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Benefits and Limitation of E-Business

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Last updated date: 21st Jul 2024
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Introduction of E-Business

Online Business also known as e-business is a kind of business, where the commercial transaction includes sharing information across the internet.


E-business or the electronic business is the conduct of business processes over the internet. E-business includes the buying and selling of goods and services, also serving the customers, processing business payments, managing production control, collaborating with the worthy business partners, sharing information via the internet, running automated employee services, recruiting, and more all over the internet.

Online business is another term for electronic business. An online business is one in which all transactions take place through the internet. The buyer and seller do not meet face to face in this situation. In 1996, IBM's marketing and Internet team invented the phrase "e-business." E-business is a subset of electronic commerce.

What is E-Business?

E-business consists of a range of functions and services which range from including the intranets and extranets by providing the e-services over the internet by the application of service providers. 


In today’s generation, with the effect of modernization and to make their business effective to function it is utmost for every corporation to conduct their business over the internet. Corporations continuously reshape their businesses in terms of the internet, availability of the internet, reach and ever-changing capabilities over the net. They conduct e-business to buy raw materials from other companies, the companies collaborate on sales promotions and also in joint research.


The growth of this e-business in recent decades has given rise to new business requirements encompassing the scope of recruitment of able employees. In companies, on the customer front, consumers expect the organisations to offer self-service options for conducting their personalised transactions for personalised experiences, they want speedy and secure interactions both in the course of purchasing the products and also while paying for the same. In the regulatory section, implementation of new laws and best precaution for keeping the electronic data secure have been installed. As e-commerce has accelerated, companies adopted stringent security services which include encryption and digital certificates, to protect against the hackers, fraud and theft.

Advantages of E-Business

The advantages of E-business are as follows –

1. Removes Location and Availability Restrictions

Starting an electronic business is simple. If you have the necessary software, a device, and access to the internet, you may start an online company from the comfort of your own home. E-business has no geographical boundaries. Anyone, at any moment, may order anything from any place.


The internet reaches wide across the world and spans in all time zones. This means that when businesses take off their business online, they have similar capabilities to conduct the business. While conducting business offline, customers are limited by visiting the store which may be situated close or far from their location. Also, they are limited by the store’s operation time. In the opposite case, when the e-businesses are conducted over the internet connectivity, it makes the customers access the store from any area with internet access which is open 24 hours a day. Because the internet is constantly available, you may set your business hours.

2. Reduces Time and Money Spent

Expenses rise up a good deal like the rent, electricity, phones, and general office upkeep, expenses for conducting the business physically, from physical locations can be cost-ineffective. By taking the business online, the expenses can be reduced or at least a lot of overhead costs can be eliminated. In addition to this, the logistics sector also gets a lot easier. Mass communicating with the customers can be done and this would save the cost.

Your online business is open for online transactions 24/7, around the clock, with no business hours limits once your website or social media channels are up and operating. Having an e-business gives you access to your customers 24 hours a day, seven days a week. There are no limitations to the usual 9-to-5 workday that you see in a traditional firm.

3. Expedites Customer Service

With the queries of the customers, they want a fast solution to their answer, in this regard email and live chat are available which can solve the problem. The flexible forms of customer service also extend with the use of online in the business platform.


4. Cheaper than Traditional Business

Electronic business is far less expensive than a traditional business. The cost of starting an e-company is significantly greater than the cost of starting a traditional firm. Furthermore, the transaction costs are effectively lower.

Having a traditional business or a real brick and mortar retail store necessitates paying employees to come to work in order to persuade clients to purchase goods and services. However, with your online business, your consumers may perform their online shopping whenever and wherever they choose, regardless of the day or time. This helps to improve your brand's consumer experience. To do business with you, all they need is an internet connection, an internet-connected phone or computer, and a debit or credit card. Though your actual items will still need to be housed in real storefronts, commercial storage facilities are generally less expensive than retail spaces, and you won't have to worry about foot traffic or parking for potential consumers. Because the government is attempting to encourage digitization, online firms benefit from government subsidies.

Your website is a priceless e-business resource. There is no such thing as an e-business concept or an e-business owner without a website. Having a website provides you with additional commercial benefits.

