Difference Between Similar Terms and Objects

Difference Between E-commerce and Retail

We all love and enjoy shopping. Not only does it provide basic needs but it is also fun and therapeutic. While shopping has been used as a trading method since ages ago, the methods and avenues used have greatly changed over time. The advancement of technology has created various effective, safe and time-saving avenues, such as online shopping.  This is arguably one of the greatest advancements, where one can shop all over the world from the comfort of their home. Although e-commerce and retail are very similar, they differ in the manner in which trade is carried out.

 

What is E-commerce?

Short of electronic commerce, these are commercial transactions carried out through an electronic network such as the internet. In this case, businesses list their products on an online platform whereby consumers can view the product descriptions, prices, and images. Upon choosing a product, the consumer can then check out and pay for the goods through an electronic payment method. The goods are then delivered to the consumers’ location. This has not only improved trade but also improved inter-trade all over the world.

Types of e-commerce include:

  • Business to Consumer (B2C) – This is the sale of goods and services from a business to a consumer
  • Consumer to Consumer (C2C) – This is the sale of goods and services from a consumer to another consumer.
  • Business to Business (B2B) – This is the sale of goods and services from a business to another business enterprise. Examples of B2B services include market research, training, technical support, and online marketing, just to name a few.

Advantages of e-commerce include:

  • It serves customers within a wide geographical location
  • The cost of starting an e-commerce business is low
  • Customers can shop on a 24/7 basis
  • It allows comparison of products pricing from different e-commerce sites
  • It’s convenient as customers can shop from the convenience of their homes
  • It is easy to source for rare items online

On the other hand, the disadvantages include:

  • It may be harder to close a sale as consumers do not have a face to face communication with the seller
  • Consumers can only see and touch a product after purchasing.
  • It may take long before goods reach consumers
  • High shipping costs
  • It may be harder to return defective items

 

What is Retail?

This is the sale of goods in small quantities from a single point such as a departmental store, supermarket, shop or mall in small quantities. For instance, a consumer in dire need of a mobile phone will purchase it at the nearest store. The retail model is set up such that a customer can touch products and also read product descriptions of items on display before ordering. The mode of payment is mostly cash, credit cards, and mobile payments. While adopted modern marketing methods, most still use traditional marketing methods, which may reach a smaller market.

Even with technological advancement that led to the development of Ecommerce, the retail business is still thriving with physical shops being opened in shops, malls, and airstrips all over the world.

Advantages of retail include;

  • Consumers have a face to face communication with the seller hence improving the chances of closing a sale
  • Consumers can see and even touch a product before purchasing. This minimizes the possibility of purchase returns
  • Goods are obtained immediately after a purchase
  • Shipping costs are inexistent
  • It is easy to return defective items

On the other hand, disadvantages include;

  • It only serves people within a specific region
  • The costs of starting a retail business are high due to additional costs such as store rent
  • It makes it hard to compare pricing within different vendors
  • Although some stores are open 24/7, most stores are only open up to a specific time

 

Similarities between E-commerce and Retail

  • Both aim at providing products and services to the consumer

 

Differences between E-commerce and Retail

Definition

E-commerce refers to commercial transactions carried out through an electronic network such as the internet. On the other hand, retail refers to the sale of goods in small quantities from a single point such as a departmental store, supermarket, shop or mall in small quantities.

Accessibility

While e-commerce offers accessibility as it serves customers within a wide geographical location and is open on a 24/7 basis, retail is only accessible to consumers within a specific region and may not be open on a 24/7 basis. 

Customer focus

Ecommerce has a larger consumer focus and reach. On the other hand, retail has a smaller consumer focus and reach.

Shopping process

In e-commerce, businesses list their products on an online platform whereby consumers can view the product descriptions, prices, and images. Upon choosing a product, the consumer can then check out and pay for the goods through an electronic payment method. The goods are then delivered to the consumers’ location. On the other hand, customers in retail visit the physical stores whereby they can touch products and also read product descriptions of items on display before ordering, after which they purchase the product. 

Market competition

While ecommerce faces global competition, retail faces local competition.

Initial costs

While the cost of starting an e-commerce business is low, the costs of starting a retail business are high due to additional costs such as store rent.

Shipping costs

E-commerce is expensive due to shipping costs. On the other hand, retail does not have shipping costs.

Payment options

While e-commerce does not have the cash payment option, retail has the cash payment option.

Pricing comparison

E-commerce makes it easier to compare pricing with different vendors while retail makes it hard to compare pricing with different vendors.

Goods ownership

In e-commerce, goods are not obtained immediately after purchase. On the other hand, goods are obtained immediately after purchase in retail.

E-commerce vs. Retail: Comparison Table

 

Summary of E-commerce vs. Retail

E-commerce refers to commercial transactions carried out through an electronic network such as the internet whereby businesses list their products on an online platform. Consumers then view the product descriptions, prices, and images. Upon choosing a product, the consumer can then check out and pay for the goods through an electronic payment method. The goods are then delivered to the consumers’ location. On the other hand, retail refers to the sale of goods in small quantities from a single point such as a departmental store, supermarket, shop or mall in small quantities. Customers visit the physical stores where they can touch products and also read product descriptions of items on display before ordering, after which they purchase the product. While the future of business lies in e-commerce, the retail industry remains an important aspect.

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[0]Image credit: https://live.staticflickr.com/3930/15556037895_d5ea665b8b_b.jpg

[1]Image credit: https://storage.needpix.com/rsynced_images/ecommerce-1706103_1280.png

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[4]Dennis C & Pantano E. E-Retailing. Routledge Publishers, 2004. https://books.google.co.ke/books?id=asAwkr48ul0C&printsec=frontcover&dq=Difference+between+Ecommerce+and+Retail&hl=en&sa=X&ved=0ahUKEwi6qfWY1NPnAhWkDWMBHVaNBxsQ6AEIfDAJ#v=onepage&q=Difference%20between%20Ecommerce%20and%20Retail&f=false

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