Online Retail vs. Ecommerce: What’s the Difference?

August 23, 2022
Written by Ampry

You might think there is no difference between online retail and ecommerce. However, each of these is a different type of business model. For example, you can run a retail business or an ecommerce website.While both online retail and ecommerce can allow for online shopping, there is a difference between online retail and ecommerce.Choosing how to label your business does make a difference. First, you must communicate properly whether you’re an online retail business or an ecommerce business. Before you define your business, you should understand exactly what an online retail business is and what an ecommerce business is.If you’re ready to take your small business online, Ampry is ready to help. Schedule your strategy call with us today!

What is Online Retail?

An online retail business will sell a physical product online. It may also be referred to as e-tail or electronic retail. This product will need to be shipped to the consumer. When you run an online store with physical products, it’s often called digital commerce. This is a common business model, especially for a physical store trying to take their business online.Some common examples of online retail include:

  • JC Penney
  • IKEA
  • Khols
  • Best Buy
  • Warby Parker

Pretty much any retail store that has started to provide an online shopping option is known as an online retail store.

What is Ecommerce?

Sometimes, online retail stores are wrongly labeled as an ecommerce business. However, to be a true ecommerce business, you must sell a non-physical product online.Ampry is a good example of an ecommerce business. Since Ampry doesn’t sell a physical product but offers a marketing service, it’s an ecommerce business that serves the business owner.While an ecommerce store doesn’t have to sell a service, the products they sell will need to be digital products. Therefore, an online marketplace that sells downloadable or digital products is also considered an ecommerce platform.An ecommerce business can serve the consumer or the business owner. B2C ecommerce is rather common. This type of business will offer the consumer digital products or services they can use without any need for shipping.It’s also common to find B2B ecommerce businesses. This type of business serves other businesses. This type of business model commonly includes offering services, such as marketing, a website builder, or social media management. In addition, some B2B ecommerce businesses may offer customer service tools or other tools designed to help online stores and other ecommerce businesses.

4 Main Differences Between Online Retail & Ecommerce

  1. Type of Product or Service Offered

An online retailer will offer a physical product that must be shipped to the consumer, while an ecommerce business doesn’t need to ship the product they offer. When it’s a service-oriented business, an online retailer must offer the service to the consumer in person, while an ecommerce website offers the service digitally.With online retail, the consumer has to wait for the product or service to be delivered. On the other hand, ecommerce provides near-instant access to products and services.

  1. Brick-and-Mortar

Another big difference between online retail and ecommerce is the existence of a brick-and-mortar location. While it’s not required that an online retail business have a brick-and-mortar location, many do. However, ecommerce businesses don’t offer a brick-and-mortar location.Many retail stores took their business online to offer both options. This caused the explosion in online shopping through online retail. While you can run an online retail store without a brick-and-mortar location, it’s more common to offer both.

  1. Overhead

Both types of commerce have overhead. However, when you run online retail, you will have a higher overhead than if you run an ecommerce business.Since an online retailer, even without a brick-and-mortar location, has to store products and pay for shipping to the consumer, the overhead is higher. On the other hand, an ecommerce business won’t need to ship products or pay to hold an inventory.Of course, if you’re an online business offering a service, you might not need to hold an inventory. However, you will need the equipment necessary to provide the service.In most cases, an ecommerce business will have a very low overhead. Online retailers can have a lower overhead compared to traditional commerce, but the overhead will still be higher than an ecommerce website.

  1. B2C vs. B2B

Most online retail businesses will be business-to-consumer (B2C) businesses. They will serve the consumer by offering products or services for sale through an online platform or website.Ecommerce, however, tends to be a business-to-business model. An ecommerce website will likely offer a service or product that will help an online retailer or any website or platform online.While there are some exceptions to this, most retailers will serve the B2C market, while most ecommerce websites will serve the B2B market.

Pros & Cons of Online Retail vs. Ecommerce

A closer look at the pros and cons of online retail and ecommerce can help you better label your business. It can also help you decide the type of business you want to start if you’re not already a business owner. Let’s look closer at the pros and cons of both.

Pros of Online Retail

  • Lower overhead compared to brick-and-mortar commerce
  • Offers easier access to the consumer
  • Provides the business with access to consumer data to enhance marketing and customer service strategies
  • Opportunities to outsource customers service, returns, sales, and marketing to free up time

Cons of Online Retail

  • Comes with shipping costs on every product
  • Returns can be difficult to deal with and can become expensive
  • Shipping delays may cause issues with consumers
  • Poor management of your distribution network can cause your brand image to suffer
  • Less control over the customer experience

Pros of Ecommerce

  • Very low start-up cost
  • Low ongoing overhead costs
  • Opens your business up to a larger market
  • Fast delivery of products and services
  • No need to ship anything to the consumer
  • Offers an easy way to improve customer engagement
  • Easy to enhance the shopping experience with the right online tools
  • Provides a shorter sales journey for the consumer
  • Very easy to launch and delivery a new product
  • Provides simple options to target new consumers through digital marketing using website analytics tools

Cons of Ecommerce

  • Can present some security issues
  • It may not work well if your website is unreliable
  • Could struggle to find customers without a good marketing strategy
  • Might have delivery issues with digital products and services

How can Online Retail and Ecommerce work together?

Whether your business targets a specific consumer or caters to small businesses, online retail and ecommerce can work together. The right platform can make a big difference for an online retail business.For example, Shopify is an ecommerce platform that provides many benefits for an online retailer. Selling on Shopify is a rather common option for online retail businesses. It’s an easy way to set up a website and provide online shopping for consumers.Another great way for online retail and ecommerce to work together is on the marketing side of things. When you have a marketing platform, such as Ampry, you can drive more customers to your online retail store. Not only will you have the right tool to get more people to shop online with you, but you will even know which products to advertise to draw consumers in.There are many ways that online retail and ecommerce work together. No matter the type of commerce you plan to engage in, you can benefit from using ecommerce businesses for marketing, accepting payments, gathering customer data, building a website, and much more.

How will Understanding the Difference Between Online Retail and Ecommerce Help my Business?

When you properly understand these two types of commerce, you can better set up your business. It doesn’t matter if you’re taking your small business online for the first time or starting a brand new business, understanding what online retail and ecommerce are is helpful.Labeling your business communicates the right messages to the consumer. For example, if you run an online retail store, a consumer might assume you also have a brick-and-mortar location. They will also quickly understand that you offer physical products shipped directly to them.However, if you label your business as an ecommerce business, the consumer will understand you don’t have physical products. They will know you offer digital products or services delivered instantly, or at least very quickly.Both types of commerce have benefits and can complement each other, too. With online retail, it can be easier to run a retail sale by using the right ecommerce tools, such as Square online to accept payments or Ampry to drive customers back to your online store.Whether you plan to start or expand your business into online retail or ecommerce, Ampry can help. With our platform, you can drive customers to purchase, no matter what type of business you’re running. Schedule your strategy call today and let Ampry grow your online sales to a new level.

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