E-commerce: Meaning, Advantages, and Disadvantages

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E-commerce: Meaning, Advantages, and Disadvantages

E-commerce or electronic commerce simply refers to carrying out business transactions over the internet. Just like in conventional businesses, this type of trade has all the aspects of a business transaction such as buying, selling, and payments. The major difference is that this business model is based on electronic transactions.

In e-commerce, companies set up stores on the internet and provide user interfaces that allow for the purchase and selling of merchandise. There is no physical contact between the seller and the buyer since purchases are done online.

E-commerce adopts the use of technology to meet customer demands and settle transactions. In this business model, an entrepreneur does not need to have a physical premise; only a store for keeping commodities.

Advantages of e-commerce

1. Enhances convenience: Customers can make orders for goods at their own convenience and from the comfort of their homes without having to travel to the business premise. Orders are also delivered to them at their most ideal locations. It’s the best shopping option for people who are always busy.

2. Allows for product and price comparison: Again, when making purchases, customers want to get the best deals. This business model allows for product and price comparison by consumers so that the best products are bought at the fairest prices. They can also enjoy extra benefits like discounts, coupons, items on sale and also get the best deals.

3. Easy fund-raising for start-ups ventures: So many people have the desire to venture into business but lack sufficient funds to set up shop. Leasing a physical store can be quite expensive. E-commerce makes it easier for start-ups to do business and grow.

4. Efficient: Resources are used efficiently since most of the business services are automated. Business owners sometimes spend a lot of resources meeting business needs and this eats into profits. E-commerce thrives on efficiency.

5. Customer reach: It’s easier to reach many customers on the internet. Using social media links and good search engine optimization strategies, an online business can increase brand awareness and grow its customer base.

6. Prompt payments: Payments are fast since online stores use electronic or mobile transactions payment methods. The mobile wallet system for merchant accounts drive up sales and increase revenue generation.

7. Ability to sell different products: The flexibility of conducting business over the internet makes it possible for entrepreneurs to display and sell several products and also cater to a wider demographic.


1. Poor quality products: You don’t physically see and inspect whatever you are paying for before it’s delivered. Customers, therefore, run the risk of falling victim to false marketing and buying poor quality products from the virtual shop.

2. Impulsive purchases: Online stores display a large number of products and due to the convenience of shopping, customers can find themselves making bad financial decisions through impulsive purchases.

3. Internet scammers: The internet is a good thing but some people have decided to use it for all the wrong reasons. Scammers have made this type of business model unattractive for some consumers.

4. Lack of after sales support: As a result of lack of physical premises, customers find it hard to access after sales support. It can take up to several days before any help is accorded to a customer in need.

5. Fast changing business environment: Technology evolves so fast. Some entrepreneurs find it hard to keep up and lose a lot of business in the process. This may make business growth unattainable.

6. Loss of personal touch: Business is all about relationships. This business model erodes the personal touch between a customer and the business owner. Cultivating loyalty can thus be a problem since there are many such businesses that provide different options.

7. Delivery of goods can get delayed: It takes time before the goods ordered for are delivered. Sometimes the delivery delays and this inconveniences the customer. This is different from physical business premises where customers walk out with the products bought.


Technology is certainly a good thing because it has made communication and access to information much easier. It has turned the world into a global village and created a wonderful platform for entrepreneurs who want to expand their enterprises. E-commerce is a business model for the modern world and with the adoption of the right strategies, it can turn a small business into an empire.

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