Advantages & Disadvantages of Doing Business on the Internet
The world of online commerce is expanding rapidly, with many businesses now making it a priority to establish a strong web presence. Previously, all that mattered was having a homepage. With the advent of new technology and social networking sites, businesses now run Facebook, Twitter and LinkedIn pages alongside their e-commerce stores. While this increased level of customer contact and visibility can raise profits and bring in business, it can also take up lots of time and create other issues. Figure out if the pros and cons of Internet business make the case for an online presence by considering a few salient points.
Advertising and Publicity
The Internet makes it very easy to create buzz, pass along information about sales and talk up the better aspects of your business. Simply having a personable employee running the social networking accounts is enough to pull in prospective clients. Wise use of Google AdSense, coupon sites and fan forums can launch a product through the roof with a very small money or time investment.
The very things that become a boon can turn into a bust, however. A small business listed on Consumerist's Morning Deals post can be blindsided by orders within hours; the advertised product or special sells out, customers become angry and the business gets a ding on its reputation. The lightning speed of Internet marketing can also turn into something ugly if a negative incident occurs. There's little time to plan offense if someone posts a YouTube video talking about a bad service experience. In the world of the Internet, the publicity game can be very hard to control.
Cost
According to Adam Toren of Blogtrepreneur, an online business is great because of its low start-up costs. "Your monthly costs are less than $25 per month when just starting out plus whatever marketing budget you set," Toren writes, also noting the inexpensive cost of web page construction and maintenance. These low operating fees also make it easier to purchase advertising in order to draw in new business.
Toren points out that people come to the Internet with dreams of making quick money, all too often ignoring the fact that these cheap Internet businesses take time to grow and have plenty of competition from around the globe. He points out, "Although there are millions to be made and lots of people are getting rich and sometimes quickly, it is naïve to think that you will do so without hard work."
Privacy and Security
One advantage of online business is that people can purchase, chat with a representative and browse items at their leisure. Because there aren't any onlookers, a customer may feel more comfortable adding items that he usually wouldn't approach. Most Internet transactions are very secure, with responsible merchants advertising third-party credit card safety and no-spam policies to protect consumers.
Although Internet commerce is popular, online business still has to surmount the trust issue. BusinessWeek writes, "Forrester Research reports that 86 percent of consumers are worried about giving information to marketers because of privacy and security concerns." Identity theft is a legitimate fear, and consumers often know of acquaintances who have been hit by mystery charges after shopping online. To combat these fears, a business has to be ready to invest heavily to offer the best policies to customers.
Intellectual Property Management
The Internet makes it easy to offer creative designs and work to a worldwide audience. T-shirt shops and craft sites like Etsy put profits and sales within easy reach without requiring a booth fee or heavy lifting. For more corporate businesses, books, projects and meetings can move through email and video sharing sites with little effort.
However, stealing this content is also a fast process that requires a small-time investment. The entertainment industry has grappled with illegal file sharing for years, and print media has problems with ebook reader technology and digital rights management. "Keeping copyright laws intact is very difficult and therefore its very easy for one business to entirely copy the business and trade mechanism of some other business association on the Internet," writes the Small Business Bible. Therefore, a business has to balance possible loss of profits with consumer accessibility.
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