Ecommerce vs retail: Understanding The Key Differences

Online shopping is having a serious moment (we mean, who doesn’t love window-shopping in pajamas, right?) It's raking in over 20% of global retail sales, making it the cool kid on the block. But hold up—don’t count out physical brick and mortar stores just yet.

The National Retail Federation (NRF) just dropped a bombshell: physical stores are making a comeback faster than anyone expected. Brands like Target, DSW, and Macy's are killing it with new, smaller stores (think showrooms and pop-ups) because, apparently, people still love strolling through aisles in 2023.

So, whether you’re all about the digital shopping spree or still rocking those in-store finds, it’s clear both retail and ecommerce have their own charm (and headaches). Let’s get into how these two worlds differ and what makes each one tick (or sometimes, trip).

Difference between retail sales and ecommerce sales

Alright, let’s break this down: retail sales and ecommerce sales are like two siblings who couldn’t be more different if they tried. Retail sales are your classic in-store purchases—those “I’m just here for one thing” trips that somehow turn into a full-on shopping spree. We’re talking point-of-sale (POS) transactions and good old-fashioned face-to-face interactions.

On the flip side, ecommerce is all about those online shopping vibes. It’s digital payments, browsing from your couch, and the mysterious world of dropshipping (where your stuff comes from who-knows-where, and you still get it in a few days).

So, what sets them apart? Let's look at how each sales model works:

How retail sales work

Retail sales are the bread and butter of physical stores. Picture this: you walk into a store, grab what you want, and use a POS system to pay. Simple, right? From giant malls to cozy little farmers’ markets, retail stores are the final stop on the supply chain before goods land in your hands. They get their stock from manufacturers, wholesalers, and distributors.

Take Epos Now's POS for example. It handles in-store purchases on  a complete POS hardware solution, checkout on a tablet, and allows mobile shopping with an app. All of this is in one place, synchronizing your online store too.

How online sales work 

Ecommerce sales, on the other hand, are the digital equivalent of retail therapy. Instead of wandering through aisles, you’re scrolling through online stores or social media. The supply chain is a bit more streamlined, thanks to options like dropshipping and direct-to-consumer (DTC).

Dropshipping is like having a middleman who handles the stock and shipping for you, while DTC cuts out the middlemen entirely, letting you get straight to the consumer. It’s all about efficiency and getting those goods from point A to point B with a lot less fuss.

With Epos Now, you can level up your ecommerce game even further. Their system allows you to integrate cool apps for things like CRM (customer relationship management), loyalty programs, and more. Not only can you streamline your supply chain, but you can also keep your customers happy and coming back for more with those nifty integrations.

In short, whether you're swiping your card in a store or clicking ‘buy now’ online, both have their own unique groove.

TIP: Check out our guide on the five retail POS integrations your store needs to thrive for more on this!

The contrast between retail stores and online trading for business owners

Here’s the lowdown on what makes these two business models tick (or sometimes, take a nosedive).

The spending threshold

When it comes to spending, retail businesses are like the high-maintenance diva of the business world. Setting up a physical store means shelling out for rent, utilities, and décor that says, “I’m here to impress.” So, yeah, that’s a hefty price tag.

On the flip side, ecommerce businesses are more like the laid-back friend who crashes on your couch—lower overhead means you can often snag a better deal on competitive pricing. No rent? No problem! Just pay for your online ecommerce platform and some snazzy digital marketing.

Operations management

Retail stores come with a whole grab bag of operational duties. You’re juggling in-store purchases, managing point-of-sale systems, and keeping track of inventory like a pro. Think of it as the ultimate juggling act. And don’t forget, you’ve got sales associates and customer service to manage in the physical storefront.

Now, online sales are a different beast. You’re running an ecommerce site, handling digital payments, and probably rocking a successful ecommerce site if you’re doing it right. Operations are streamlined with ecommerce tools, electronic data interchange, and automated systems—less juggling, more clicking.

