The Difference Between Ecommerce and Online Retailing

Contrary to a widespread misconception, ecommerce and online retailing are not the same thing. While online retailing is certainly a type of ecommerce, it is only a rudimentary form of this much broader and more sophisticated way of conducting business. In order to understand the fundamental difference, it’s worth looking at some recent history.

Online retailing predates the public internet. It is said to have begun with an experiment in 1984 when something called Videotex was used to turn an ordinary television into a computer terminal, enabling Jane Snowball to compile an onscreen shopping list and place an order with Tesco to be delivered to her door. Videotex was actually intended to help the elderly, disabled and housebound.

It was another 10 years before dial-up internet connections allowed the sale of items such as CDs and other small goods. In 1994 Pizza Hut pioneered online fast food ordering and in that same year Jeff Bezos founded the internet book retailer Amazon and eBay launched the year after.

Online retailing was here to stay. But while many large businesses, including some major department stores, were very slow adopters, others with real vision recognised that this fledgling phenomenon had the potential to change the business model beyond recognition. At this point e-commerce really took off.

E-commerce is about far more than simply selling products from a website. It encompasses all other aspects of running a business, including supply chain management, marketing, customer and aftersales service, inventory, data analysis and recruitment. Instead of hiving off the simple transactional elements, it transplants the entire process.

The most common e-commerce models, and the most recognisable, are business to consumer and business to business. Companies such as eBay and Amazon, with its marketplace, have also facilitated the growth of consumer to consumer trading, while the consumer to business model, in which value is added to a business service or product by online reviews and influencers, is something entirely new.

There are many other examples of e-commerce relationships in areas including wholesale, drop shipping, crowdfunding and subscription services. In this last category, just consider for a moment the astonishing success of Netflix, a business in which no physical product changes hands but the profitability of the service has made the company one of the biggest funders of films and television programmes in the world. All of that has been achieved by the happy collision of an upstart competitor to Blockbuster and the development of e-commerce.

E-commerce enables businesses to expand their market, reaching a worldwide audience with minimal investment and maximum return. Business processes become simpler, with increased efficiency making scalable growth much easier. It’s a 24/7 operation with unprecedented opportunities to offer support and gather informative feedback. Marketing information is gathered as a valuable by-product meaning that the more your business grows, the better equipped you are to extend that growth.

In order to make the most of e-commerce, rather than settling for mere online retailing, it is essential to put in place internal structures to ensure smooth supply lines, effective fulfilment and responsive customer service. Moreover, it requires a fully resourced marketing operation not simply to maintain but to increase the visibility, profile and reputation of your business.

Online retailing was a revolution. It took trading beyond geographical limits and helped create a global marketplace. Everything started with attractive, interactive, user-friendly websites and generally speaking this is still the most important single element. But online retailing was only the precursor of a much more comprehensive shift in both customer habits and business practice.

It is vital for every business to appreciate that where online retailing is a very useful adjunct to bricks and mortar operations, e-commerce represents a foundational reinvention of how to trade. It requires a mindset that is committed to the challenges and benefits of this entirely new model.