What You Need to Know To Run a Successful Online Business

by | Jan 15, 2023

Total worldwide e-commerce sales are expected to reach $4.5 trillion by 2021. Its significant growth is indicative of the fact that online business works. But while e-commerce is working for hundreds of thousands of businesses around the world, it’s also important to note that 90% of all Internet startups end in failure within 4 months.

As you can see, there’s a huge gap between failure and success, with 9 times as many Internet companies flopping before they ever really achieve lift off. Odds are, the e-commerce sites that don’t make it never had a good grasp on their strengths and weaknesses, which put them at a profound disadvantage.

“If you want your online business to thrive,” says Small Business Trends, “you have to be a realist. You must understand which advantages you face, as well as which issues and sticking points could hold you back.”

Online Business Advantages

The only way to share a piece of the growing e-commerce industry is by leveraging your opportunities and reducing risk factors. That being said, Small Business Trends gives five clear advantages to running an online business:

1. Overhead Costs are Low

Operating an online business means you don’t have to absorb inflated overhead costs common among brick-and-mortar stores. Expenses such as storefront real estate, physical signage, customer service associates, and insurance policies, won’t eat away at your profit margins and drive up prices for your customers.

This paves the way for your business to be a low price leader in your niche. A word of caution, though: don’t get greedy with your low overhead and try to pad your profit margins too much. Successful e-tailers are willing to pass the savings on to their customers!

2. Opportunity to Collect Valuable Customer Data

“Being able to collect customer data enables you to construct a detailed portrait of your target market: who they are, and what makes them tick,” says Small Business Trends. When you gather this type of intelligence, you’re able to create detailed customer profiles that guide your online advertising, landing page optimization, product development, and more.

With the advances in customer intelligence and data analytics tools over the last couple of years, online business owners stand to benefit from some pretty awesome innovations in the future.

3. Enhanced Customization

The Nike brand has both physical storefronts and an e-commerce website, but the online side of the business exceeds the brick-and-mortar side.

For example, customers can log on and customize the exact pair of shoes they want, from style and colors to shoelaces and logo placement. This opportunity for personalization makes the customer feel valued compared to an in-store experience where there are typically only a handful of generic styles (which may or may be in stock).

As an online retailer, you can give customers the ability to customize their orders, choose the exact products they want, and have them shipped right to their home. Of course, they’ll have to wait a few days to receive the product but that expectation is part of the experience.

4. Expanded Reach

Having an online business gives you opportunities for unlimited reach compared with a brick-and-mortar store that is possibly only visited by customers within a 25-mile radius (and only a 10-mile radius in some industries).

With the supply chains and shipping capabilities available today, even the smallest online companies are able to handle international sales. This effectively broadens your potential target market from thousands to millions.

5. Greater Potential to Adapt

“Online businesses are in a much better position to adapt to market needs and optimize their approach without much backlash,” says Small Business Trends.

Because your business is available wherever there’s Internet access, you’re not restricted to locality. Plus, customers can confidently and securely pay for their purchases via PayPal.

Disadvantages Of An Online Business

As of 2015, e-commerce was the only trillion-dollar industry growing at a double-digit percentage each year and that growth is projected to continue through 2020. Unfortunately, not all online businesses are thriving. As we mentioned previously, 90% of online businesses fail within the first 120 days.

Knowing how to address and alleviate the challenges e-commerce sites face will help you increase your chances of survival. Here are 3 disadvantages you need to be aware of:

1. Building Credibility

A certain amount of trust organically exists between consumers and brick-and-mortar stores. Perhaps, in part, because these companies have not only taken the time but also invested the money to set up a physical business.

As an online business, it can be challenging to prove that your brand is legitimate, especially when you’re just starting out or you’re a relatively small e-tailer.

You can help establish trust by making sure your website provides contact information, including a phone number, address, email, and contact form. Your website should also be up to date, free of spelling and grammatical errors, fast-loading, and full of useful, relevant content. Additionally, make sure you use security badges to let consumers know that their payment information is protected.

It takes time and consistency to lay a foundation of trust and build a solid reputation.

2. Meeting Customer Service Needs

Many customers prefer to speak with company employees face-to-face, whether they’re asking questions, returning a product, or resolving conflicts. Unfortunately, with an online business, you don’t often have the resources or capabilities for this. Instead, you must rely on email, chat support, or the phone.

To alleviate as many problems as possible, make sure consumers know what they can expect from your website. Prominently post policies and procedures, as well as contact information. Your website should also be easy to navigate, provide clear and accurate product descriptions to help customers make purchasing decisions, and offer a quick and simple checkout process.

Customers have countless options when it comes to shopping online, so you need to make sure you offer the best experience possible.

3. Competition & Market Saturation

While offline businesses may have one or two competitors in the area, online businesses are pitted against hundreds of competitors across the world—a level of saturation that makes it extremely difficult to achieve marketplace penetration.

“On the flipside,” says RankWatch, “a saturated market also indicates a huge demand, which means opportunities. And if you can identify these opportunities, then you can certainly gain a good market share.”

Here is a brief list of ways you can rise above the competition:

  • Capitalize on ongoing trends
  • Set yourself apart/offer something unique
  • Add an extra level of value to your offerings
  • Invest in search engine optimization
  • Choose the right e-commerce software

For more detailed information on the suggestions above, check out this article.


According to RankWatch, there are over 3 billion internet users worldwide and about 75% of them shop online. Clearly, opportunities to make money online are abundant.

But if you want to be successful in the online business arena, it’s crucial that you understand the advantages and disadvantages you will face. Being realistic about the challenges and opportunities of e-commerce will help you develop a growth strategy that’s not only reasonable but sustainable.

Above all, approach your e-commerce aspirations with the goal of alleviating pain points for consumers and providing them with the best experience possible. Not only will you gain an advantage over the competition, but you’ll build a brand that customers love, trust, and return to again and again.

“The key to success for eCommerce retailers is to provide exceptional shopping experience and customer service. You need to put your customers first and ensure that they don’t go through any trouble while trying to buy from you.” Source: shanebarker.com

Learn more about running a successful online business with Rain Retail Software.