E-Business: Meaning, Benefits & Limitations

Today, we live in an era where you can order or purchase anything you want online. From toothbrushes to televisions and food, you can have anything you want with just a few buttons. All you need is a good internet connection and a mobile phone or a computer. The advancements in technology, especially digital technology, along with the growth of online businesses or e-businesses, have made this possible.

But what exactly are e-businesses? What are the benefits and limitations of e-commerce? In this guide, you can find answers to all these questions and more. Read on!

What is e-business? Understanding its meaning

E-business stands for electronic business and is also commonly referred to as online business. It is a type of business where the transactions take place online through the internet or any other computer network. Here, the buyer and the seller do not meet in person.

The term ‘e-business’ was coined 1966 by IBM’s marketing and internet team. E-business is an integral part of e-commerce, and today, these businesses have become a way of life. Even for business owners, i.e., the sellers, using the internet and conducting e-business allows them to offer superior customer services and increase their sales while reducing their costs significantly.

Benefits and limitations of e-business

Now that you know the meaning of e-business, let us look at its benefits and drawbacks.

Benefits of e-business

E-business offers innumerable advantages to both the buyers or customers and the sellers or the business owners. The most obvious is the ease of doing business. Other benefits include:

• Easy to set up
  

  As a business owner, setting up an e-business is much easier and cheaper than a physical business establishment. You can set up your online business from the comfort of your home. All you need is a computer or smart mobile phone, a good internet connection, and relevant software.

  
  
• Cater to a larger audience
  

  In e-business, the concept of geographical boundaries becomes obsolete. As a business owner, you can cater to a large audience group, and sell your products or service to anyone worldwide. Similarly, if you are a customer, you would have a wider range of choices, and you can purchase from an international seller.

  
  
• Cheaper than conventional businesses
  

  Online or electronic businesses are much cheaper than traditional businesses, as the cost required to set up an online business is significantly less ‘also, the transaction cost is effectively less. This allows the business owners to offer their products and services at an affordable price, which, in turn, helps attract more customers and increase revenue prospects.

  
  

  From a customer point of view, this is beneficial for you as you can get the products and services you desire at a lower price than you may get from a physical store. Thus, it offers a win-win situation for both the customers and the sellers.

  
  

  Also Read: 8 Amazing Small Business Ideas Under ₹1 lakh in India

  
  
  
• Government subsidies
  

  The government of India has been trying to promote digitalization, and in line with its goal, it offers various subsidies to online business owners, allowing people to start their own online businesses.

  
  

  So, if you are looking for e-business opportunities, you can take advantage of the government subsidy schemes, start your own venture, and make your dream of being a business owner a reality.

  
  

Limitations of e-business

All is not rosy about e-business; although it offers several benefits, it has its own share of drawbacks, too. Some of these are:

• No personal touch

  
  

  Unlike conventional businesses, the e-business lacks a personal touch. When you buy any product from an online store, you cannot touch or feel the product. This makes it difficult for you to know about the quality of the product.

  
  

  Also, the online businesses don’t have the human touch. In a traditional business, you can speak to a person who may help you address your queries and give you more information about the product or service they are offering, allowing you to make an informed purchase decision. 

  
  

  This also helps add a touch of credibility and trust with the customers. In e-business, this aspect is absent completely.

  
  

• Delivery time

  
  

  Another significant limitation of e-business is that the delivery of products may take time, especially if you are ordering things from an international seller. The delay in delivery of products can be a huge deterrent for the customers to complete the purchase transaction.

  
  

  However, modern e-businesses are trying to resolve this issue by promising delivery within a limited time. For example, several online businesses now offer one-day delivery. And some businesses even offer the product for free if you don’t get the product delivered within the promised time.

  
  

• Security concerns

  
  

  The number of people becoming soft victims of online businesses has been on the rise. It is easier for criminals and hackers to get your financial details while you make purchases through online stores.

  
  

  The online businesses also have integrity and security issues, creating a distrust among customers. However, to address this issue and win the customer’s confidence, online businesses now use several top-of-the-line security measures to keep your data confidential and safeguard your interests.

  
  

Conclusion

As the world is moving more and more towards a digital economy, e-businesses have fostered international business and connected people from all over the world. These businesses are here to stay and are sure to gain even more prominence in the future.

If you are looking to leverage the immense growth prospects of e-business and start your own venture, you can get the required capital by applying for a business loan with Udyog Plus. It is an integral part of Aditya Birla Finance Limited and offers a range of customised business loan solutions to suit the needs of all.