The 8-Minute Guide to Ecommerce VS. Traditional Commerce

Commerce is commerce, right? Maybe, in the broad sense that commerce is the act of buying and selling goods.

However, just like most things, the internet and technology have changed the way that commerce is conducted with the emergence of ecommerce. So, no, commerce isn’t just commerce anymore. Even though they have the same primary principle of buying and selling goods and services, there is a difference between ecommerce and traditional commerce. As a business owner, it’s important to understand those differences so that you can effectively manage and increase profits through both channels.

What is Traditional Commerce

The word commerce can mean different things to different people, so let’s start with defining traditional commerce for the context of this conversation. Our definition of traditional commerce is the exchange of goods or services, in person or face to face. The most conventional method, and something we have all done — walk into a store, pick out an item for purchase, stroll to the checkout and pay for the item. As for the service part, a better example would be if you had to call a pool service company to come and fix your broken pool heater and the repairman came to your house (and if you have a pool, we’re jealous).

In either example, the customer has to interact with the business owner or a representative of the business, one on one. There is more to be said for that personal interaction, but we’ll explore that later in this post.

What is Ecommerce

Ecommerce is a variant of traditional commerce because there is still an exchange of goods. Just Like other words with an ‘e’ prefix, the ‘e’ stands for electronic, but it could really stand for ‘easy’ because it’s all at your fingertips — email, ebook, and ecommerce. You no longer have to physically write a letter, or make a special trip to your favorite downtown bookstore and circle the block for 20 minutes looking for a parking space. All of these things can be done online from the comfort of your own home, thanks to the internet and security protocols that enable the secure transmission of data.

Key Differences Between Traditional Commerce and Ecommerce

Now that we’ve defined traditional commerce and ecommerce for you, let’s take a look at the differences between the two. It’s important to understand the distinction because each channel will need to be managed a little differently.

The biggest difference between traditional commerce and ecommerce is accessibility. With traditional commerce, your reach and accessibility are only as far as the furthest customer is willing to travel to your business. And they must do so only during designated business hours. With an ecommerce store, you’re open 24/7/365 — including holidays. Your customer reach is no longer local or regional, it becomes national and possibly even international.

As a business owner, you need to make sure you’re equipped to handle not only the increased sales volume an ecommerce store can produce, but also shipping logistics, sales tax collection across multiple jurisdictions, and a return process, just to name a few.

Besides accessibility, the human element and instant tangibility of the product are next on the list of key differences. With traditional commerce, customers can approach a sales associate and ask them questions about a particular item. They can hold the item in their hands and physically inspect it, or compare it to a similar product. Once they decide to make a purchase, they walk out of the store with the product in hand.

SEE ALSO: How to Build a Retail Website

On the ecommerce side, however, customers lose both of these factors. While you still may be able to ask questions via a chat feature on the website or a community Q&A forum, you’re still not speaking to someone face to face, and the latter method typically doesn’t result in an immediate response. Since customers can’t handle the items in your online store, it’s important that you have detailed descriptions, product specs, or pictures and videos of products to make up for the fact the customers cannot physically inspect the product for themselves.

This list of differences could go on and on, but accessibility, the human element and the instant tangibility of products are what we consider to be the biggest differences.

Advantages & Disadvantages of Ecommerce

With a solid understanding of some of the key differences between traditional commerce and ecommerce, let’s explore how we can spin some of these differences into advantages and how to avoid the pitfalls and disadvantages.

Advantages
The biggest advantage of an ecommerce store is related to the accessibility factor we mentioned in the previous section. Not only are you literally always open, but you’ll reach more customers because you aren’t geographically restricted to a customer base that lives, works or travels near your store.

Another big advantage of an online store is the low cost of entry. Gone are the days when ecommerce was only for large national chains because they were the only ones that could afford it. In fact, today, it’s not uncommon for retailers to start online and then move to a brick-and-mortar store once they find their audience and have enough funds to lease their ideal space.

The transition from brick-and-mortar to online, or vice versa can be made much easier with a little planning and forward thinking. If you currently have a brick-and-mortar shop and you are thinking about launching an ecommerce store, make sure your point of sale system can integrate with an ecommerce platform to make inventory management easier across both channels. On the other hand, if you are exclusively an online retailer and are thinking about opening up a storefront, make sure your ecommerce platform has an integration option for a point of sale system that would be a good fit for your business. An excellent example of this is ShopKeep’s partnership with BigCommerce. If you are currently a ShopKeep merchant and you want to dive into the world of ecommerce, you can start your free trial with BigCommerce today. You can’t get much more low cost than free!