The potential risks

Both worlds have their share of potential risks. For brick and mortar stores, you’ve got the risk of a shopping mall that’s a ghost town, unexpected costs, and the occasional unhappy consumer who didn’t find their size. Then there’s the dreaded store hours—closing time for your brick and mortar store means losing out on sales.

Online retailers face their own set of challenges. Your ecommerce business model has to contend with shipping issues, dropshipping headaches, and the wild west of online reviews. Plus, ecommerce businesses have to stay on top of search engine optimization and digital payments to keep those online purchases rolling in.

In both realms, you’re playing a high-stakes game of balancing costs, managing operations, and mitigating risks. Whether you’re operating a physical store or running an ecommerce business, knowing the ins and outs will help you navigate the rocky waters of retail vs ecommerce.

In-store experience vs e-commerce experience for consumers 

Alright, let’s break down the epic face-off between in-store and e-commerce experiences. Think of it like comparing a cozy coffee shop hangout to a late-night snack binge. Here’s how the two stack up:

Customer journey

The customer journey in a physical store is like a treasure hunt. You walk in, roam the aisles (probably grabbing things you don’t need, let’s be honest), and get that sweet satisfaction of finding exactly what you’re looking for. And let’s not forget the thrill of discovering a random sale or snagging a bargain. It’s an adventure, with the added bonus of trying things on (hello fitting rooms!)

Now, shopping online is like browsing through a digital mall while lounging on your couch (with your cat on your lap and snacks within reach). You search, click, and boom—your stuff is on its way. It’s quick and efficient, but sometimes it feels like you’re missing the whole “hunt for treasure” part. No fitting rooms, but hey, you can still do a virtual dance when your package arrives.

Customer service

When it comes to customer service, physical stores offer that human touch. Sales associates greet you, help you find what you need, and chat about your day (or maybe just the weather). They’re proactive and all about making sure you leave with a smile.

E-commerce customer service is more like a game of hide-and-seek. You might never see a live person unless you hit up a live chat or drop an email. It’s more reactive: you might have to wait for a response, but if done right, the support team will have your back through multiple channels like email and social media.

The time-flexibility

Time flexibility is where ecommerce really shines. It’s like having a store that’s always open (24/7, baby). Want to shop at 2 AM? Go for it. No judgment here. Need to compare prices while binge-watching your favorite show? Easy peasy.

Physical stores are a bit more old-school. They have set store hours and if you miss them, well, tough luck. You’ll have to wait until the next day or until you find a store with extended hours (which might mean braving the weekend shopping crowd).

3 factors to consider when choosing between retail and ecommerce

Business model

Think of the business model as your store's personality. Retail is all about that face-to-face charm. You’ve got a physical storefront, and your vibe is in-person interactions and spontaneous in-store events. It’s like having a dinner party where guests pop by and you get to play host.

On the other hand, ecommerce is like running a digital hotspot where customers shop anywhere and at any time (and so can you). Your ecommerce business models here involves managing an online store, dealing with digital marketing, and keeping your website fresh and engaging. It’s a bit like throwing a massive online party where the invite list is endless and the dress code is “casual.”

Start-up costs

When it comes to start-up costs, retail is like buying a house—it’s a big investment. You need to cough up cash for rent, utilities, decor, and possibly a team of sales associates. Plus, there’s that pesky little thing called retail inventory management. Think of it as the upfront cost of a high-maintenance pet that needs a lot of attention.

Ecommerce, however, is more like getting a pet rock—less upfront cost but still a bit of upkeep. You’re looking at expenses for an ecommerce platform, domain hosting, and some snazzy digital marketing tools. Sure, there’s less physical space to rent, but you’ll need to invest in your website and maybe some shipping logistics. It’s a bit more laid-back but still requires some initial love.

TIP: Find out how much a website can boost your business's sales by checking out our latest blog! Spoiler alert: Businesses with websites grow between 15-50% more compared to those without one. Ready to make your investment count? 

Size and scope 

Size and scope are where things get interesting. If you’re dreaming big with a massive inventory and want to reach customers far and wide, ecommerce might be your playground. You can scale up quickly, add new products, and reach international shoppers.

