Retail vs. E-Commerce: The Future of Shopping

Where people once flocked to brick-and-mortar stores for all their shopping needs, they are now increasingly comfortable making purchases from the comfort of their homes via online retailers. However, does this e-commerce vs. retail shift spell the end for traditional retail? Not necessarily.

By 2040, it’s predicted that 95% of purchases will be made online.

While e-commerce continues to grow rapidly, many shoppers still enjoy the experience of browsing stores in person.

Let’s dive deeper and explore how retail and e-commerce can learn to coexist in the future of shopping.

SOURCE: Linkedin

Retail and E-commerce: What’s the difference?

Frequently, people have common misconceptions about e-commerce vs retail. While some of these terms are similar, there are fundamental differences between these two categories of shopping. At the same time, they differ in that they sell products to consumers, but the consumer experience and delivery of products are not the same when shopping online or in a physical store.

• In retail, clients visit physical places like malls, strip malls, and one-time stores directly to examine various products such as garments, electronics, etc. In-person, customers can view, feel, and try out items before making their own purchases.
• Retail stores employ sales associates to help customers and handle transactions at the register. Goods are taken home immediately in most cases.
• E-commerce, on the other hand, involves shopping online through websites and apps. Consumers browse and select products from the comfort of their homes using a computer, tablet, or phone without ever stepping foot inside a store.

SOURCE: FreePik

Approximately 62% of all e-commerce sales are expected to be made through mobile devices (smartphones and tablets) by 2027.

Payment is made digitally, and items are delivered later, whether to a home address or pickup location. No physical interaction with salespeople occurs either during shopping or at checkout.

Advantages of E-Commerce & Retail

Advantages of E-Commerce

Shopping from the comfort of home is increasingly appealing to many consumers.

Here are some key benefits of the online shopping model in more detail:

• Convenience

With e-commerce SEO services, buyers have access to any product 24/7 with just a few clicks. No more taking time off work to visit stores during limited operating hours.  No more wasting gas driving from place to place hunting for that perfect item. No more pushing a full cart through crowded parking lots and lingering in long checkout lines. 

• Broader Selection

Physical stores struggle to stock more than a small fraction of the tens of millions of products available. However, shelf space or warehouse space is not a constraint for e-commerce retailers. They can list entire catalogs numbering in the hundreds of thousands of SKUs. This extensive selection empowers customers to find niche items, rare collectibles, seasonal merchandise, and entire product categories like books that may not be carried locally.

• Competitive Pricing

Traditional retailers incur massive overhead costs for real estate, utilities, staffing, and inventory handling that drive up retail prices. However, e-commerce sellers operate virtually with low fixed costs for warehouses, no middlemen, and automated order fulfillment. This allows online businesses to undercut competitors and pass higher margins directly back to customers.

• Customization

While stores offer limited sizing and color options, e-commerce platforms empower buyers to design personalized products.

SOURCE: FreePik

In the United States, e-commerce sales, as a percentage of total retail sales, hover around 15%.

Websites enable you to choose your own photos, logos, text, colors, materials, and specifications for items like apparel, mugs, bags, tech accessories, and more. Customers receive a truly one-of-a-kind product they helped create that feels uniquely theirs.

Advantages of Retail

While e-commerce brings many conveniences, brick-and-mortar stores continue to serve important purposes for shoppers.

Here are more expanded perspectives on the advantages of retail:

• Immediate Gratification

Nothing quite matches the satisfaction of browsing a store, making an impulse purchase, and instantly being able to use or enjoy the item. The dopamine hit of this feedback loop fuels further in-store spending. Time-sensitive needs like last-minute gifts or emergencies require instant solutions; online orders simply can’t deliver the way in-person shopping does.

• Ability to Examine Products

Stores allow multi-sensory evaluations beyond sight. Feelings, textures, testing weight/balance, listening for sounds, even smelling scents—the full sensory experience gives a holistic understanding of quality. Fittings allow comfort and function checks. Salespeople provide expert demos and showcase features. Mistakes are avoidable.

• Opportunity for Discovery

Browsing serendipitously amidst curated displays stimulates creativity more than algorithmic online silos. Finding unexpected items sparks new interests/hobbies. Stores showcase whole categories that may not occur to shoppers otherwise. Discovery fuels future purchasing and relationship-building with brands.

• Social Experience

Stores facilitate valuable bonding over shared experiences. Spending time together in public builds interpersonal connections and community. Interacting with other shoppers fosters chance encounters and conversations that strengthen the social fabric. Even solitary shoppers find comfort in bustling energy and people-watching.

Challenges Facing Retail & Ecommerce 

Challenges Facing Ecommerce

One challenge facing e-commerce businesses is developing trust with customers. When shopping online, customers cannot see or touch products before purchasing.

