Traditional commerce refers to the exchange of goods and services for a price, face to face, and also includes ancillary services like insurance, banking, transportation, and so on, which are required for a successful exchange between buyer and seller.
E-commerce or electronic commerce means the exchange of products and services, money and information, that takes place between businesses and customers through the electronic network, like the internet.
Ecommerce is witnessing an unprecedented boom right now, especially in a world beset by the Coronavirus pandemic and lockdowns and social distancing. More and more people today prefer to order from the safety of their homes and get door delivery of essentials as well as non-essential products. So how different is this model of doing business from the traditional method? Let’s examine:
- E-commerce is a completely digital, online business, with no face-to face interaction between buyer and seller. Traditional commerce is conducted face to face completely.
- Communication happens digitally in e-commerce, through email, or chat on the website; whereas in traditional commerce, customers can simply ask the sales staff at the store.
- Marketing in E-commerce can be inbound or outbound; inbound marketing involves providing something of value to customers to attract them to your business, like blogs, infographics, videos, etc., in addition to online banners, pay per click ads, and so on. Usually in traditional commerce, marketing is mostly outbound, and takes the form of advertisements in the print media, radio, and TV, hoardings and billboards, pamphlets and flyers, and so on.
- Marketing methods mentioned above facilitate personalized, one to one marketing for ecommerce sites; this is not possible in traditional methods like hoardings and TV ads – these are generic, one way ads.
- E-commerce offers multiple payment options while in traditional commerce, not all establishments offer this convenience. Most accept only cash, or cash and credit cards. Though of late, some have started accepting online wallet payments – still, it is not as widespread as in E-commerce.
- In traditional commerce, goods are delivered to the customer instantly – unless in the case of large appliances where they may have to wait for delivery for a couple of days; however in E-commerce, the customer always has to wait for a few days for delivery. This can be further delayed in times of inclement weather, turbulent situations, pandemics, and so on.
- E-commerce sites have minimal overheads as compared to traditional commerce establishments. Ecommerce sites need no or very few employees, and save on renting showrooms in prime locations, décor, displays, power, and utilities. All they need is warehousing facilities in any low-rent location, and a small office. Whereas, the operational costs and overheads of those engaged in traditional commerce are very high – high rents for showrooms, large staff, and so on.
- Due to the above-mentioned reasons, Ecommerce sites are able to offer big discounts to their customers, and still make a profit; this is possible rarely in traditional commerce.
- An e-commerce site can offer a huge variety and range of products; often online stores do drop shipping, wherein they place orders directly with the manufacturer or large scale wholesaler who ships the product to the end user, further reducing costs for the ecommerce seller. This means that the ecommerce retailer need not bother about warehousing space. However, in traditional commerce, the range and variety of products offered depends on the availability of space in the store.
- A brick and mortar store services customers within their immediate neighborhood or geolocation; however, in ecommerce, the seller can serve customers across the world. Ecommerce sites have a global reach.
- In traditional commerce, the transactions can only take place during working hours -usually between 9 am to 6 pm, or something similar, and on working days; shops remain closed on certain days, like festivals, Sundays, and so on. However, in e-commerce, the transactions can be performed at any time during the night or day, and 365 days a year.
- In traditional commerce, business usually happens between a business, and a customer, or end user, or at the most, from one business to another. For example, the customers of a packaging materials business will be other businesses – that’s called a B2B (business to business commerce) However, in e-commerce, exchange of goods can take place in the following ways:
- B2C (to customers/end users directly)
- B2B – to other businesses
- C2C – customers who want to sell a product they have bought either in brand new condition, or after using it for some time (sites like eBay, OLX, etc.)
- Intra-B Commerce – exchange of goods within an establishment through online channels.
- E-commerce offers a great deal of convenience to the customer as they need not drive through heavy traffic, wait in queues at the stores, and so on. They can simply browse and order what they want from the convenience of their homes.
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