Retail, however, is a bit more grounded. Your physical store will have a set amount of space, and expanding usually means more locations or bigger stores. It’s a great choice if you love the idea of creating a specific atmosphere and engaging directly with customers.

So, when choosing between retail and ecommerce, consider your business’s personality, how deep your pockets are, and how big you want to grow. Both paths have their perks, so pick the one that suits your style and goals best!

How to sync your retail store with your online site to create an omnichannel approach 

Now, you can totally rock both a physical retail store and an online retail business. But to make this dynamic duo work seamlessly, you’ve got to make sure you:

Centralize stock control

Imagine you’re juggling flaming torches—each one is a different inventory system, and it’s a bit of a hot mess. To avoid setting yourself on fire, you need to centralize stock control. Think of it like having one epic control center where you can keep an eye on all your inventory, whether it’s in your physical store or in your ecommerce store. Get yourself a retail POS system that updates in real-time, so you know exactly what’s in stock, what’s running low, and what’s mysteriously disappeared. This way, you won’t accidentally sell the same pair of shoes twice—awkward!

Gather all customer data in one place

Next up, let’s talk customer data. It’s like having a guest list for your party—except you want to remember everyone’s favorite snacks, not just their names. Centralize your customer data so you know what they bought, how they like to shop, and what they’re clicking on. Whether they’re popping into your brick-and-mortar store or shopping online, having all their info in one place helps you personalize their experience and keep track of their preferences. It’s like having a VIP guest book that tells you exactly how to impress them!

Integrate payments

When it comes to payments, you don’t want to switch between a dozen different apps like you’re playing whack-a-mole. Integrate your payment systems so that whether someone’s buying a latte in your physical store or a pair of shoes from your ecommerce site, the payment process is smooth and seamless. This means having one system that handles everything from credit card transactions to digital wallets, making it easier for you and your customers to keep things rolling without a hitch.

Cross-promote your products effectively

Finally, let’s talk about cross-promotion. This is where you get to show off your entire product range, both in-store and online. Put up some eye-catching signs in your physical store that direct people to your online store for exclusive deals, and vice versa. Send out email blasts and social media posts that remind your online shoppers of the cool stuff they can check out in your brick-and-mortar locations. It’s all about making sure your customers see your products no matter where they’re shopping, so they’re always tempted to buy something new!

Simple steps to switch from a retail store business to an ecommerce store

Ready to take your retail store online? Here’s how to make the leap without tripping over your own shoelaces:

1. Choose an ecommerce platform 

First up, pick your ecommerce platform (this is like choosing the right outfit for your online store). Whether it’s Epos Now Online, WooCommerce, or something else, find one that suits your style and budget. This platform will be your online store’s new best friend, handling everything from listings to payments. Think of it as a digital POS system (but way cooler).

2. Set up an online store 

Time to get your online store up and running! Customize your site with your branding, upload your products, and make sure everything looks as snazzy online as it does in your physical store. Don’t forget to integrate your POS software so you can manage sales across both worlds.

3. Centralize stock and payments

Now, let’s get organized. Centralize stock and payments so your retail POS system and online store are on the same page (literally, because no one wants to double-sell that last item.) Sync your inventory so you know what’s in stock and make sure your payment processing is seamless. No more juggling different systems or confusing your customers with checkout hiccups.

4. Start digital marketing for your business 

Spread the word now! Kick-off some digital marketing to get those online sales rolling (think of it like throwing a big virtual party and sending out invites.) Use social media, email campaigns, and maybe even some good old-fashioned online ads to let everyone know about your new online digs. This is where you really make some noise!

5. Offer shipping and returns 

Set up shipping and returns so your online shoppers can get their goodies delivered to their doorstep (and send them back if they need to—no hard feelings!) Make sure you have clear policies and options to keep your customers happy and coming back for more.

6. Test and launch

Before you go live, give everything a good test run. Check all the links, test the checkout process, and make sure your store software is running smoothly. Once you’re happy with the results, hit that launch button and let the online sales begin!