Thanks to the growing strength of the internet, e-commerce is rapidly evolving across the globe. As per research, the Indian e-commerce industry has the potential to outperform more mature markets and become the third largest market in the world with US$ 350 billion by 2030. Have you been thinking of setting up an e-commerce business of your own? Well, that’s great! However, it is essential to understand the complexities of an e-commerce business so that you plan effective solutions in time.
In this blog, we shall discuss some of the major limitations of e-commerce business that you must be aware of.
1. Robust security
E-commerce giants like Flipkart and Amazon have always prioritised customer’s security by authenticating transactions. In general, people hesitate to share their financial details no matter how strong the data encryption. This is one of the major limitations of e-commerce that comes in the way of business growth. Hence, it is important that you develop an e-commerce website that is capable of authenticating all sorts of transactions and protecting customer data.
2. Technological expenses
Getting the right resources to leverage advanced technology might prove to be a costly affair. It is indispensable to have a good budget to meet the technical requirements for your e-commerce platform. Without advanced technology, you won’t be able to set up a top-level e-commerce business.
3. Hiring cost
Running a company is never a single person’s task. You need different experts to look after different segments of your e-commerce business. For instance, you would be needing employees for the execution of various tasks like product listing, product packaging, shipping, customer care, and more. Hiring expenses is one of the major limitations of e-commerce businesses. It doesn’t matter whether you’re a small e-commerce platform or a big one. You need to incur high costs to employ a talented pool of experts.
4. Shipping charges
Another limitation that you might face as an e-commerce business is high shipping cost. If you’re a B2B business type, you’re usually required to transport goods in bulk and the profit margin remains high. But when you’re a B2C business, the shipping cost is costlier and the profit margin decreases. The charge of transporting products varies depending on the size and weight of the product.
5. Warehousing cost
Meeting warehousing costs is one of the biggest limitations of e-commerce businesses. When you’re into an e-commerce business, it becomes essential to have a physical space or warehouse where you can store your products. It helps you manage your business operations from a particular location easily. So, if you’ve been thinking of investing in an e-commerce business, you must be prepared to incur warehousing costs. We recommend setting up your warehouse outside the city to avoid high inventory costs.
6. Complex e-commerce policies
Registering yourself as a seller on an e-commerce platform can prove to be a complex process. E-commerce portals like Amazon, Flipkart and others have their own e-commerce policies. Most of them do not give sellers the full right to function in the marketplace. Violation of the e-commerce policies may result in the permanent suspension of your business account. Such strict policies can put a limit to your business operations.
7. Advertising costs
In order to boost your sales and increase business visibility, it is essential to have a marketing strategy in place. You will be required to invest additional costs in advertising your products. There are multiple ways to market your products online. You can advertise via email, social media platforms, or search engines. Marketing on search engines helps you attract more traffic to your e-commerce business.
8. Packaging expenses
Another limitation of e-commerce business is high packaging cost. Packaging costs are extremely high when products are heavy and large in size. So, if you’re planning to deal into large-sized products, you must be prepared to invest in additional packaging charges.
The bottom line
We hope our article helped you gain a fair understanding of the limitations of an e-commerce business. Overcoming the challenges or limitations is not that complicated. All you need is a well-organized business plan and effective implementation strategies. So, what are you waiting for? Get started with your e-commerce business today. With an efficient enterprise risk management service like Diligen, you can handle all sorts of uncertainty and associated risk of starting your e-commerce business. Connect without delay.