Disadvantages
Losing the ability to look your customer in the eye and explain to them the value of your goods or services, is probably the biggest disadvantage of an ecommerce store. It is practically impossible to replace the human interaction between a customer and a sales associate or business owner. Reading a bunch of words on the screen or looking at pictures to figure out what you need isn’t always as helpful as talking to someone directly.

The best way to turn around this disadvantage is to create an engaging, informative, user-friendly, helpful, and responsive online presence for your customers. This can be done not only on your website or ecommerce store, but also through social media and other outlets.

Another disadvantage of an ecommerce store, for the customer specifically, it the waiting period between placing the order and having the product in hand. Here is another opportunity where you can engage the customer by offering a shipping upgrade on their next purchase. So rather than thinking about the wait time for this purchase, you already have them thinking about the next.

Advantages and Disadvantages of Traditional Commerce

Just as with ecommerce, there are also advantages and disadvantages to owning a brick-and-mortar store or a business that is considered traditional commerce.

Advantages
The biggest disadvantage as an ecommerce store, just became the biggest advantage as a brick and mortar store. You can bring to life the human element and interact one on one with your customers. You have the opportunity to create the ultimate experience for you customers from the moment they walk in the door, until the second they leave and that’s not something that can be replicated online.

Your customers also get the thrill of walking out of your store with the item they purchased. They don’t need to wait through the drawn out shipping process.

Disadvantages
The biggest disadvantage to exclusively being a traditional commerce store is that you’re not online! According to the Pew Research Center, 8 out of 10 Americans are online shoppers. That’s practically a whole other market that you’re missing out on by only having a brick-and-mortar store.

Another disadvantage is that the cost of operating a retail store is significantly more than operating an ecommerce store. With a brick-and-mortar store, you have the cost of rent, utilities, insurance, employee salaries, store displays, and significantly more inventory on hand to exhibit in your newly acquired storefront.

SEE ALSO: Advantages and Disadvantages of Ecommerce

Similarities Between Ecommerce and Traditional Commerce

Since we have spent some time talking about the difference between traditional commerce and ecommerce, let’s now discuss their similarities. First and foremost, as we mentioned at the beginning of this post, is both types of commerce have the same primary principles of buying and selling goods or services.

Along the lines of buying and selling, no seller is going to succeed without buyers. Or rather no merchant, online or traditional, is going to prosper without customers. Customers are the key to success for any business, so going above and beyond or throwing in a little extra on the customer service front will only help your business thrive.

Ecommerce giant Amazon, is the ultimate example of exceptional customer service. It is their obsession, their credo, and they have been rewarded time and time again for it.

Who Benefits from Starting an Ecommerce Business?

There really is no downside to having an ecommerce store. If you already have a brick-and-mortar store, you’re more than halfway there, especially if you’re using a point of sale system like ShopKeep that can integrate directly into an ecommerce platform like BigCommerce. With a simple guided setup process, you can sync your store inventory with your ecommerce store and be online rather quickly.

In this digital age, you can’t afford to not have an ecommerce store. More and more customers are making purchases online and ecommerce is growing 23 percent year over year. That’s a growth rate that any business could be interested in.

It’s not just business owners that benefit from an ecommerce marketplace, but also the customers. By having a website and ecommerce store, you are assisting them with their online research and making it easy for them to purchase from you.

How Ecommerce Sites Work

Like anything else that exists online, you will need to first select an ecommerce platform or hosting service. This is an important decision because the platform will serve as the backbone to your entire online store, so you want to make sure that you select one that has the functionality you need. Here is a comparison list of today’s leading ecommerce platforms to help you get started in the selection process.

Once you’ve selected a platform, you will need to select a template for your ecommerce store. Two rules you should follow during the selection process are to make sure you pick one that is specifically designed for ecommerce — ecommerce themes are built to showcase products and will include functionality must haves for ecommerce merchants — And to select one with a responsive design. This allows mobile customers to navigate your site with ease.

After you have selected the template, you will need to organize your inventory, and set up payment processing and data analytics so you can understand your online business performance. These are all things you do or have done in your brick-and-mortar store already, but now you are taking it to a digital level. When that has all been completed and set up, you’re ready to rock and roll. Welcome to the world of ecommerce!

We hope that you can walk away from this article with a better understanding of the differences between traditional commerce and ecommerce, the similarities and how can better manage both channels to maximize your profits.

Nicole Walters

As Content Writer at ShopKeep, a leading iPad Point of Sale System, Nicole Walters leverages her background in communications and her extensive experience in the payment and POS industry to create valuable content that addresses real problems and solutions for small business owners.