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Understanding the difference between e-commerce and retail

Gone are the days when the only way to make a purchase was to visit the store and wait to be rung up by a cashier. Mobile apps, online marketplaces, and even social media platforms have transformed how we shop – forecasts indicate that by 2027, e-commerce is projected to make up 23% of total global retail sales.1

Today, we have no shortage of shopping options, with traditional retail and e-commerce being two primary ways businesses can sell their goods and services. Here’s how to navigate the debate between retail vs. e-commerce.

What is retail?

Traditional retail involves merchants selling products or services directly to consumers via a physical store. With 72% of consumers still shopping in stores weekly, the importance of brick-and-mortar locations remains undeniable.2

Yet, to meet ever-changing consumer expectations, retailers must innovate and adapt to evolving retail trends, such as building personalized shopping experiences or sustainable practices.

What is e-commerce?

E-commerce, short for electronic commerce, is a type of retail that focuses on buying and selling goods or services using the internet. E-commerce enables consumers to shop from anywhere at any time, providing convenience and accessibility that traditional retail cannot match.

What are the differences between retail and e-commerce?

Physical presence

Traditional retail involves brick-and-mortar stores that customers can visit in person to make purchases. Alternatively, e-commerce is purely online, eliminating the need for physical stores.


Since customers must physically visit retail stores to make purchases, their accessibility is limited to their geographical location, which can restrict access for those living in different areas.

On the other hand, e-commerce offers global accessibility, allowing customers to shop from anywhere with an internet connection. With orders shipped and delivered right to their doorsteps, e-commerce can expand market reach beyond local customers to a worldwide audience.

Operating hours

Retail stores are bound by specific operating hours – if shoppers arrive outside of store opening hours, they’re out of luck. Comparatively, e-commerce stores are typically available 24/7, providing customers the convenience to shop anytime.

Customer interactions

Physical stores not only allow customers to physically examine and try products before making a purchase, but they can also ask questions or get recommendations from sales staff.

Although e-commerce lacks physical interaction, shoppers are guided by detailed product descriptions, customer reviews, and multi-angle images.

Payment methods

In traditional retail settings, accepted payment methods typically include cash, credit and debit cards, and sometimes checks or gift cards. These physical payment options cater to the immediate, tangible exchange of goods and services, providing a sense of security and familiarity.

Conversely, e-commerce transactions rely exclusively on electronic payment methods, such as credit and debit cards, digital wallets and contactless payments.

The different approaches of e-commerce vs. retail for businesses

Traditional retail and e-commerce embody distinct strategies for businesses, with each catering to different business objectives and customer preferences.

E-commerce capitalizes on businesses’ abilities to access a global market, offering operational flexibility around the clock. Customers benefit from the convenience of shopping from any location, expanding the potential consumer base beyond geographical constraints.

Meanwhile, traditional retail is grounded in physical storefronts and immediate product accessibility. This model emphasizes a tangible shopping experience that can build strong customer relationships and loyalty.

What customers expect from an e-commerce experience vs. a retail experience

Customers hold distinct expectations when shopping through traditional retail settings versus e-commerce platforms.

In retail environments, immediacy is a fundamental expectation – 50% of U.S. consumers cite “the convenience of getting purchases instantly” as the top reason they shop in-store rather than online.3 The tactile experience is another key focus, where customers can touch, feel, and try products before purchasing.3

From personalized guidance to quick answers, immediate assistance from store staff further enriches this experience. When top-notch customer service is paired with a welcoming atmosphere, shoppers are likelier to make a purchase – 84% of shoppers say they would return to stores with a pleasant atmosphere.3

Conversely, what sets e-commerce apart is how it trades immediacy and physical interaction for convenience and breadth of choice. While online purchases require waiting for products to be delivered, the trade-off comes with the ability to shop from anywhere, at any time.

With 51% of consumers now conducting more research before making purchases, the digital shopping model also allows customers to effortlessly compare prices, read reviews, and explore a wider range of options than what might be available in physical stores.4

What to consider when deciding where to sell your products or services

Trying to decide whether to sell your products at a traditional retail store or online? Use these key factors to guide your decision-making process:

  • Target audience. Who are your customers, and where do they enjoy shopping? Different demographics have unique shopping preferences.
  • Your products. Products requiring personal fit or feel, such as apparel, are often better suited for physical stores where customers can try them first-hand. Conversely, standardized items, like books or mugs, are well-suited for e-commerce.
  • Overhead costs. Physical retail spaces often involve expenses such as rent, utilities, and staffing, while online sales may incur other costs like website maintenance, digital marketing, and shipping logistics.
  • Competitive landscape. Are your competitors selling in-person or online? A saturated market may require additional efforts in differentiation and marketing.

Building an omnichannel strategy

Rather than choose between traditional retail versus e-commerce, consider building an omnichannel strategy instead. Omnichannel retail bridges online and offline channels to provide a seamless shopping experience.

For example, a shopper might use a mobile app to scan a product in a physical store to read reviews and compare prices. They could then add it to their online shopping cart, decide to purchase it later through the store's website, and choose either home delivery or in-store pickup.

By meeting customers where they are and offering a cohesive brand experience, businesses increase customer engagement and satisfaction, making it less likely that they abandon their virtual or physical shopping carts.5

Market your products and sell with PayPal

Ready to boost sales online and offline? Leveraging PayPal's comprehensive payments platform offers sellers a streamlined way to help grow their businesses.

As a trusted and globally recognized payment solution, PayPal facilitates easy, secure transactions for both sellers and buyers, helping to enhance customer trust and satisfaction. PayPal also provides valuable tools for analyzing sales data, helping sellers make informed decisions to grow their business.

Embrace the convenience and reliability of PayPal to simplify your sales process and expand your market reach. Learn more about how to sell with PayPal.

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