

3 Comments

  1. Yes, online businesses are cost-effective way of doing business. There are many items which can be sell online yet there are items which are not suitable for online businesses. Items with heavy weight will cost more in shipping and so more buying cost. Imagine entirely online IKEA or buying large TV or Furniture from entirely online business. Yet, I agree the pros of online business outweigh its cons.

  2. Hello,

    I think that depending on the product or service offered, virtual storefronts may be preferred. Especially if it is not necessary to work out of a building. If one’s customers can access their products and/or services online easily, the company owner can save lots of money because he or she could work from home, instead of investing an in office location.

  3. With regard to you point of the affordability of online storefronts, I am constantly amazed at the opportunity that the internet provides. In many ways, it is a great equalizer. Now those with little can step into the arena with the best of them.