6 Differences Between E-Commerce & Brick-and-Mortar Stores
Both brick-and-mortar and e-commerce businesses are often shoved into the same classification of retail. After all, to shoppers, it's all just "shopping.".
However, while the two have their similarities, there are a few key differences that are worthwhile to understand if you're planning to launch a retail business.
1 - Locations
It's understandable that one might conflate brick and mortar business and e-commerce, since both involve strategies with which to move products and services. The biggest differences may be in the ways the items are sold.
E-commerce operations don't necessarily include a physical storefront, particularly when they begin. Instead, these "digital natives" sell products online through a website and virtual shopping cart. Orders are entered remotely, and the goods are then mailed to the customers.
Brick-and-mortar businesses, by contrast, have physical locations. They might consist of a single outlet or a chain of stores. However, more and more brick and mortar businesses are adopting e-commerce platforms, merging the two to create a seamless shopping experience for their targeted audiences.
2 - Sale Transactions
Although technology is steadily advancing to allow remote exchanges such as Apple Pay and mobile transactions, most brick-and-mortar outlets accept only cash, credit cards, or checks as legal means for purchase of their goods and services.
E-commerce outfits also accept cards, but they don't have a way to take payment by cash or checks. They can accept other options for completing a transaction such as PayPal. Some e-commerce platforms - but only the rare physical store - also accept cryptocurrency tender like Bitcoin.
Thus, there's payment flexibility on both sides, when you compare brick and mortar versus e-commerce, but the options differ due to the structural capabilities of each approach.
3 - Omnichannel Flexibility
Many large chain stores, such as Walmart, Target, or JC Penney, have adopted an omnichannel focus, which means they can connect with shoppers through more than a single channel or shopper touchpoint.
They can send out SMS messages, contact you by email, provide information via their website, or chat with you via customer service representative on the phone. They can also accept alternate payment options, like Google Wallet or Amazon Payments.
Many small physical retailers struggle to effectively deploy an omnichannel approach to selling their goods or services. E-commerce vehicles, on the other hand, tend to have more omnichannel flexibility as they accept more payment methods, do most of their advertising over social media, can connect with shoppers through phone or chat, and use mobile apps to help shoppers discover products and services.
4 - Marketing
Brick-and-mortar and e-commerce stores can market and promote their organizations differently as well. Brick-and-mortar stores will often use traditional forms of advertising such as television and radio commercials, newspapers, and billboards.
E-commerce organizations, on the other hand, can purchase advertising through traditional methods, but those are rarely regarded as effective when compared with social media and digital advertising. Because they operate generally in the online space, digital advertising tends to be more effective for these firms, so they see little reason to venture into older marketing approaches.
The clear majority of brands - both brick-and-mortar and e-commerce - advertise on social media and other online platforms. However, some brick-and-mortar businesses have not caught up and have failed to take advantage of the online advertising available.
Additionally, as digital native e-commerce businesses grow, many have expanded into complementary physical locations to offer a seamless, branded, cross-channel experience for their shoppers. In these cases, all forms of advertising can be used effectively.
5 - Customer Attention
A prime challenge for e-commerce organizations is how to deliver a personalized experience to every consumer. You're not physically present while people are shopping; although you're effectively just an email, phone call, or chat box away, and consumers tend to crave instant gratification, which means they'll often abandon a cart whenever they have a question rather than wait (or worse, have to search) for a response.
Brick-and-mortar shops, on the other hand, have an advantage in being able to provide - and even volunteer - immediate customer service. There is almost always someone right there in the store for visitors to talk to. Even if the customer service is subpar, most consumers prefer to speak with a real person face to face, rather than through a phone.
6 - Operating Expenses
Intuition says that e-commerce expenses are significantly lower than brick and mortar retail, which is one reason so many have started online businesses. However, it's not always reality.
Pure-play e-commerce retailers can build a brand identity and begin to realize revenue, making a simple, advantageous start for themselves. But after an initial period of growth, infrastructure costs make it difficult to stay profitable. There are expensive shipping and return expenses, the massive costs of new customer acquisition, lost customers to a close competitor, and growing expenditures for increasing web hosting.
In the last few years, we've seen a large number of e-commerce retailers turn to brick-and-mortar platforms because it's cheaper, even though there are expenses such as rent, inventory warehousing, employee labor, property taxes, and more.
E-commerce is not always more expensive, as a variety of factors influence this, including the industry segment, market values, marketing campaigns, business plans, and the owner's financial dexterity. In all, depending on your business abilities and industry, one retail platform could be more affordable than the other. Increasingly, however, retailers are turning to both.
There's a lot to consider in the conversation about brick-and-mortar and e-commerce retail. It's vital to weigh both sides of the spectrum carefully before you decide on the best business platform for your new company, but keep your shoppers' best interests in mind as you do so.
About the writer: Anna Johansson is a freelance writer, researcher, and business consultant. A columnist for Entrepreneur.com, Forbes.com and more, Anna specializes in entrepreneurship, technology, and social media trends. Follow her on Twitter @Number1AnnaJo and LinkedIn.
About the author: