The advantages of ecommerce include low start-up costs, being able to sell anywhere to anyone at any time.
But how does that compare to selling through a traditional shop? In this guide, we’ll examine the advantages of ecommerce vs traditional shops, and also explain why it doesn’t have to be an either/or choice.
Ecommerce vs traditional shops: Set up cost
One of the big advantages ecommerce websites have is much lower set up costs than traditional shops.
If you use GoDaddy’s Website Builder to build an Online Store, you can expect to pay an upfront fee of around £240 for your first year, which includes a free domain name, and that’s it. (If you’re planning to launch a very large ecommerce site then the set up cost may be higher. Read this guide for information on how much an ecommerce website should cost.) You can learn how to set up an online shop in the UK here.
If you want to set up a traditional shop with a physical location, then you may find that you have to pay rent (and possibly other costs) in advance, and this sum will almost certainly be much larger than £240.
Ecommerce vs traditional shops: Running costs
Assuming you’re using a product like GoDaddy’s Online Store and you’re doing all the work on the website yourself, then you’ll pay around £240 + the cost of your domain name renewal a year (though prices are subject to change).
For a physical shop, you have to take into account things like rent, business rates, insurance, utility bills, service charges and so on.
Again, this will be much larger than the cost of something like Online Store.
Ecommerce vs traditional shops: Catchment area
If you’re running an ecommerce website, your catchment area can be as large or as small as you want. (As long as you take into account things such as shipping costs, taxation, local laws etc.)
For a traditional shop, you’re limited to customers who could reasonably be expected to travel to your location. (Unless you implement something like telephone orders and delivery.)
Ecommerce vs traditional shops: Opening hours
An ecommerce website can stay open 24/7 without the need for someone to man the tills.
And although it’s possible to open a traditional shop 24/7, there are complications as you may need local authority permission to do so, and you’ll certainly need to hire staff to cover the shifts you’re not able to, which will reduce your profits.
Plus, there may not simply be demand for your shop to open 24/7 – with an ecommerce website, you can serve people all over the world so the time of day where you are becomes less relevant.
Ecommerce vs traditional shops: Stock storage
It’s possible to run an ecommerce website without holding stock – for example you could be selling digital products, dropshipping or making goods to order.
But if you do need to hold stock, you’ll need somewhere to put it, this can be a real problem if you’re selling large items and you may end up hiring storage space, which will increase costs.
If you’re running a physical shop, you’ll probably find that your premises will provide adequate stock storage.
Ecommerce vs traditional shops: Walk-in customers
You need to actively promote an ecommerce website, you can’t expect people just to find it.
But with a shop with a good location there’s likely to be high footfall in the area, giving you the chance to attract walk-in customers. (However, shops in areas with high football tend to cost more to rent.)
Ecommerce vs traditional shops: Marketing channels
Yes, you need to actively market your ecommerce website – but the good news is that there are several marketing channels you can use
From search engine optimization to email, you’ll find there are inventive and (relatively) low-cost ways to market your site.
If you just have a physical store, you’ll find your options are much more limited. It’s hard to do digital marketing effectively without at least some sort of web presence. And of course if you’re not selling online, you’ll have to focus your marketing efforts on your immediate area.
Ecommerce vs traditional shops: Demands on your time
Many people turn running an online shop into a full time job. Others keep it as a part time sidehustle to supplement their main income. Some are even lucky enough to earn a full-time income from their ecommerce website without having to work full-time hours.
For a physical shop, things are different. If you want to be open and selling, you need someone there – either you, or a member of staff. And that person needs to be there even if things are slow.
Ecommerce vs traditional shops: Selling niche products
The fact that having an ecommerce website allows you to target a global audience means that it’s easier to sell highly niche items at a profit. The fact is, if there’s a market for it, and you promote your online shop in the right way, then you can sell just about anything.
But with a traditional shop, you’re limited to selling what local people are interested in buying, which can reduce the range of items you can sell profitably.
Using both an ecommerce website and a traditional shop
It’s perfectly possible to run both an ecommerce website and a traditional shop, and many successful businesses do.
If you already have a traditional shop, adding an ecommerce site can help you reach a whole new audience, giving you the chance to expand your business.
This guide explains how to start an online shop.