E-Commerce Vs Traditional Business - Defining Differences

Posted by Ma. Jessica Paula Florita
May 18, 2022
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In this age of technology, combined with the force majeure that is the pandemic, we witnessed traditional businesses cling to the power of e-commerce landscape to remain relevant and continue what they have started. 

If you plan to move forward or thinking of starting your enterprise, a good starting point would be to identify the significant differences of e-commerce vs. traditional commerce and what they bring to the table. 



The difference between e-commerce and traditional commerce




Market Reach

Traditional business 
e-Commerce allows your geographical reach to stretch beyond its boundaries through the logistics and distribution capacities of e-commerce platforms such as Amazon, eBay and Shopify. It’s also possible to collaborate with courier partners like FedEx, USPS, UPS, Aramex, ShipBob, and DHL.  Traditional businesses can only offer their products or services to the consumers with close proximity to them. Their physical location ties them to the customers in their neighborhood, making it hard to provide for those in far areas. 
Turnaround time for e-commerce shipment is longer compared to that of physical stores because of the process it goes through from checkout, warehouse processing to delivery.  



One upside of  traditional business is the prompt receipt of product. If consumers need something in a jiffy, making a purchase from a physical shop is the best option.  
An e-commerce store never closes and that’s what convenience is like. Online stores are open 24/7, all year round which is an enticing offer as you can shop at any time of the day you want. 


Operating Hours 

Physical stores follow a particular timetable for operations — normally an 8-hour period — for an entire week, excluding holidays. If you want to operate outside your usual working hours, you’re going to incur expenses such as overtime pay and night pay differential  
Digital payments (e.g. credit and debit cards, bank and wire transfers, e-wallets) are dominating the e-commerce arena. Since they operate online, they also settle purchases in the same manner.  Cash on delivery (COD) is also feasible for some retailers, depending on the circumstance.  


Payment Methods 

A mix of both cash and online payments are being embraced nowadays by traditional businesses, although contactless payments are becoming a trend for these entities in an effort to ensure safety and health protocols.   
There are less customer engagements for e-commerce businesses because of its digital nature. However, you can make up for this by creating a personalized experience for your customer niches. 


Customer Interactions 

Good customer interaction is an advantageous feat for traditional businesses as they can personally offer and assist customers in making a purchase and answering any questions they may have.  
Accounting for e-commerce entails quite a tedious process as you have to manage your transactions in your sales channel/s and migrate them to your accounting platform. In this facet, you also encounter inventory management and COGS to keep your records accurate.  



A big difference between e-commerce and traditional business is the latter’s straightforward nature in bookkeeping and accounting. For a seamless management of your numbers, consider using cloud accounting software.  



Choosing between e-commerce vs traditional commerce will dictate how strong your entrepreneurial foothold will be. Embracing and exploring the options available for your entity not only keeps your operations existent, but builds business resilience by being present in various channels, should any unprecedented circumstances present themselves again. Assess the strengths of each platform, their drawbacks and the value they bring to your company. This kind of adaptiveness is a must in a volatile industry like the business sector so you can keep up with the competition as well.  

Want to stay on top of your finances? Let D&V Philippines do the work for you. We offer a suite of finance and accounting solutions for both e-commerce and traditional businesses from different verticals through our in-house accounting professionals. Grab a copy of our guide Succeeding Online: Refining Your Accounting Processes through Technology and Automation to know more or you can also schedule a free consultation with our experts.  


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