What’s the difference in traditional vs e commerce business? With a traditional business, you require staff, premises, stock and a large investment to start. However, with an e commerce business, there’s far lowers costs involved. Most people already have a laptop and internet connection to start an e commerce business with.
You don’t need to hold stock or even anything of your own to sell. With an e commerce business model known as affiliate marketing, you can promote other people’s products and services and earn commissions based on the sales. Other models such as print on demand or direct selling allows e commerce owners to partner with companies who provide a product/service, sell products directly from a website, and organise the delivery through a third party company.
So e commerce is far easier to enter into for the modern day entrepreneur or “solopreneur”. A traditional business requires a lot more investment and the addition of managers and staff to run. An e commerce business can collect customers from a website and refer them to other people’s products online. So a single person working on their laptop can generate thousands of sales using automation and online systems to find customers.
Traditional Vs E Commerce – Costs
Many high street stores have closed because they simply can’t compete with the internet and e commerce. High street property rental is costly but an internet business can be based anywhere. Amazon is a good example of an e commerce business. Over 50% of Amazon’s revenue comes from entrepreneurs who run businesses from home – promoting other people’s products and services.
How can high street stores compete when Amazon’s prices are so low? More and more people are now shopping online because it’s so much more convenient and cheaper. Business owners have to turn to internet sales to survive.
In comparison with a traditional business, the entry level costs of an online business are far lower too. A traditional business requires a business premises to locate which needs to be near its customer base.
Traditional vs E Commerce – Convenience
An e commerce business can be run from anywhere in the world from a laptop. With a drop shipping business there’s slightly more involvement in terms of customer interaction and organising deliveries etc. But an affiliate business can be much more hands off. See affiliate marketing vs drop shipping. Through using automation with an online business, e commerce owners can largely automate the process of online selling. This means they can work when they want because customer services and product delivery are dealt with by product owners, not the referrers.
This makes an online e commerce business one of the most flexible in terms of bot when and where you want to work.
Conversely, a traditional business requires you to turn up, or at least pay your staff to turn up. Physical businesses are located in a specific location and this means you need to be too. This also limits the business to the local population, unless the business caters to online selling as well as a local premises.
Scaling Up – Traditional Vs. Online Business
An online business has fewer limitations regarding who it can reach. While a traditional business is limited to the shop size, and its ability to sell to the local population, an online business is less limited. With an online business, you can sell to anyone globally.
Through the use of websites and checkout portals, an online e commerce business can cater to far more people than a traditional business. In terms of scale, a traditional business is limited by it’s ability to sell multiple items simultaneously. An e commerce business can sell multiple products from a website instantaneously, providing there’s a flow of customers through the site.
If an e commerce owner can become profitable, they can scale up their business quickly too, simply by spending more on advertising. Once the systems are in place, this is straight forward and just like turning on a tap. More advertising means more sales. But with traditional business, it’s more limited to the physical nature of the business. People have to turn up in person to a physical shop, whereas people can purchase items online from their homes or phones.
Traditional vs E Commerce Business – Summary
Traditional businesses are suffering at the moment due to increased online shopping, convenience and lower costs. So if a specific traditional business model can be replaced by an online business, it’s probably going to be! Traditional businesses have far more costs involved than online e commerce businesses have. Anyone can start an online business at a far lower cost than they could a traditional business.
With an online business you need a laptop and internet connection, which many people already have. A traditional business requires staff, premises, stock and advertising. An online e commerce business can be up and running much more quickly, with less hassle and costs and also scaled up to a global audience. Traditional businesses are limited to their location and their ability to serve a local audience.
For more information and to start an online e commerce business, access a free video series and learn about the different e commerce models available.