E Business vs. Retail

Since the invention of trade, one of the most dominant forms of business is retail. Retail is a type of business that involves the sale of goods and services to the last consumer. Laudon and Traver (3) stated that a majority of the most successful corporations in the world today started from a retail idea. Today, retail businesses occur in two major forms. These include physical or traditional retail and online retail. Physical retail is where a proprietor sets up premises and then sells products and services to the consumers from there (3). On the other hand, online retail is a form of business in which a proprietor sets up an online webpage from which consumers can order the listed products and services. It has been documented that the online business, as opposed to the traditional retail, is more desirable due to its various superior characteristics ranging from flexibility to adaptation. Therefore, it is highly recommended that entrepreneurs shift their focus to online retail trade.

In the contemporary world of business, technology seems to be the major driver. A host of businesses have increasingly adopted a range of technologies in order to facilitate their business processes and to ultimately achieve significant success. For instance, it is common for entities to implement the Enterprise Resource Planning, which is a business management software that provides an entity with the ability to collect, store, manage, and even interpret data from a range of business processes. Given the size and scope of traditional retail trades, it is often very difficult to implement these technologies. Ward (5) recognized that implementing a technology such as ERP necessitates extensive and expensive resources, and this is especially due to the broadness of the system. Such an amount of resources might be a challenge to a traditional retail trade. As such, the level of profitability and the savings made by a traditional retail trade is not sufficient enough to meet the demand of technologies (5). The case is different with online retail entities. These businesses are founded on internet, which is an integrative technology by itself. These proprietors are often placed in a good position to explore a range of other technologies which are internet-based such as applications and to implement them successfully at ease and without using significant resources (1). Most of these businessmen are technology savvy meaning that they have adequate knowledge on various supportive technologies and understand how they can adopt them without incurring much. In this regard, it is clear that online retail businesses are more likely to reap the benefits presented by technology as compared to their traditional retail counterparts.

There are various factors that affect the workforce. One of the most essential factors is the changes in demographics. The term demographic change is used to refer to the shifts in the structure of the population. An example of a demographic change that is related to the workforce is aging (2). Usually, employers prefer recruiting employees from a certain age cohort. However, as time goes, these employees age and their productivity go down significantly. With the traditional retailers, hiring employees is one of the inevitable processes. As such, a proprietor has to recruit a number of people such as salesmen and cashiers in order to facilitate success of the business. Given the huge cost involved in selecting, training and maintaining talents, the traditional retail traders opt to remain with the same workforce for some time. According to Kumar and Ruan (2), an effective recruitment of human resource requires heavy investments. For instance, a business has to ensure extensive advertisement in order to reach a pool of applicants, has to pay for the recruitment and selection process, and has to incur a given cost in training these first-time employees. Again, a traditional retail trader may not be able to meet these costs. Therefore, they prefer to remain with the same workforce. Unfortunately, the workforce age means that the energy towards work is limited and this translates into lowered success for the business. An online retail business is often not confronted with this issue. With such a business, it is not mandatory for a proprietor to employ people. Rather, he or she can manage the business by their selves (2). For instance, the proprietor does not need to employ people in order to update the website. The need for employing people comes when considering distribution. While this is the case, rather than employing people to facilitate this process, a proprietor can contract distribution agencies. In the light of this, it is evident that an online retail business is confronted by changes in the demographics of the workforce.

Besides, changes in demographics affect the marketplace, and these consequences also extend to the traditional retailers. A good account of such a demographic shift is a change in tastes and preferences of consumers. The demand of a given retail product or service might change abruptly. For instance, there might be a great demand for umbrellas due to the prevalence of severe weather conditions. In this case, a traditional retailer dealing with such products might gain significantly (4). However, supposing that the weather conditions get back to normal without any warning, the demand for umbrellas will fall abruptly meaning that the traditional retailer will take more time to transition to other products. This is especially so considering that he or she has to rearrange the stocks in order to focus on other products. Such a challenge hardly confronts online retailers (4). Where they are faced with a similar situation, they only need to remove the umbrella listings and update the website replacing them with new products. This process could even take just several minutes as opposed to traditional retailers where this kind of adjustment might take several months.

In conclusion, it is clear that online retailing is more desirable than the traditional retail businesses. Overall, the nature of flexibility and adaptation with the online retailers when faced or confronted by a range of market dynamics is more appropriate than the case of traditional retailers. For instance, a traditional retailer, as opposed to an online retailer, is more affected by changes in demographics that affect the marketplace and the workforce. The traditional retailers are likely to be faced with the issue of waging workforce, which lowers the productivity of the business. As opposed to this, the online retailer does not have to employ workers and cannot thus experience the problem of aging workforce. Similarly, the time taken to transition into other products supposing a change in preference is experienced all of a sudden is more for a traditional retailer than that for the online retailer. Therefore, it is highly recommended that entrepreneurs shift their focus to online retail trade.



  1. Gupta A, Su BC, Walter Z. Risk profile and consumer shopping behavior in electronic and traditional channels. Decision Support Systems. 2004; 38(3): 347-367.
  2. Kumar N, Ruan R. On manufacturers complementing the traditional retail channel with a direct online channel. Quantitative Marketing and Economics. 2006; 4(3): 289-323.
  3. Laudon KC, Traver CG. E-commerce. London, UK: Pearson/Addison Wesley; 2007.
  4. Szymanski DM, Hise RT. E-satisfaction: an initial examination. Journal of retailing. 2000; 76(3): 309-322.
  5. Ward MR. Will online shopping compete more with traditional retailing or catalog shopping?. Netnomics. 2001; 3(2): 103-117.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s