eCommerce Businesses May Lose Their Spotlight Soon
Ever since the advent of e-commerce businesses there has been a phenomenal change in the number of consumers that prefer shopping the old, conventional way, i.e. from the brick and mortar stores. And why not? Given how effortless shopping off an e-commerce platform is, consumers are converting to e-commerce at a rapid pace.
Did you know the number of digital shoppers has increased tremendously? By 2021, it is expected that almost 2.14 billion people across the world will turn to online shopping. However, you know what they say, all that is good, must come to an end. We all know that the e-commerce industry has seen big names such as eBay, Amazon and Ali Baba, but dissect any local economic system and you will come across a plethora of locally set up e-commerce businesses being operated and used by a growing number of people, every day. Although this kind of business model is lucrative in a particular perspective, a surfacing theory states that in the coming years e-commerce business may not be as prolific and enduring as we assume it to be.
To better understand this notion, let us first understand the whole idea of e-commerce business and its impact on the world. Before we move on, let’s take a moment to give e-commerce the credit that it deserves since it has been one of the most historic leaps that we have achieved that allows people to shop unconventionally from the comfort of their smartphones and computers.
Even though groundbreaking, it is very recent and undeveloped, and yet it has managed to be a part of the fully-functioning economic system of the world. A risky move, no? The very novice and unexplored nature of this particular way of doing business may be the reason why we won’t be able to sustain it for too long. Just like every other business eventually ends up being in a saturated market, chances for them eventually becoming obsolete are also inevitably high. Therefore, experts are particularly exploring the theory, whether e-commerce businesses will continue to flourish like this in the future or soon they will meet their end. In this piece, we have explored possibilities that can cause e-commerce businesses to go obsolete, so without further ado, let’s take a look at them:
Why eCommerce Businesses Might Go Obsolete?
Constant Reliability on the Internet
The e-commerce business model thrives upon one basic need: that is both customer and seller should be connected using Wave internet connection. So, if the growth in e-commerce is expected, then it won’t be wrong to assume that:
- Users will need prompt access to the internet at all times
- Companies that intend to establish themselves in the e-commerce realm will need an unprecedented internet speed that doesn’t affect the quality and time of their processes
Let us be clear, we are not talking about a far-fetched scenario where you get 3 bars of Wi-Fi in the middle of the Sahara Dessert. It’s pretty straightforward that even within the cities, there are growing instances of frustrated entrepreneurs, who have the willingness and ability to conduct business via e-commerce but are simply unable to due to connectivity issues. Therefore, this particular dependence on connectivity points towards a simple fact that e-commerce businesses are nothing without internet service providers – literally.
Consumers ‘Don’t Get, What They See’
E-commerce may be pretty big these days, but there has been this dilemma etched with it for quite some time now and that is consumers don’t get the products that they see online. Not sure, as to why E-commerce businesses go down the ‘clickbait’ route and try to attract customers by showing them a picture, description or a video of a product that they’re ‘promising’ to sell, but then fail at it miserably.
Most people do not realize what they have already spent their money on until it arrives at their doorstep. As e-commerce is growing, the notion that any customer wants to first-hand experience the feel, touch and look of a product before purchasing it, is also growing. Thus, if e-commerce businesses are planning to build any brand loyalty, then they must never overpromise and under-deliver. E-commerce businesses also have a noticeable impact on them due to ‘word of mouth’ and when customers are disappointed, just think of all the bad reputation the brand ends up getting.
eCommerce Businesses Are Headed in an Undefined Direction
A very important misery of e-commerce is its very size. Any established business is essentially virtual and so is its limit. E-commerce business is probably one of the easiest business setups. It’s like almost anyone can set up an online store and begin reaping its benefits from the instant someone clicks on it. However, this situation eventually ends up turning into an absolute nightmare for the regulatory bodies.
E-commerce businesses are very much like other businesses; they open, close, declare bankruptcy, merge, split, get acquired, etc. But they do this at a phenomenally fast pace. This, in particular, is what makes e-commerce businesses very difficult to monitor. There are cases in developing countries where regulatory bodies do not even know how to monitor sales for an e-commerce business and thus, things get pretty out-of-hand. Plus, this instability is bad for consumers as well; every time a person opts for an e-commerce platform, they are faced with a huge number of sellers, all offering the same thing. This does not only add a lot of confusion on consumers’ end, but also pushes other sellers into a lot of unnecessary and unsolicited competition. So, we can conclude this point by stating that e-commerce businesses are advancing towards an unspecified direction.
Dependency on Freight services
E-commerce businesses are highly dependent on shipping and freight services. It wouldn’t be wrong to state that e-commerce businesses are pointless unless their business model has freight services included in it. If these services aren’t up to date, then the first thing that gets impacted in an e-commerce business is its entire business model and ultimately, its reputation is next in line. The reason why e-commerce businesses can fall into failure due to these shipping services is that companies that offer shipping and cargo don’t grow at the same rate as e-commerce companies do. Thus, that time is not far when we will soon reach a point where there won’t be spare capacity for shipping companies to cater to the growing number of e-commerce companies.
Let’s understand this with an example. A shipping company has 5 freight shipping containers for e-commerce businesses and only 3 are being utilized, then it has the Spare Capacity to cater to another e-commerce business with the remaining 2 containers. However, soon there will be so many e-commerce businesses that would utilize all the shipping capacity, while the increasing demand for more shipping containers will remain unaddressed. Subsequently, shipping companies will be exhausted and they will fail to meet with the needs of new businesses, and ultimately it would hit the e-commerce world.
eCommerce Businesses might be a Threat to Local Businesses
E-commerce business is essentially an international trade. How? Well, it involves thorough shipping activities to be carried out across borders. Since it is not a conventional trade activity, there are some countries that have implemented the lowest, almost negligible tariff rates, which makes shipping of goods cheaper.
However, if you look at this from a different angle, then you’ll only realize that despite being favorable for the consumers who want to enjoy cheaper goods from other countries, this entire ‘no tariff and duties’ situation is hazardous for local businesses that are struggling to survive. So, it would suffice to say, e-commerce businesses cannibalize local counterparts by offering cheaper solutions online. If this continues, then countries that are suffering from a loss of local business because of e-commerce will look towards limiting the number of commodities that are bypassing their borders.
So, are eCommerce Businesses Good, or What?
We are not implying that an e-commerce business idea is better off gone; it has proven to be the next step in the evolution of businesses worldwide, without a doubt. However, business processes have gone through years and years of perfection and maturity to reach the state in which they are now and e-commerce is nowhere near that state of maturity. Given these unaddressed problems, the e-commerce business model may pose a threat to privacy and leakage of sensitive information of its customers. These are big holes right in the center of the boat, which if not mended have the capacity to take down the entire e-commerce business, even before it has had a chance to grow. If the current trend stays and the e-commerce industry is let to evolve freely without having its flaws addressed, then it will indefinitely face its extinction, sooner than we think.