Commerce is an essential pillar of any nation and the world in general. In simple terms, it is the exchange of goods, services, products, etc., on a large scale between businesses or nations and so on.
This system of goods exchange has been around since civilisation’s birth; the barter system’s early form was reported in the Harappan civilizations and similar periods.
After millions of years of evolution, the simple barter system has also evolved; we have foreign exchange committees, stock markets, cryptocurrency, and so on.
All these elements play a pivotal role in both traditional commerce and e-commerce.
- E-commerce allows businesses to operate online without needing physical stores, while traditional commerce is based on brick-and-mortar stores.
- E-commerce is a more convenient way of shopping, providing 24/7 access to goods and services, whereas traditional commerce is limited by store hours.
- E-commerce enables businesses to reach a global audience, while traditional commerce is limited to a local or regional market.
Traditional Commerce vs E-commerce
The difference between traditional commerce and e-commerce is that the former refers to the exchange or, rather, a commercial transaction of goods, data, and other services, mostly in person or face-to-face. The latter is done entirely with the help of the Internet; that is, the same transaction of goods, etc., is done via the Internet.
|Parameters of comparison||Traditional Commerce||E-commerce|
|Process of transaction||A Direct transaction is done between the buyer and the seller.||An indirect transaction between the buyer and the seller.|
|Accessibility||Only when the business is open, thus is it accessible only at certain times of the day.||The websites are up and running all around the clock, 24*7.|
|Maintenance||The seller needs to maintain a warehouse and display the goods and products they offer to attract customers.||Mostly they need to maintain a warehouse physically, and the website, once created, is up and running without much fuss or attention.|
|Inspection||The goods can be physically examined. For example, the customer can get a perfect size while buying shoes, clothes, etc.||Such facilities are not easily available.|
|Scope of business||Restricted to a certain geographical location.||Worldwide transactions can be done.|
What is Traditional Commerce?
As defined before, traditional commerce refers to the practice of selling items or services, which is done in person and face-to-face dealings.
This system has existed since the very dawn of civilization; the earliest form of traditional commerce was the barter system, where people used to exchange goods as there was no currency like money, etc.
This has then evolved and now we see shops, shopping malls, and so on where people sell goods to interested buyers.
These businesses are geographically restricted to a general area and do not have a worldwide audience.
The major advantage of traditional commerce is that the person can see the quality, fit, ingenuity, or whatever the case may be of the product or service they are purchasing.
The buyer also feels a sense of brotherhood as they can directly support their local business and help the community grow.
Though they are not accessible 24*7, there are traditional businesses in remote parts of the world where there is poor or no internet.
Also, there is no headache of getting scammed or anything, as there are no hackers or fake sellers on this model.
These business models are based on the supply side, and linear model where they take in components, create products and sell them to the user.
What is E-commerce?
E-commerce or electronic commerce is the new age of commerce where the buyer and the seller need not interact on a physical or face-to-face basis but contact over the internet to buy and sell products.
It was in the year 1991 when the Internet was opened up to commercial businesses, and e-commerce has only bloomed since then.
Today it is accessible and availed by most of the urban population in developing countries and all developed country populations.
There are 3 major business models in e-commerce, which are B-2-B transactions that are business-to-business, B-2-C, Business-to-consumer, and Consumer to consumer or consumer-to-business.
There is also the business-to-administrator model, where a business sells any item or service to public administration or government bodies and vice versa, where the administrator sells to the business.
The e-commerce site has boosted even those who were not so sure to buy materials via the internet turning to it.
The advantages of this are high too, from the 24-hour availability, the ease of access given one has working internet, the worldwide delivery and beggar scope of business these help the buyer and the seller.
There is also a lower cost to maintain the business as the seller only needs to maintain the warehouse physically, and programs and AIs do the storefront.
However, there are some disadvantages, including theft or scams and even getting fake or damaged goods, as the buyer cannot physically examine the good.
The buyer must wait a few days before getting the item, and returns can also be a hassle.
Main Differences Between Traditional Commerce and E-commerce
- Traditional commerce means the commercial transaction of material goods or services on a large scale without using the Internet. On the other hand, E-commerce is done via the Internet to transact goods, etc.
- The business relationship in traditional commerce is linear, while in e-commerce, it is end-to-end.
- The scope of business is restricted to a certain geographical area in traditional commerce, while in the case of e-commerce, it can be done worldwide.
- The delivery of products is mostly instant in the case of traditional commerce, while in the case of e-commerce, it takes time to deliver products.
- In traditional commerce, the seller needs to maintain both the warehouse and storefront to attract customers. In contrast, in the case of e-commerce, they mostly need to maintain the warehouse, and the website, once it is up, is generally easy to maintain given they have the technical knowledge.
- Traditional commerce is mostly focused on the supply side while
e-commerce is based on the demand side.
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Chara Yadav holds MBA in Finance. Her goal is to simplify finance-related topics. She has worked in finance for about 25 years. She has held multiple finance and banking classes for business schools and communities. Read more at her bio page.