Understanding Retail vs. E-commerce: The Difference

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There has been a substantial shift in the way consumers think. From shopping style to technology, everything has evolved from head to toe. Conventional shopping techniques are also part of this wave of transformation, where most things have shifted online. 

Many small and medium businesses have opened online portals for their offline stores, which only big firms managed a few years ago. Now that technology and mindset have evolved, so has the industry. 

So, where do traditional and e-commerce lie? Traditional commerce, or the retail industry, has an offline face to it. It means shop owners have a property or pop-up stores for their products, and customers can walk into the store to shop. Whereas electronic commerce, also known as e-commerce, has changed the online shopping experience.

Abundant differences exist between the two. This article contains information about the retail and e-commerce industry, what should be considered while establishing a business, success measures, etc. First, let’s look at the difference between e-commerce vs. retail.  

Retail vs. E-commerce for Consumers

The main motive for both retail and e-commerce is to sell products to end customers. Except one of them is conducted online. There are several ways of selling products to consumers. For instance, it can be done in retail by building brick-and-mortar stores, shopping complexes, person-to-person sales, etc. Whereas in e-commerce, the products can be displayed in a marketplace, social media, website, or email. 

It depends on when and how the customer wants to buy products. If you look deep into both industries, other significant differences should be considered to understand them. 

The shopping experience

Similarity– Both retail and e-commerce carry out multiple ways to enhance the shopping experience for their customers. They display the products in their stores in an appealing way that gathers customers’ attention. Moreover, brand identity plays a crucial role in both retail and e-commerce. 

Differences– Online customers must believe in customer reviews to get real-time exposure to the product. They don’t get to try the products physically to know what suits them. This is ultimately the opposite with retail shops, where customers can touch, feel, and analyze the product and only then make decisions. In an estimate, it was seen that 20% of items purchased online are returned, which is only 9% in retail stores.

Customer service

Similarities– Both retail and e-commerce have customer service to resolve queries. The concerns mainly deal with product returns or possible defects in the product. 

Differences– Physical stores serve proactive customer support and hire sales associates who offer help and assistance to the customers after thoroughly analyzing their queries related to the product. However, e-commerce has a customer support team and offers multiple options, like live chats, emails, portals, direct messages, etc., to interact.  


Similarities– Offline shopping also offers drop-out services. However, it depends on what kind of product the consumer buys. For example, if the customer buys a piece of furniture, then the store offers handling and shipping services to the customer.

Differences– E-commerce stores bring home-like comfort to your shopping experience. Customers can log in to any computer, mobile phone, or tablet device. They get multiple varieties of purchases within a few clicks. The order is also placed in no time, and the items are delivered to their doorsteps within the desired time frame. Physical stores demand time and little monetary investment (in transportation). 

Retail vs. E-commerce for Businesses

As a business owner, choosing your store type entirely depends on your requirement and the type of products you are selling. Opening an offline store requires heavy investment as you must buy some property to set up an offline store, pleasing interiors, etc. The online marketplace requires little investment because you deal with just your products and the online store. The more money you put into technology, the better your online marketplace performs. 

Investment level and cost

Similarities– As discussed, investment happens in both retail and online stores. It depends on multiple factors associated with the investment.

Differences– Online stores save you more costs compared to traditional stores. E-commerce comes with digital marketing tools, SEO building, social media ads, etc., which are cheaper compared to property rates, and building brick-and-mortar stores. Moreover, the regular maintenance costs of shops is almost negligible in online shopping. 


Similarities– Both physical stores and online websites pay close attention to the inventory and tracking and maintain an automated record of everything. 

Differences– Offline stores, however, require some paperwork and manual operations, including hiring employees and maintaining inventory and space. 

Selling products via multiple channels

Similarities– Retail and e-commerce stores establish multiple channels to offer products. With the help of various touch points such as social media, customer reviews, or email marketing, you can keep the shoppers engaged so they can easily buy and purchase products.

Differences– The method of creating an omnichannel is the most significant difference. Offline stores build both in-store facilities and an online version of that store. At the same time, e-commerce marks its presence across different online channels via social media, websites, and mobile apps.  

What to Consider When Choosing Between Retail and E-commerce for your Business

There are certain factors that pop-up while choosing between retail and e-commerce. These are-

  • Business model:  Before choosing between retail and e-commerce, create a business model. Whether your products are best suited for online stores or pop-up stores, there are some questions you can ask yourself–
    – Will you be a wholesaler or distributor?
    – Who is your target market?
    – Would you be directly selling your products or being a middleman? 
  • Start-up costs: Another vital factor is calculating your expenses. Consider your business calculations concerning the two models and compare them. Calculate how much it will cost to establish your business online and offline.
  • Size and scope: Evaluate the future of your business and consider its scalability before concluding. What business size will it be in the future? Depending on the answer, you can pick either one or both. 

