Ecommerce or online shopping is one of the most rapidly bludgeoning industries to have come up in recent times. This success is owed to a variety of social and technological factors that have aided the online shopping mechanism. And as a result, most distributors and retailers are making their products available online through eCommerce portals.
In this article we will be conducting swot analysis of eCommerce Industry to analyze the strengths, weaknesses, opportunities, and threats pertaining to the current eCommerce industry. This analysis will help understand why this industry has faced such massive growth and what lies for it in the near future.
Table of Contents
Strengths
Below are the key strengths of eCommerce Industry
Availability and Ease
Ecommerce portals have ensured that stepping out of your home is no longer necessary to purchase a product. From groceries to clothing to electronic goods, almost every required by a consumer is made available through ecommerce websites. These websites are also integrating multiple payment methods to ensure further ease on the part of the consumer.
Global Access
There was a time when goods from one geographical area could not be accessed by another. E-commerce has ensured that all products be available globally and for minimal shipping costs as well.
Start-up Friendly
Businesses that are just starting out prefer to sell their products through eCommerce portals rather than through traditional shops. This is primarily because the latter incurs a larger amount of establishment cost which most start-ups are unable to afford. The marketing process also becomes much smoother and cheaper through online shopping platforms.
Discounts
Since production cost is lessened through the use of ecommerce portals, sellers are able to provide attractive discounts on their products which helps garner more consumer attention.
Weaknesses
Below are the key weaknesses of eCommerce industry
Consumer Mindset
Consumers are not ready to buy all products via ecommerce portals. While products such as electronic goods can be bought easily through these portals, other products such as clothing is often preferred to be bought via traditional methods since size and exact color can be verified before the purchase. Another factor is that customers expect smaller ecommerce portals to serve as speedily as larger ones and when the same level of service is not achieved these former portals are abandoned.
Absence of Communication
Seller and buyer communication have always been a strong method of marketing when it comes to consumer products. Since ecommerce portals do not allow for such communication to take place it is entirely on the buyer to make the decision, which often leads to the product not being bought.
Cost
While ecommerce portals are able to provide discounts that attract customers, in many cases the shipping cost becomes quite high and sometimes even higher than the product cost. This can easily turn customers away from buying the product online and shifting to traditional means.
Generation Gap
Consumers belonging to older generation still prefer going to the respective markets to purchase their goods rather than through internet. This is primarily due to inaccessibility to technology and lack of trust on online purchases.
Opportunities
Below are the key opportunities of eCommerce industry
Market Reach
The eCommerce world allows even the smallest seller to tap into a global market and sell to more customers. As the global online population continues to grow, eCommerce will become the single most effective way to sell products and gain market momentum.
Technological Advancement
While consumers in developed countries have plentiful access to technology that allows them to make online purchases, other countries are still coming to grip with such technology. As the purchasing power increases and the price of smartphones and computers decreases, the number of people actively using eCommerce platforms is expected to increase.
Marketing Possibilities
Not only is marketing through online portals cheaper and easier, but they also provide more feasible ways to market the products. For example, usage of online influencers is one of the primary ways in which clothing and cosmetics items is marketed. Usage of such alternative marketing will help the online shopping industry grow and attract more consumers to it.
Threats
Below are the key threats of eCommerce industry
Highly Competitive Market
Since the cost of setting up an e commerce portal or using an established one is quite cheap, the level of competition on such portals is much higher than traditional markets. This makes it difficult for new sellers to achieve sales that are equivalent to bigger brands of their respective industries. So, many small-time sellers prefer not to enter such a highly competitive market and tend to their traditional ways of selling products.
Digital Fraud
Online payment systems, although secure, can be easily used to run fraudulent transactions. There have been multiple instances where the consumer has made the payment and not received the product. Such cases lead to consumers turning away from eCommerce portals as lack of trust on online payment increases. Certain countries still do not have strict regulations on online payment making it difficult for both buyers and sellers to use eCommerce portals.
Data Privacy
Buyers are expected to provide a lot of sensitive personal data to eCommerce websites to be able to make a purchase. This includes address, banking information, etc. Many consumers stave away from handing over such data freely to websites that they do not trust. As a result, smaller eCommerce portals are unable to garner as much momentum as larger and more established ones.
Government Regulations
Government regulations regarding online sales are becoming more stringent and there are high possibilities of increased taxation on online sales. This will inadvertently increase the cost of products on eCommerce platforms thereby turning consumers away from it. Furthermore, data-centric regulations such as the GDPR have made it harder for setting up online stores.
The above swot analysis of eCommerce Industry presents a clear picture regarding the growth of the eCommerce industry and also how it will be performing in the future. While there is no doubt that more consumers are joining the league every day, there are acute factors that are also driving them away from it. It is expected that such factors will be dealt with in the coming times so that the online purchasing process becomes much easier for the consumers.
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