Advantages and Disadvantages of E-commerce in the USA

Starting an E-commerce business in the United States can be a great idea for multiple reasons. However, this process also comes with some challenges. Prospective business owners and entrepreneurs who are interested in capitalizing on the E-commerce trend should familiarize themselves with the advantages and drawbacks of venturing into this industry.

This guide will examine the various pros and cons of E-commerce in USA.

Advantages of E-commerce in the USA

There are over 2.1 million E-commerce sellers operating in the USA. This business model’s popularity is easy to see given the numerous advantages E-commerce offers. This includes:

Low Start-Up Costs

One of the best reasons to consider starting an E-commerce business in the USA is low start-up costs. The E-commerce business model differs from that of ordinary stores because it does not require bricks and mortar outlet. This means that  E-commerce sellers are able to save costs on rent, purchasing store signs, buying inventory, and sales equipment.

Prospective business owners and entrepreneurs should note that they will still need to pay virtual “rent” on the E-commerce platform they will be selling on. For example, starting a business on Shopify requires an investment of around $400 and an annual “rent” between $350 and $3,600 depending on your chosen plan.

This is in contrast to the whopping $50,000 average startup cost and $15,000 to $40,000 annual rent for a retail store in the USA.

Making Sales 24/7

Another advantage of running an E-commerce store in the USA is the potential to make sales around the clock. Traditional brick and mortar stores in the country typically operate from 9 am to 8 pm or 10 am to 10 pm on weekdays and Saturdays. They also run from 11 am to 6 pm on Sundays. That means they are open for less than half the time during a given 24 hour period.

This makes sense as it would be incredibly costly for such businesses to run 24/7 and at times when few customers are likely to shop. Such operations would add to labour costs as well as utility bills without turning much profit.

The good news is that E-commerce stores are able to operate 24/7 with little to no added costs. This means customers can browse your inventory and make purchases at any hour of the day. Such orders can then be processed during the daytime when the E-commerce platform’s employees are active. This arrangement allows E-commerce store owners to maximize their sales without worrying about store hours.

Selling Internationally

A great reason to consider starting an E-commerce store is having the ability to sell your products internationally. This is possible using bricks and mortar stores as well. However, the process of shipping your products internationally tends to be easier for E-commerce stores.

This is thanks to the abundance of international payment providers such as Paypal, Visa and Square. E-commerce stores can also use a third-party logistics partner to assist with different aspects of digital fulfilment. All these services make selling to an international audience easier than ever before.

Offering Customers a Unique Online Experience

Many brick and mortar stores attempt to attract and wow customers using various decorations or by adopting a specific aesthetic. However, upkeep for such arrangements can be time-consuming and costly.

E-commerce stores have the ability to offer customers a unique online experience. Store owners can customize their websites to fit different themes that impress customers and keep them on their page. E-commerce stores that go above and beyond with user experience can encourage repeat customers, thereby boosting their sales.

Prospective business owners and entrepreneurs may need to invest in a great website for their E-commerce store. However, the upkeep and maintenance costs of this website can be far cheaper than that of a physical brick and mortar outlet. 

Disadvantages of E-commerce in the USA

Running an E-commerce store in the USA does come with a few disadvantages. This includes:

Relying on Your Website for Sales

Your E-commerce website may allow you to benefit from receiving orders around the clock. However, it also means customers won’t be able to shop at your store in the event of a website outage. Such outages may take anywhere from a few hours to a few days to fix. This can leave E-commerce owners in a difficult situation, especially if the outage occurs during peak shopping season such as around the holidays.

High Competition

As mentioned earlier, there are over 2.1 million E-commerce sellers in the United States. Each of these two million sellers may not be competing with each other directly. However, there is likely to be a significant overlap between the products your store sells and the products that a few dozen other E-commerce stores sell.

The competitiveness of the E-commerce industry isn’t likely to end anytime soon, as more and more business owners are entering this industry every single day.

Poor In-Store Engagement With Customers

Business owners and entrepreneurs who run a brick and mortar retail stores may already be familiar with the importance of engaging customers in-store. Unfortunately, this can be difficult for an E-commerce store to pull off.

Such stores can still try drawing visitors’ attention using flashy banners and pop-ups. However, such strategies lack many of the qualities that make in-store engagement so great.

Final Thoughts

As you can see, there are plenty of advantages and drawbacks associated with E-commerce in USA. Consider reviewing the above list before venturing into the E-commerce industry.

If you would like assistance with starting your own E-commerce store in the USA, please get in touch with www.startanamericancompany.com. We provide company formation services for business owners and entrepreneurs in many countries. Contact us today to learn more about our range of services.