What is an E-commerce Retail Model?

Retail e-commerce demands a web presence even if the company has a physical presence. Retailers with offline and online stores can reinforce their offline presence on online channels. Moreover, they can use their physical stores to establish their business and look for various innovative strategies to market their products. 

The e-commerce retail models currently succeeding

The most prevalent models in the retail e-commerce industry are B2B and B2C, which sell products directly to businesses or customers. However, the simplest models like this also require an innovative framing of products that can target the intended customers. 

The most innovative ecommerce models

D2C, or direct-to-customer and dropshipping, are considered the newest and most innovative e-commerce models. Both models are pretty similar, except that dropshipping acts as a middleman, whereas D2C directly sells products to customers. 

Classic B2B and B2C models continue to thrive

Direct marketing channels are still the most effective as they utilize email, social media, and online campaigns to a great extent. You should have a rigid and effective business model to convert your new customers to loyal ones. 

How to Measure the Success of Your E-commerce Retail Model

To measure the success rate and effectiveness of your e-commerce model, there are various KPIs or metrics designed to measure it. Every company produces abundant data that can be evaluated and analyzed to measure success. These are– conversion rates, customer acquisition cost (CAC), average order value (AOV), social media engagement, bounce rate, return rate, shopping cart abandonment rate, and many more. 

There needs to be more than just knowing all the metrics, as every business requires a different set of KPIs. But how would you know which metric is best suited for your business? The answer depends mainly on the business model, sales and marketing strategy, and your long-term business objective. 

How Shopping has Already Changed: The Rise of Online Shopping

Earlier, online shopping was considered a mere futuristic aspect of shopping, which didn’t come to the forefront initially. But soon after the COVID-19 pandemic, we saw a sharp increase in the e-commerce industry. In 2021, the global e-commerce rate grew at the rate of 17.1%. In 2023, the global e-commerce market is expected to generate $6.3 trillion in sales. 

All thanks to new technology such as digital tools, cloud-based software, and and so much more. The future of e-commerce is vast and is expected to be surrounded by the latest and highest technology possible. Another common business model observed these days is the availability of both offline and online stores simultaneously.

Whatever the option, we can expect high customer demand and a transformation of conventional shopping methods. Omnichannel retail caters to customers’ needs in every aspect, ensuring a bright future for the retail e-commerce industry. 

Onwards to the Future: Omnichannel Retail and Beyond

Omnichannel, or multichannel retail, is the next big step toward the e-commerce industry’s future. It strengthens sales, customer relationships, and revenue generation and creates more entrepreneurial opportunities. 

The main motive for establishing omnichannel is to provide a comprehensive and effortless shopping experience that allows customers to purchase from any place or device– smartphones, computers, laptops, or even brick-and-mortar stores. 

Another essential aspect of omnichannel retail is the availability of customer services. Customers’ concern is a top priority for most business ventures that cater to customers’ preferences and latest purchases. It not only leaves customers with a satisfied experience but also leaves room for businesses to be better and incorporate feedback. 

Apart from convenience and customer service, some other features are associated with the omnichannel presence. These include:

  • More efficiency: As discussed, omnipresence ensures a smooth customer shopping experience across platforms. The businesses respond to customers’ queries, concerns, and feedback which can be used in promotions and marketing.
  • Personalized experience: Treating customers as data instead of people can cause trouble. Omnichannel builds personalized experiences that serve better and enhance customer experience. 


Retail and e-commerce are two worlds that work for the same motive of presenting various products and services to customers. On the one hand, retail businesses believe more in offline and pop-up stores, whereas, on the other hand, e-commerce builds an entire online channel by using various digital tools. Entrepreneurs can choose any one of the models or combine both, depending on their business type and its scalability in the future. Both retail and e-commerce bring out the best and put customers first. 


What is the difference between retail and sales?

In retail, customers purchase goods from the distributor, whereas in sales, customers purchase goods directly from manufacturers.

What is e-commerce retail?

E-commerce retail means setting up an online store for the customers where products are sold directly to them. Business owners establish multiple channels online, such as social media, websites, marketplace, and more.

What is the retail customer type?

Retail customers are: loyal, impulsive, need-based, wandering, and expect discount offers.

What is retail vs. e-commerce?

Retail means building a physical store to sell the products where customers can walk in and purchase. Whereas e-commerce is an online marketplace where customers can see different products in the comfort of their homes, place orders, and wait for their delivery to arrive.

What is the difference between consumer and retail?

The main difference between consumer and retail is that consumers can consume the product they buy, whereas retail signifies how they can access that product.

What to consider when choosing between retail and e-commerce for your business?

The three main factors that should be considered while choosing between retail and e-commerce are business model, budget, and business scope.

What is an e-commerce retail model?

E-commerce retail is their presence on the web or the internet, whether they have physical stores or online websites. 

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