Source: FreePik

• The absence of physical interactions makes it harder to create the same level of trust as experienced in physically organized shopping. Online sales companies have to find clever methods to help clients visualize products and credibly decide to buy.
• Detailed product descriptions with multiple high-quality images are one way to address this. User-generated reviews and video demonstrations can also help give customers a more tangible sense of what they are buying.
• Building a reputable brand over time through excellent customer service, secure transactions, and on-time deliveries will further help develop the trust needed for long-term success in online retail.
• Another problem is how to offer and deliver integrated, omnichannel experiences. Nowadays, online shopping is where the research starts, but conversely, buying is still done in brick-and-mortar stores.

This crossover between digital and physical shopping means the customer experience must be consistent, connected, and convenient regardless of the sales channel.

Challenges Facing Retail 

One challenge facing traditional retailers is the rise of e-commerce giants. Online shopping continues to grow in popularity as consumers appreciate the convenience of purchasing from home.

• Websites like Amazon offer vast selections of products at competitive prices with features like fast, free shipping. As more purchases shift online, brick-and-mortar stores have lost foot traffic and sales.

A large percentage (around 90%) of consumers say free shipping is the top incentive that gets them to shop online more often.

• Retailers must find ways to give customers compelling reasons to visit physical locations despite the option of online ordering.
• Another challenge is changing consumer preferences. Younger shoppers, in particular, have embraced online shopping and expect seamless digital experiences.
• They also value sustainability and expect brands to prioritize issues like reducing waste and supporting fair labor.
• Adapting business models to meet these new standards requires time, effort and funding that many retailers do not have.

Transitioning physical stores, supply chains and company culture requires strategic planning, yet consumer demands are shifting rapidly. Retailers must thoughtfully consider generational trends and societal changes to remain attractive options for current and future customers.

How Shopping Has Already Changed: The Rise of Online Convenience

Source: Semrush

Over the past decade, the way we shop for everything from groceries to electronics has undergone a dramatic transformation. The convenience and vast selection available with a few clicks has many customers questioning if they really need to leave the house to shop at all.

As internet speeds and reliable delivery options improved, more mainstream customers felt comfortable making purchases without seeing items in person first.  Customers have come to expect the same level of speed, selection and convenience virtually that they once could only access physically.

Omnichannel Retail Matters—From Offline to Online Shopping Experiences

Whether you’re browsing aisles at the local mall or scrolling on your phone, the lines between e-commerce vs. retail shopping are blurring more each day.

Related: Ecommerce vs Retail: Can I Expand My Business Online?

• Savvy retailers recognize that consumers fluidly move between digital and physical shopping channels, and they’re integrating technology to provide seamless experiences across platforms.
• Gone are the days when shoppers would research options solely online before making a trip to the store. Now they may check inventory online and order online for in-store pickup. Or browse digitally to narrow options and then try items on in person.
• Meanwhile, in-store associates armed with mobile devices can look up product details, check availability across nearby locations, and complete purchases for customers on the spot.

The average return rate for e-commerce is higher than brick-and-mortar retail, estimated at around 20–30%.

This omnichannel approach recognizes that people shop in very personal ways and allows flexibility based on individual preferences. A retailer that can cater to each customer’s path, whether straight online or by mixing digital and physical steps, has a significant competitive edge.

Final Words

As different demographics show varied preferences when it comes to shopping modes, the winning strategy for most retailers will be to have a strong multi-channel presence with smooth hand-offs between digital and brick-and-mortar channels. While e-commerce will continue chipping away at certain retail categories, a thriving retail ecosystem will depend on both online and offline storefronts learning to successfully coexist by catering to their respective consumer segments and complementing each other’s strengths. The future of shopping is omni-channel.

Read more:

What are the Types of Ecommerce Retail Models?

E-Commerce Retail Trends 2024

FAQs: 

What is the future of retail shopping?

The future of retail will see more emphasis on online and mobile shopping. While brick-and-mortar stores will still exist, they will focus more on experiences like classes and events.

Which is better, retail or eCommerce?

Both retail and eCommerce have their pros and cons, depending on what the business needs. An optimized strategy uses both channels effectively.

What is the future of online shopping?

In the future, we’ll see even smarter shopping assistance from AI, more personalized recommendations, same-day and even instant delivery options, as well as innovative payment methods like voice shopping without apps.

What is the future of e-commerce and retail?

The future of e-commerce and retail is omnichannel integration. Online and in-store shopping experiences will merge with innovations like online pickup in store, virtual try-ons, interactive product reviews, and personalized recommendations across all touchpoints.