Differences Between E-Business & Traditional Business

Since the surge of popularity of the Internet, many entrepreneurs have capitalized on it by starting businesses completely based on an online platform. These are called e-businesses or e-commerce sites. The typical e-business follows a different business model than traditional businesses. These differences have created completely separate business strategies for profit, operations and management.

  1. Logistics

    • The logistics of e-business typically have lesser constraints than traditional business. E-businesses are not limited to venue; they can be located anywhere and still serve the same customer. Their product capacity is "infinite" in that they are not limited to the space of a brick-and-mortar store. E-businesses mainly depend on shipping methods to deliver and receive items, while traditional stores conduct an instant exchange. This timing difference can be a significant factor for some consumers; for example, refunds would typically take much longer to process for e-businesses than in a neighborhood store.

    Human Resources

    • The two types of business differ in talent recruitment. E-businesses significantly emphasize technology and hire more people from the web design and development fields. In some cases, every employee may be required to have a technical background or receive in-house training for basic web development. On the other hand, traditional businesses are more diverse in hiring for nontechnical positions, such as sales representatives and display managers.

    Marketing

    • In marketing for traditional business, marketers can focus on all five human senses to influence the sale. For example, maintaining a proper display keeps the product aesthetically appealing. Consumers can also physically touch the product in a traditional store; this is particularly vital for physically sensitive items such as clothes. E-businesses typically have to rely mainly on sight. The physical display is replaced with digital images. The inability to touch and test the product firsthand is replaced with technical text to visualize the details of the product; online retailers may also have the ability to present many more choices because they do not need to have the physical product on hand.

    Finance

    • The major financial difference between e-business and traditional business is cost. E-businesses usually have lesser startup and operational costs -- buying an online domain is much cheaper than renting land and building facilities and buying equipment.

    Management

    • E-business management is typically flatter than traditional management. A flat company happens when there are few levels in between top management and the entry-level employee. In most e-businesses, low level management, such as store managers and division managers, is unnecessary. Instead, e-businesses expand horizontally by hiring external consultants and contract web development positions. These entities specialize in a business service, such as e-commerce setup and online marketing. They may work for the company but are not necessarily included in or affected by management decisions.

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