5. Updates on the Go

You have access to make rapid updates and order processing on things like promos, holiday specials, shipping costs, and so on, whether it's on your website, blog, or social media platforms. Another good avenue for bringing out rapid updates to your global audience is email marketing. Another big advantage of an online firm is its email marketing strategy. Email marketing's benefits to this company strategy cannot be overstated. You may leverage your real retail business to bring foot traffic to your door if you have one.

6. Profiling of Customers

You may collect data on how long visitors or customers remain on your site, what pages they look at, and how they go about completing purchases if you have an e-commerce site and use various digital marketing methods.

The more information you have about your customers, the more you'll be able to personalise your product or service to their needs. This kind of information is invaluable to your web marketing efforts. As a result, whether customers visit your website, e-commerce store, use your app, or connect with your brand on social media, e-business makes it more probable to collect valuable data about them. Such information is required to create an effective company strategy.

The cornerstone for great marketing strategy and customer service is consumer profiling. And having a robust customer service system in place is crucial to your physical or online business's success.

Limitations of E-Commerce

There are also drawbacks in conducting business online. The limitations are as follows 

1. Security

The biggest drawback of e-commerce is the security of business information. It is a general fear among the clients/customers to provide personal and financial information, even though several improvements and steps are taken up for its security. There are websites which do not have the capabilities to conduct authentic transactions.

Several individuals make money by scamming others over the internet. Additionally, hackers will have an easier time obtaining your financial information. This creates scepticism among potential clients.

With an e-business, there is a risk of corporate fragility, since you risk losing market share faster due to domestic and international competition. As a result, you must continually be on your toes (so to speak) and come up with new tactics to keep your consumers coming back. This is the only method to keep your company from losing a significant amount of money.

2. Lack of Privacy

Even now many websites do not have high encryption to secure the online transaction or to protect the online identity. Some websites illegally collect the statistics of the consumers even without their permission.

3. Tax Issue

Sales tax is an issue when the buyer and seller are actually situated in different locations and then they need to compute sales tax which poses problems as the buyer and seller are in different states.

4. Personalization

E-business is lacking in the personalization department. The product cannot be touched or felt. As a result, consumers have a tough time determining a product's quality. In addition, the personal touch is lacking. One can maintain regular touch with the salesman conventionally. It gains a sense of humanity and trustworthiness as a result of this. It also fosters consumer confidence. Such characteristics will always be a hindrance in any e-Business model.

5. Product Shipping Time

Product delivery takes time. You get the thing as soon as you buy it in conventional business. In internet business, however, this is not the case. Customers are frequently turned off by this lag time. E-businesses, on the other hand, are attempting to address these difficulties by offering extremely short delivery times. Amazon, for example, now guarantees one-day delivery. This is a step forward, but it does not fix the problem.

FAQs on Benefits and Limitation of E-Business

1. What is Extranet?

An extranet is a network which is privately set up, Internet technology and the public telecommunication system securely share the part of a business's information or operations with the suppliers, vendors, partners, customers, or other businesses. An extranet can be also be viewed as the part of a company's intranet facility which is extended to the users outside the company. It has been described as a "state of mind" in which the Internet is perceived as a way to do business with other companies as well as to sell products to customers.

2. What is the Internet?

An intranet is a computer network which is formed by sharing information within an organization by collaborating tools, operating systems, and computing other services within the organization’s set up, an intranet is usually excluded out of access by the outsiders. A company’s intranet can constitute an important focal point of internal communication and collaboration, by providing a single starting point to access the internal and external resources of the organization. 

3. Does E-Business Replace the Physical Form of Business?

E-business is a modern form of business, but the physical form of business cannot be said as the traditional or old form as the e-business cannot totally replace the physical form of business due to some undying advantages of the physical form. While in today’s world every business must set up their website to function over the internet as well.

4. Give Examples of E-Business.

E-business mainly takes place on two main platforms: on online storefronts and also on online marketplaces. Examples of online marketplaces are Flipkart, Amazon, Etsy, Fiverr etc. 

5. What are extranet firewalls?

An external firewall ensures that the extranet is adequately protected. It's also known as a network or hardware firewall since it's set up between separate computer systems. You may also use virtual private networks to ensure the most secure data access (VPN). The VPN firewall encrypts the systems and guarantees that only authorised users can access the network, as well as that data, cannot be intercepted. Multiple types of firewalls can be utilised by the concerned companies to secure their connection and to prevent any breach in the security of their data.