Electronic commerce or e-commerce refers to the buying and selling of goods and services online or through other computer systems. Ever since Michael Aldrich invented online shopping in 1979, e-commerce has picked up pace like no other online venture. Apart from internet transactions, it also includes other forms of electronic transactions such as electronic funds transfer (ETF), electronic data interchange (EDI) and inventory management systems among others. The popularity of ATMs and ETFs has smoothened out the issue of online cash payment. However, there are some disadvantages of e-commerce that every budding entrepreneur and shopper must consider before indulging in an electronic/online venture. Today e-commerce is a booming area for start-ups and consumers flock in huge bunches towards them. But in order to make a fair evaluation of this field, a discussion on the disadvantages of e-commerce is only apt.
Modern e-commerce setups require the use of the World Wide Web at least once in the whole transaction process so this discussion revolves mostly around the online aspect of e-commerce.
Disadvantage of E-commerce: Security Concerns
Perhaps the biggest drawback of having an e-commerce setup is the uncertainty surrounding safe payment. Most online shopping portals, be it for books, clothes, accessories or any other product, requires customers to reveal credit card information or mailing address. Such information can easily be used for credit card fraud or worse, identity theft. In developing countries with technological and logistical frameworks in a nascent stage, the use of the Internet to purchase goods is not favourable since there is no guarantee about their quality. If the consumer is not satisfied with the quality of the good or service, it becomes tougher for him to get it exchanged or returned since after-sale service channels are weak in an e-commerce setup. Also, chances of credit card fraud are much higher since proper security systems may not be well in place.
Thus the reliability and genuineness of the online shopping mart comes into question in these cases encouraging consumers to approach only the famous online portals. The ease with which such portals can be set up and used as a scam site is astonishing and consumers are wary of such facts while placing orders or divulging financial information online. Apart from prior payment, delayed receipt of the good is also a cause for concern for the consumer. As mentioned above, poor delivery systems force the consumer to wait for a longer time as compared to physically going and purchasing the product. This does not ofcourse hold for e-versions of a product (e-book, e-document).
Disadvantage of Ecommerce: Lack of personal touch
An e-commerce setup’s main USP is that it does not require the customer to physically approach the shop or sales are to obtain the good or service. However this very fact may work against them in some cases. Among the disadvantages of e-commerce is the lack of the option of physically touching or experiencing the product. In other words, for certain commodities like furniture and home-theatre systems, it is not possible for the consumer to touch the fabric of the upholstery or hear the surround sound of the speaker system while purchasing it. Thus there are some commodities that just cannot be purchased online. Further, some of the options that physically going to a shop provides, like tasting ice cream flavours or feeling the material of a garment, cannot be provided by an online portal or virtual mall.
On the subject of virtual malls, they do not have the same effect as their real physical counterparts do. Malls are designed such that every shop window and physical arrangement attracts shoppers. Since such an effect cannot be obtained in a virtual environment, the ‘shopping experience’ is not the same for the consumers and sales may not be as high for producers.
Disadvantage of E-commerce : Technical issues
When online shopping deals became hugely popular among customers as in the case of Groupon.com, a website which features discounted gift certificates usable at local or national stores, the increased volume of business that it brought to certain small businesses could not be handled efficiently by them. For instance a small coffee shop in Portland struggled with an exodus of customers for three months when it sold 1000 Groupons in one day through the website. Thus from the producer’s perspective, an e-commerce mode of sales could sometimes bring about orders or workloads which are unmanageable on a micro scale for start-up or small scale businesses. Inability to service these orders could further damage the reputation of the company.
Further, for the server to handle such high load orders and customer volumes, becomes a huge task. If the customer base is more than the server is equipped to handle then the website performance degrades and becomes slow in performance which leads to a subsequent loss in customers. The security and integrity of the database is also a cause for concern as a technical snag could lead to the whole website shutting down and putting the owner out of business.
Disadvantage of E-commerce : Information Overload
In order to completely showcase their product most website owners display all the information about the product and its various features. This information is publicly available and can be used by competitors to gauge the quality and other features of the product. Thus, another one of the disadvantages of e-commerce is the requirement to display all information on an open public domain accessible to all as compared to a shop which can selectively decide who to reveal information to. The idea of extracting business intelligence from the website is called web framing.
Thus through this detailed discussion of the disadvantages of e-commerce, it seems there are considerable pros and cons to adopting it in a business model. Both aspects need to be dealt with attentively in order to get the maximum benefit of an e-commerce setup. Business models across the world also continue to change drastically with the advent of e-commerce and it has become an important tool for businesses globally.