Traditional commerce vs. e-commerce

Traditional commerce refers to the practice of selling products and services within a single industry and in some cases, within a specific geographical area. Traditional commerce relies on operating business hours during a specific period of time and requires housing inventory or occupying a retail store.

In contrast to e-commerce that relies on online sales, drop shipments and 24-hour access for consumers, traditional commerce relies more on local consumers interacting with sales executives, managers, customer service personnel and accountants personally versus through electronic mediums.

Businesses deemed as traditional commerce handle advertising, inventory shipping and creation of products and services in-house with a staff of employees in close proximity. Traditional commerce does not typically share information with competitors whereas e-commerce prices, specials and inventory are ready available online for consumers and competitors.

Traditional commerce often relies on face to face interaction with consumers and thrives based on word of mouth, networking and customer referrals for new and repeat business. Personal interaction is a key component of businesses experience success with traditional commerce. Many businesses network within the community, establish rapport with city leaders and chambers of commerce and sponsor local events and sports teams to develop a relationship with the community to draw in business.

Traditional Commerce or Commerce is a part of business, which encompasses all those activities that facilitate exchange. Two kinds of activities are included in commerce, i.e. trade and auxiliaries to trade. The term trade refers to the buying and selling of goods and services for cash or kind and auxiliaries to trade, implies all those activities like banking, insurance, transportation, advertisement, insurance, packaging, and so on, that helps in the successful completion of exchange between parties.

In finer terms, commerce encompasses all those activities that simplify the exchange of goods and services, from manufacturer to the final consumer. When the goods are produced, it does not reach to the customer directly rather it has to pass from various activities, which are included under commerce. Its main function is to satisfy the wants of consumers by making goods available to them, at the right time and place.

E-commerce

E-commerce refers to the commercial transactions or exchange of information, buying or selling product/services electronically with the help of internet which is a newer concept of business style and comes under e-business. Now a days people are preferring this as it is less time taking and does not need physical way of doing business everything can be done with laptop or smartphone and internet.

Working:

Accept the order. The customer places an order on your website or e-commerce platform. You’ll be alerted that an order was placed.

Process the order. Next, the payment is processed, the sale is logged, and the order is marked complete. Payment transactions are usually processed through what is known as a payment gateway; think of it as the online equivalent of your cash register.

Ship the order. The last step in the e-commerce process is shipment. You have to ensure prompt delivery if you want repeat customers. Thanks to Amazon, consumers are used to getting items within two days.

Advantages:

• You can operate 24/7 with no staff. The internet doesn’t have store hours. It is up 24/7, and so is your e-commerce business. Unlike a physical store with set hours, your site can accept orders whenever your customers are ready to buy, which can drive more business. If you use software to automate most of the process, you won’t need to hire an ordering manager to work the night shift.
• It has fewer overhead costs than a physical store. A big expense of running a retail business is the physical storefront. That means money spent on rent, utilities and other such needs. All of that goes away when you operate an e-commerce store. There is no rent to pay. You don’t have to worry about keeping the lights on, nor do you have to pay to have the lawn mower or the walkways shoveled.
• Your business can scale on the fly. There are physical limits to how many products you can stock when you operate a brick-and-mortar store you only have so much shelf space. There are no such limits with e-commerce; you can add and remove products as you see fit.
• You can reach more customers. Your business may be in New York, but you can sell to customers in California if your store is online. “E-commerce changes the game for small business,” said Ben Richmond, U.S. country manager at Xero. “It doesn’t matter if you’re in a city or in a small regional town; e-commerce gives you the opportunity to live where you want and sell into many markets.”
• It’s easy to track your sales and shipments. Logistics are make-or-break for e-commerce companies. Thanks to the digital nature of e-commerce, it’s easy to track sales and shipments. The benefit of having this information in real time is that it allows you to quickly identify and rectify any snafus.
• It compiles customer data. When you sell products online, you capture a lot of customer data, from addresses to emails. You can also glean information about their purchasing preferences. You can use these insights to target loyal customers with promotions and discounts.
• It’s pandemic-proof. While brick-and-mortar businesses were forced to close their doors amid the pandemic, online businesses were able to stay open. As a result, consumers have shifted their shopping habits, making it a necessity for every retailer to run an online store. “I strongly believe that with COVID-19, the pros of running an e-commerce business outweigh the cons,” Richmond said. “As more consumers are shifting their spending from visiting brick-and-mortar stores to online shopping, businesses need to shift too.”

Cons:

• You can’t reach everyone. Even amid the pandemic, there are still consumers who simply don’t like shopping online; they want to see and touch products before they buy, and they are afraid of online fraud. According to Oberlo, 2.05 billion people are projected to shop online in 2020 but that’s out of the 7.8 billion people worldwide, making it approximately 26%.
• Data and credit card fraud are rampant. One of the biggest problems with e-commerce is the risk of fraud. Credit card and identity theft are commonplace, affecting thousands of consumers annually. If hackers breach your network and steal sensitive customer information, it could cause irreparable damage. On average, a cyberattack costs a business $200,000, and 60% of businesses shutter within six months of the incident.
• Customers abandon their shopping carts. E-commerce makes it easier for customers to window-shop with little intention of buying. Shopping cart abandonment impacts a high percentage of online sales.
• There are costs for doing business online. You may not have the overhead physical retailers have, but there still costs to consider, such as website hosting and/or e-commerce platform fees, internet service costs, social media marketing, inventory management, and storage and shipping. Like any other business owner, you must also consider applicable taxes, business licenses and regulations.
• E-commerce is a cutthroat business. You aren’t the first person to sell a product or service online; depending on your industry, you may have many competitors with identical or very similar products. Since many consumers shop based on price and expect to find good deals on the internet, you may find yourself in a race to the bottom.
• Customers want fast, free shipping. Physical retailers don’t have to worry about packaging and shipping their products. An online retailer does. Amazon has taught customers to expect not only two-day shipping, but also free shipping which you may not be able to afford to offer.