Gone are the days when the commercial activities like the exchange of goods and services for money, between parties, takes place only in the traditional mode, i.e. the customer has to go to the market, look at the variety of products, choose the required stuff and the purchasing them by paying the specified amount. But with the advent of e-Commerce, people can buy goods, pay bills, or transfer money in just one click.
Many people, still prefer traditional commerce over e-Commerce, due to their dogma that the latter is not safe, however, this is just a myth. Both modes have their pros and cons, so we have simplified you the difference between traditional commerce and e-Commerce.
Content: Traditional Commerce Vs e-Commerce
|Basis for Comparison||Traditional Commerce||e-Commerce|
|Meaning||Traditional commerce is a branch of business which focuses on the exchange of products and services, and includes all those activities which encourages exchange, in some way or the other.||e-Commerce means carryng out commercial transactions or exchange of information, electronically on the internet.|
|Processing of Transactions||Manual||Automatic|
|Physical inspection||Goods can be inspected physically before purchase.||Goods cannot be inspected physically before purchase.|
|Scope of business||Limited to particular area.||Worldwide reach|
|Information exchange||No uniform platform for exchange of information.||Provides a uniform platform for information exchange.|
|Resource focus||Supply side||Demand side|
|Marketing||One way marketing||One-to-one marketing|
|Payment||Cash, cheque, credit card, etc.||Credit card, fund transfer etc.|
|Delivery of goods||Instantly||Takes time|
Definition of Traditional Commerce
Traditional Commerce or Commerce is a part of business, which encompasses all those activities that facilitate exchange. Two kinds of activities are included in commerce, i.e. trade and auxiliaries to trade. The term trade refers to the buying and selling of goods and services for cash or kind and auxiliaries to trade, implies all those activities like banking, insurance, transportation, advertisement, insurance, packaging, and so on, that helps in the successful completion of exchange between parties.
In finer terms, commerce encompasses all those activities that simplify the exchange of goods and services, from manufacturer to the final consumer. When the goods are produced, it does not reach to the customer directly rather it has to pass from various activities, which are included under commerce. Its main function is to satisfy the wants of consumers by making goods available to them, at the right time and place.
Definition of e-Commerce
e-Commerce or electronic commerce refers to the exchange of goods and services, funds or information, between businesses and consumers using the electronic network, i.e. internet or online social network. e-Commerce means trading and providing assistance to trading activities, through the use of the electronic medium, i.e. all the activities like purchasing, selling, ordering and paying are performed over the internet. The scope of e-commerce is discussed in the following points:
- B2B commerce: When the business transaction takes place between two business houses, through the electronic channel, it is called B2B commerce.
- B2C commerce: When the exchange of goods and service takes place between the business entity and the customer, over the internet, then it is known as B2C commerce.
- C2C commerce: When the buying and selling of goods and services take place between customers using electronic medium, then it is called C2C commerce
- Intra-B commerce: When the exchange occurs within the firm or business house, with the use of electronic media, it is called as Intra B-commerce.
Key Differences Between Traditional Commerce and e-Commerce
The following points are noteworthy so far as the difference between traditional commerce and e-commerce is concerned:
- A part of business, that focuses on the exchange of products and services, and includes all those activities which encourage exchange, in some way or the other, is called traditional commerce. e-Commerce means carrying out commercial transactions or exchange of information, electronically on the internet.
- In traditional commerce, the transactions are processed manually whereas, in the case of e-commerce, there is automatic processing of transactions.
- In traditional commerce, the exchange of goods and services, for money can take place, only during working hours. On the other hand, in e-commerce, the buying and selling of goods can occur anytime.
- One of the major drawbacks of e-commerce is that the customers cannot physically inspect the goods before purchase, however, if customers do not like the goods after delivery they can return it within the stipulated time. Conversely, in traditional commerce physical inspection of goods is possible.
- In traditional commerce, the interaction between buyers and sellers is direct, i.e. face to face. As against this, there is indirect customer interaction, in the case of e-commerce, because it may be possible that the customer is miles away from where they place an order for the purchase of goods.
- The scope of business in traditional commerce is limited to a particular area, i.e. the reach of business is limited to the nearby places where it operates. On the contrary, the business has worldwide reach in case of e-commerce, due to its ease of access.
- As there is no fixed platform for information exchange in traditional commerce, the business has to rely on the intermediaries for information fully. Unlike e-Commerce, wherein there is a universal platform for information exchange, i.e. electronic communication channel, which lessen the dependency on persons for information.
- Traditional commerce is concerned with the supply side. In contrast, the resource focus of e-commerce is the demand side.
- In traditional commerce, the business relationship is vertical or linear, while in the case of e-commerce there is directness in command leading to a horizontal business relationship.
- In traditional commerce, due to standardisation, there is mass/one way marketing. However, customization exists in e-commerce leading to one to one marketing.
- Payment for transactions can be done by paying cash, cheque or via credit card. On the other hand, payment in e-commerce transactions can be done through online payment modes like credit card, fund transfer, etc.
- The delivery of goods is immediate in traditional commerce but in the case of e-commerce, the goods are delivered at the customer’s place, after some time, usually within a week.
Therefore, with the above discussion, it is quite clear that both the methods have their advantages and disadvantages. e-Commerce is just like the traditional commerce, i.e. when you log in to the website, you enter into the e-world for shopping, wherein you choose a category, specifications and you get the desired results. e-Commerce is not suitable for perishable goods and also for high-value items, while traditional commerce is not suitable for purchasing software or music.