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Difference between E-business and Traditional Business

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E-business and traditional business are two ways of conducting business through the Internet and local stores respectively. Even though both are ways of performing business and selling goods and services, they are different from each other.

Difference between E-business and Traditional Business

What is E-business?

Conducting business activities over the internet or any other computer network is known as E-business or Electronic Business. E-business conducts all business activities, like trade, commerce, and industry; electronically. It is about using the internet and other computer networks and technologies to provide superior customer service, increase sales and reduce costs. Computer networks, which are more secure, effective, and efficient as compared to the internet are often used in E-business. 

In the words of Philip Kotler,“Electronic Business is the general term for buying and selling process that is supported by electronic means.

What is Traditional business?

A traditional business is a local store, shop, etc., which offers its services or products to its local customers. It is a set-up where customers will have to visit the store physically to buy the products or services. In traditional business, infrastructure is required, and staff is hired to carry on the business. It involves huge costs and there are more opportunities for a personal touch. 

Difference between E-business and Traditional Business 

Basis

E-business 

 Traditional Business 

Meaning Conducting business activities over the internet or any other computer network is known as E-business or Electronic Business. A Traditional business is a local store, shop, etc., which offers its services or products to its local customers. It is a set-up where customers will have to visit the store physically to buy the products or services.
Ease of Formation Formation of E-business is easy. Formation of traditional business is comparatively difficult.
Physical Presence Physical presence is not required. Physical presence is required.
Locational Requirements There is no requirement for location. There is a requirement for location, and a location near raw materials and markets is preferred.
Cost of Setting up The cost of setting up an E-business is low as there is no requirement for physical facilities. The cost of setting up a traditional business is high as there is a requirement for physical facilities.
Operating Cost Operating cost is low. Operating cost is high because of fixed charges associated with storage, marketing, etc.
Contact with Suppliers and Customers There is direct contact with suppliers and customers. There is indirect contact with suppliers and customers through intermediaries. 
Nature of Internal Communication Communication can flow in any direction. Communication flows in hierarchical order.
Response time for meeting Customers/ Internal Requirements It gives an instant response. Response takes a lot of time.
Organisational Structure Organisational structure is vertical or tall due to the chain of command.  Organisational structure is horizontal or flat due to direct command and communication. 
Ease of going Global There are many chances of going global. There are less chances of going global.
Business Processes and Length of the Cycle There are short business processes and cycle. There are long business processes and cycle due to the number of sequential processes.
Opportunity Interpersonal Touch There is less opportunity for interpersonal touch. There is more opportunity for interpersonal touch.
Opportunity for physical pre-sampling of the Products There are less opportunities for physical pre-sampling of the products. It is mostly available in the case of books, software, journal, etc. There are many opportunities for physical pre-sampling of the products.
Government Patronage Government patronage is increasing.  Government patronage is declining or shrinking. 
Nature of Human Capital Technically and professionally qualified human capital is needed. Mostly semi-skilled and unskilled manpower is needed.
Transaction Risk There are high transaction risks due to a lack of personal contact between the parties. There are low transaction risks due to personal contact between the parties.


Last Updated : 23 Jan, 2024
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