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Pros and Cons of an E-Business

written by: N Nayab•edited by: Jean Scheid•updated: 2/27/2011

E-business is utilizing information and communication technologies in all activities of the business. E-businesses are fast replacing traditional businesses as the best way of commerce. But is e-business a panacea for everything? Read on for the advantages and disadvantages of an e-business.

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    Pros of an e-Business

    Advantages and Disadvantages of an e-Business In a trade off between the advantages and disadvantages of e-business, the advantages of e-business is its ubiquity, or the ability to transcend geographical constraints and remain accessible from everywhere. A sound business model need not work if the location of the traditional business is inappropriate for the business. With an e-business, a good business model only needs reinforcement with effective search engine optimization (SEO).

    The second biggest advantages of e business vs. a traditional business is its cost-effective nature. An e-business does away with many processes and costs associated with a traditional business. The traditional business requires considerable investment for furnishing the brick and mortar store, rent, energy and other establishments costs, employing many staff to run the operations, and advertising. The e-business does away with most such costs. The costs involved in setting up, designing, and maintaining a website comes to just a fraction of the costs involved in setting up and running a brick and mortar store. Inexpensive methods such as pay per click advertising and affiliate marketing replace the costly ways of advertising undertaken by traditional stores. The e-business also requires fewer employees, with the entrepreneur herself able to single-handedly manage the entire operations of a small or medium e-business.

    The business model of e-businesses helps in serving the customer better. In e-business, customers access comprehensive information of the desired product or service, make comparisons, and effect the purchase, all with a few clicks of the mouse. The traditional business model requires the customer to take the time and effort to visit one or more shop, make manual comparisons of the products, and deal with salespersons of varying personalities and initiatives, before finally making a purchase.

    The ability to serve the customer better also extends to providing better providing better customer service. The customer of an e-business can access the entrepreneur directly through email or online chat, compared to dealing with the many hierarchical levels, or lengthy telephone holds up when trying to access the customer service department of a traditional business.

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    Cons of an e-Business

    The biggest disadvantages of e-business is its inherent separation from the customer. The customer and the product come face to face in a traditional brick and mortar business. The faceless nature of an e-business causes an issue of trust, which remains hard to resolve.

    Another big disadvantages of e-business is its unsuitability in many areas or sectors. E-business, for instance, cannot treat a patient.

    The success of an e-business depends on robust computer systems, updating and maintaining the website, security of e-commerce transactions, reliability of shipping and delivery, and search engine optimization. Managing such critical components seem easy, but in most cases, such components remain far unstable and unreliable than the critical components of a traditional brick and mortar business. Search engine optimization and other technological components remain in a constant change of flux, with new standards replacing old standards by the day. This requires the entrepreneur to spend considerable time and resources in keeping up with the developments.

    A far bigger threat is the danger from viruses, Trojans, worms, and other malware. An e-business need to invest heavily on SSL certification, antivirus, and other security mechanisms, and even then, the business and its customers remain at risk of various attacks and scams.

    Finally, success of an e-business depends largely on the success of the delivery channel partner. Only those e-businesses that can ensure delivery of the product to the customer in a timely and safe manner can survive. Most e-businesses remain at the mercy of third party shipping vendors in this regard.

    Many people weighing the advantages and disadvantages of an e-business remain comfortable carrying out business the traditional way, that is, in person or face-to-face, and seeing the product before purchasing. The fact that an online entrepreneur may display one thing and ship another thing, the security risks associated with financial transactions over the Internet, possible misuse of private data either by the e-business or some hackers, and other threats make many people unwilling to opt for e-business and continue to patronize the traditional brick and mortar business.

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    Pros vs. Cons of an E-Business

    Comparing brick and mortar vs. e commerce, e-businesses have changed the very nature of doing business, and in many industries and sectors, have made obsolete the traditional models of doing business. Comparing e-business advantages and disadvantages, the potential advantages of e-business outweigh the disadvantages of e-business, but e-businesses have to overcome challenges related to trust and security before they replaces brick and mortar stores as the default way of doing business.

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    The author is a business management professional with 10+ years of corporate and business experience, and shares some of his experience through this article.

    Image Credit: Wichary