E-commerce can be a great way for small businesses to increase their sales and expand their reach. It’s also convenient for consumers, who can shop at their convenience, without having to leave home or spend the day fighting queues at the mall to get the best deals. However, e-commerce also has negative effects on both consumers and retailers that must be taken into account before launching an online store.

Privacy

It’s easy to collect a lot of personal information from a consumer using an e-commerce website, sometimes too easy. Since all online transactions are recorded, it is relatively easy to create an online buyer profile and use it to serve targeted ads. However, many will agree that this is an intrusion into the consumer’s right to privacy, and is something that is heavily regulated in many countries. This means that small businesses wishing to establish an online presence through e-commerce must be aware of the applicable legislation, as mistakes can be costly both in terms of fines and customer trust.

Security

Another negative effect of electronic commerce is its effect on consumer safety. Online transactions are inherently more insecure than those made in person because there is no way to guarantee that the person making the payment is the actual owner of the credit card used. At the same time, when the customer enters the payment information they run the risk of being intercepted by a third party if the website does not comply with the appropriate security measures, leading to credit card fraud and identity theft. Merchants must be aware of the risks involved in electronic transactions and work to secure systems to the highest standards.

Price wars

Merchants used to selling in their store can often find selling online to be an extremely competitive market. Your products are displayed alongside competitive offers, often from different countries or larger retailers with access to better wholesale prices. This can negatively affect the retailer, as they cannot sell as much as they hoped to make a real profit, or the consumer when online stores take shortcuts to become more competitive or products are bought from illegitimate retailers because they had the best price.

Returns and complaints

Selling online generally means a higher product return rate than when the purchase was made in person. This is partly due to the fact that customers have not seen the products in person before the purchase, but also to the fact that many online shoppers buy things on impulse and when they receive them at home, they have changed their minds. and make use of favorable return policies. While a large retailer would have no trouble adjusting to this, it can be very detrimental for a small business with limited inventory management.