July 27, 2020
The Pros And Cons To Starting An Online Business

Leslie Youngblood

By Leslie Youngblood

Today we live in a world that entrepreneurs from previous generations never could’ve dreamed of.

Over the past few years small businesses and startups have been getting a lot more love, which is amazing. Advancing technology helps perpetuate this- a small biz in Rhode Island can promote itself and connect with customers in California. Anyone can launch a biz from their living room sofa and expand it without ever leaving their house.


There’s always a but, right?

In order to be a success you need to understand the advantages and disadvantages to the online commerce space. Maybe you have had an idea for an online retail product for some time, or maybe you’re a brick and mortar store looking to go online. Either way you need to know: 90 percent of all Internet business startups end in failure within the first four months.


But ecommerce continues to rise and overall sales are expected to exceed $4.5 TRILLION by 2025. So, while there is great risk there is just as great opportunity. You have to be prepared, be smart, and be strategic.

Here are three pros and cons to starting an online business to help you along the way.

Portrait of a smiling casual man holding laptop over gray background

PRO #1: Low overhead costs

As I previously noted, you can start a business from your sofa these days. Which means you don't need to get funding for a brick and mortar space or signage, or anything like that. If you decide to open an online retail space your merchandise and marketing will most likely be your main expenses. If you decide to open an online business that's offering a service you provide, you're essentially spending zilch on expenses (save for your website domain).

Justworks is a fantastic online platform that can handle your business's back office complexities too.

PRO #2: Access to customer deets

When you conduct business online, you can essentially track any and every online transaction, interaction, etc. Then you can harness that data to adapt nimbly. For example, if you're a retailer you can learn what sorts of products your customers are buying quicker.

Access to data gives you the ability to deliver customization easier as well. You'll know who is buying what from different geographical regions and can tailor your services or products to suit those customers. Data is seriously a treasure trove of opportunity.

PRO #3: Get that reeeacccch!

Obviously the internet connects your business to the rest of the world. You can sell to, or chat with, anyone from anywhere at any time. That's incredible.

Brick and mortar stores are more centralized to their local community, which is always a pro. But having a larger reach means you have a larger pool of potential customers to draw from.

Screen Shot 2018-10-02 at 3.06.46 PM

CON #1: Lack of credibility

The internet is a giant mass of info and companies and items and people. That means, unfortunately, that people don’t know you on a personal level at the outset so there’s an initial hump you have to get over.

You will have to work a bit harder to get their attention and build a relationship with a customer when conducting business online, as opposed to in person.

CON #2: Customer service struggles

The world wide web has made all of us very impatient people. Now, anytime we want something, whether it's pizza or an answer to a random question, we just pop on our phones or laptops and get it.

This immediacy translates to customer service too. Customers now expect immediate attention to their problem and if you can't deliver on it, it will harm their relationship with you and could reflect poorly on your business as a whole (think: bad Yelp or Facebook reviews).  

So you have to make sure that you have adequate email, chat and phone support procedures in place. There are a number of platforms that can automate this for you too, so you can rest easy knowing customer issues are always taken care of, and customers can feel good knowing their business matters to you.

CON #3: Differentiation difficulty

When you have an ecommerce business you're online with the rest of the world, tapping into the entirety of its possibilities. But on the flip side, you're also online with the rest of the world, trying to get heard and stand out.

It can be hard to establish your brand when your competitors are just as easily out there too. This is where having an effective brand campaign and marketing plan come in. Without them, the online community may not be not as likely to take a chance on you.

Okay, that sums up the pros and cons to starting an online business. Keep them in mind to make sure you're as prepared as can be to kick ass on the old interwebs. Even though it's a risky place, it has an amazing possibility for success.


Leslie Youngblood is the Creative Director for Excelerate America, the ultimate resource for entrepreneurs. She'd love to hear about your online business. What are some obstacles you've been able to overcome? What's something you still struggle with? Shoot her an email her anytime at leslie.youngblood@excelerateamerica.com.

You might also be interested in these
4 Minutes
Tenacity Tales: The Coffee Shop Brewing Up Community Love and Belonging
Nestled in Bad Axe, Michigan, the state’s quiet thumb-area (population of less than 3,000), local favorite Emma’s Coffee House is flourishing like a big city star. In the middle of a pandemic no less.
3 Minutes
Retail Readiness for Christmas
Open since September 2018, Untied was a rare breed of merchant pre-Covid: an independent men’s shop selling lesser-known brands and accessories, its aesthetic more sit-for-a-while than next-in-line. Today, post-lockdown, the store remains a rarity: welcoming familiar – and new – faces, enjoying more good days than bad, and an owner-operator optimistic despite the looming holiday season.
3 Minutes
Stumped on Social Media? Use the ATACC Method
Social media is the most powerful marketing tool of our lifetime. It not only keeps people around the country and the globe connected, it’s also become a marketing machine. Brands everywhere can easily discover their target audience and reach them from the comfort of their own home and preferred platform.
3 minutes
Tenacity Tales: The Designer Inspired by Dogs and Cards Against Humanity
Faye Klein has produced award-winning graphics that span nearly every area of advertising and promotion for over 30 years. And while titles are surely nice, she’s not one to sit back and relish in accolades. In fact, she can’t stop finding new inspiration and side hustles.
Subscribe to our newsletter
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.