14 Difference between e-commerce and Traditional Commerce

Electronic Commerce

When you’re running a business in today’s fast-paced consumer landscape, you may be thinking about adding an eCommerce option to your brick-and-mortar business. The truth is, you can easily have both, and doing so is a great way to boost your revenue and grow your business.

To help you compare and contrast, we’ve laid out how both eCommerce and traditional commerce can help your business thrive.

Electronic commerce is very much like traditional commerce. It also involves and exchange of goods. But the exchange of goods is conducted online. Technologies such as email, electronic data interchange and electronic fund transfer are used to track transactions and receive payments. Some of the differences between electronic commerce and traditional commerce are explained briefly below.

Traditional Commerce

Traditional commerce involves any business exchange that takes place face-to-face located in a physical store space. With traditional commerce, consumers have the option to come in personally to buy your products and services. Some of the most important characteristics of traditional commerce include providing more personalized service and giving the customer a chance to use all five senses before making a purchase. By interacting with consumers in these ways, you’re better able to form stronger relationships with them, which will help you achieve the ultimate goal of creating long-term customer loyalty.

While having a storefront is a great way to provide personalized service, it carries some hefty costs. In traditional commerce, the brick-and-mortar location cost is generally very high whether you’re renting or buying the space. Once you obtain your space, you also need to hire staff for sales, accounts, and management. As a retailer, you’ll also need to maintain stock of the products provided due to which a huge amount of money remains blocked in business.

Your store has to be located centrally so that the customers can visit easily. Traditional showrooms run for a limited time like from morning to evening and from Monday to Saturday only. Besides the high overhead costs, there is also a limitation on potential expansion in the future.

there are Differences between e-commerce and traditional commerce

1. Cost effective

E-commerce is very cost effective when compared to traditional commerce. In traditional commerce, cost has to be incurred for the role of middlemen to sell the company’s product. The cost incurred on middlemen is eliminated in e-commerce as there is a direct link between the business and the customer. The total overhead cost required to run e-business is comparatively less, compared to traditional business.

For example, in running an e-business, only a head office is required. Whereas in traditional method, a head office with several branches are required to cater to the needs of customers situated in different places. The cost incurred on labour, maintenance, office rent can be substituted by hosting a website in e-business method.

2. Time saving

It takes a lot of time to complete a transaction in traditional commerce. E-commerce saves a lot of valuable time for both the consumers and business. A product can be ordered and the transaction can be completed in few minutes through internet.

3. Convenience

E-commerce provides convenience to both the customers and the business. Customers can browse through a whole directories of catalogues, compare prices between products and choose a desired product any time and anywhere in the world without any necessity to move away from their home or work place.

E-commerce provides better connectivity for its prospective and potential customers as the organization’s website can be accessed virtually from anywhere, any time through internet. It is not necessary to move away from their work place or home to locate and purchase a desired product.

4. Geographical accessibility

In traditional commerce, it may be easy to expand the size of the market from regional to national level. Business organizations have to incur a lot of expenses on investment to enter international market. In e-commerce it is easy to expand the size of the market from regional to international level.

By hosting a website, by placing advertisements on the internet and satisfying certain legal norms, a business can penetrate into global market. It is quite easy to attract customers from global markets at a marginal cost.

 

5. Introduction of new products

In traditional commerce, it takes a lot of time and money to introduce a new product and analyze the response of the customers. Initially, cost has to be incurred to carry out pilot surveys to understand the taste of the customers.

In e-commerce, it is easy to introduce a product on the website and get the immediate feedback of the customers. Based on the response, the products can be redefined and modified for a successful launch.

6. Profit

E-commerce helps to increase the sales of the organization. It helps the organization to enjoy greater profits by increasing sales, cutting cost and streamlining operating processes.

The cost incurred on the middlemen, overhead, inventory and limited sales pulls down the profit of the organization in traditional commerce.

7. Physical inspection

E-commerce does not allow physical inspection of goods. In purchasing goods in e-commerce, customers have to rely on electronic images whereas in traditional commerce, it is possible to physically inspect the goods before the purchase.

8. Time accessibility

Business is open only for a limited time in traditional commerce. Round the clock (24 x 7) service is available in e-commerce.

9. Product suitability

E-commerce is not suitable for perishable goods and high valuable items such as jewellery and antiques. It is mostly suitable for purchasing tickets, books, music and software. Traditional commerce is suitable for perishables and touch and feel items. Purchasing software, music in traditional commerce may appear expensive.

10. Human resource

To operate in electronic environment, an organization requires technically qualified staff with an aptitude to update themselves in the ever changing world. E-business has difficulty in recruiting and retaining talented people.

Traditional commerce does not have such problems associated with human resource in non electronic environment.

11. Customer interaction

In traditional commerce, the interaction between the business and the consumer is a “face-to-face”.

In electronic commerce, the interaction between the business and the consumer is “screen-to-face”. Since there is no personal touch in e-business, companies need to have intimate relationship with customers to win over their loyalty.

12. Process

There is an automated processing of business transactions in electronic commerce. It helps to minimize the clerical errors.

There is manual processing of business transactions in traditional commerce. There are chances of clerical errors to occur as human intervention takes place.

13. Business relationship

The business relationship in traditional commerce is vertical or linear, whereas in electronic commerce the business relationship is characterized by end-to-end.

14. Fraud

Lot of cyber frauds take place in electronic commerce transactions. People generally fear to give credit card information. Lack of physical presence in markets and unclear legal issues give loopholes for frauds to take place in e-business transactions.

Fraud in traditional commerce is comparatively less as there is personal interaction between the buyer and the seller.

 

article reference:

-https://staxpayments.com/blog/ecommerce-vs-traditional-commerce-should-you-have-both/

-https://accountlearning.com/14-differences-between-e-commerce-and-traditional-commerce/

-https://www.ipixtechnologies.com/how-ecommerce-is-different-from-traditional-commerce.html


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