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Retail & Ecommerce: A Comprehensive Guide to the Modern Marketplace for 2025

Retail & Ecommerce

What is the fool-proof way to make more sales in your retail business? 

Reaching the right people at the right time. 

As a business owner today, you have multiple channels to reach your customer and make that sale. Think traditional retail, e-retail and e-commerce. 

How do you make the most of these? 

Let’s dive deep into the needs, benefits, and challenges of each channel. 

What is Retail and E-commerce in Today’s Economy?

Think of getting your daily fresh vegetables or fruits for your household. What comes to your mind first? If you are like the majority of Indians, you buy it from your local, nearby shop – the traditional way.

Traditionally, retail operations were primarily brick-and-mortar stores, where customers physically visited to get their products right away.

But what about packaged foods, apparel, or electronic items? You’re already thinking of the online options available to you – the ecommerce way.
Go to an app/website, browse through countless options, add to your cart, pay, and get it delivered within a day or two.

The Impact of E-commerce on Traditional Retail Markets

Ecommerce has changed the way businesses interact with consumers by 360°.
Currently, traditional retail stores hold about 80% of the total market share, which will go down to 60-65% in the coming 5 years due to the rise in e-commerce.

All thanks to doorstep delivery, a wider product range, and competitive pricing, online retailers have captured a significant market share. Ecommerce has challenged traditional retailers to adapt and innovate to stay in the game.

Why Understanding the Differences Between Retail and Ecommerce Matters for Businesses and Consumers

Understanding the nuances between retail and E-commerce is crucial for businesses. It helps in applying effective strategies for both online and offline channels with the ultimate goal of making more sales.

For instance, a product like perfume needs tactile experience and makes a good case for traditional retail. However, e-commerce channels can facilitate repeat purchases of the same scent once a consumer has experienced the product in real-time.

Or consider buying any personal care item like shampoo with standardized manufacturing, it can be easily sold using online mode only.

Sellers can choose to either integrate both channels for certain categories or limit the sale to one channel alone, depending on the product.

Also Read: Everything to know about Vertical and Horizontal Retail

What is Retail?

When businesses make bulk purchases from wholesalers (sometimes manufacturers or distributors) and mark up the price to make a profit from the end customer, it’s called retail. 

Types of Retail Models

  1. Brick-and-Mortar: This traditional model relies solely on physical stores for selling products or services. Customers can physically inspect products, interact with sales associates, and make immediate purchases. The payment could be in cash or digital mode. 
  2. Multi-Channel: This model incorporates both physical stores and online channels, but they operate independently. For example, Apple uses its flagship store, website, and third-party marketplaces, like Amazon, etc., to reach more customers. The catch is, though, you can’t add an iPhone to a cart from the website and buy it in an Apple store, as these channels aren’t integrated together. A customer can choose only one channel per transaction. 

The main advantages of this strategy are

However, the challenges of this approach are

  1. Omni-Channel: This approach provides a seamless shopping experience across multiple channels, ensuring a consistent brand experience. The prime examples of businesses using this model are Ajio, Zara, PepperFry, etc. 

They have implemented an integrated approach where customers can buy online and pick up or return in-store, providing a unified experience across all channels. 

BOPIS and BORIS are two key ways in which brands can implement the Omni-channel retail model. 

The main advantages it lends are precise customer insights gained in online stores and increased brand loyalty. 

The drawbacks of the high costs of marketing and advanced supply chain requirements make omnichannel tricky.

The Role of Retail Stores in the Consumer Journey

Retail stores continue to play a vital role in the consumer journey, offering opportunities for:

Challenges and Opportunities in Traditional Retail

Traditional retailers fight rising operational costs, intense competition from e-commerce, and changing consumer preferences. Other factors that limit the growth of traditional stores are depending on foot traffic alone and limited warehousing capabilities.

However, they also have opportunities to leverage technology, improve customer experiences, and focus on niche markets. Because human interaction can define customer experience, traditional retail can easily beat e-commerce in this arena.

E-commerce refers to the buying and selling of physical/digital goods and services over the Internet using online marketplaces, a dedicated app, an online store, and even social channels. 

What is the E-commerce Industry?

E-commerce refers to the buying and selling of physical/digital goods and services over the Internet using online marketplaces, a dedicated app, an online store, and even social channels. 

Ecommerce and Its Various Business Models

It encompasses various business models:

  1. B2B (Business-to-Business): Transactions between businesses come under the umbrella of B2B. AliExpress is a good example of a B2B e-commerce model, wherein businesses can buy from other listed manufacturers globally and resell the products to end customers. 
  1. B2C (Business-to-Consumer): Transactions between businesses and individual consumers are categorized as B2C e-commerce. For instance, the clothing brand SutiSancha makes online sales to its target consumers directly without any mediators. 
  1. C2C (Consumer-to-Consumer): Transactions between individual consumers facilitated by online shopping is the C2C model. This model offers opportunities for consumers to sell pre-owned goods across categories. Examples include Craigslist, OLX, and Quikr. 
  1. C2B (Consumer-to-Business): The examples of this model can be easily seen with individuals providing services to businesses via the Internet. For example, influencers or freelancers offering their services to businesses. 

Also Read: Type of Business Ownership in India

Activities of Ecommerce: An Overview

Ecommerce transactions are a series of activities that enable the product to reach the buyer. 

Front-end is what customers see and interact with while shopping online. Plus, the e-commerce business needs to integrate several online payment portals to actually receive digital payments. 

In-fact, the daily online transactions in India amount to INR 10,000 crore per day, indicating the need and popularity of online payments, besides the leading payment mode of Cash on Delivery. 

The distribution of this huge amount is  – 30% of digital wallets, 25% of credit/debit cards, 40% of UPI transactions, and 5% of net banking. 

Thankfully, you can use the best e-commerce Logistics and Shipping platform to take care of shipping needs and more so you can scale your e-commerce business successfully. 

Once the product/service is delivered successfully, the online transaction has been completed. 

Also Read: 7 Best e-commerce shipping strategies for all businesses

Key Features of the Ecommerce Industry

Types of Ecommerce Platforms

The major benefit of these marketplaces is they already have a strong user base. But that automatically implies stiff competition from other sellers present on the platform. Around 60% of online transactions happen on these marketplaces.

The benefit of these websites is brands can build a direct relationship with their customers. Plus, businesses don’t have to pay platform fees. However, the major challenge of such websites is attracting an audience, especially for smaller and newer brands. 

Difference Between Ecommerce and E-Retail

You can define online retail or E-Retail as a subset of E-commerce that focuses on selling retail products online directly to consumers using online stores and may occasionally have physical stores as well. Hence they offer more cohesive and immersive experiences to consumers, though the expenses may add up. 

E-commerce, in general, focuses on a series of complex activities like logistics and payments. E-commerce also includes the sale of services, digital products, online auctions, and the booking of e-tickets. They only sell directly to consumers, i.e., operate via B2C mode. 

The core differences between e-commerce and Online retailing can be summarized below – 

Also Read: How To Start An Online Retail Business with Zero Capital

Difference Between Traditional Retailing and E-retailing

Traditional retailing has been around for a long time with physical stores, offering in-store experience and immediate fulfillment to customers. These stores need old methods of inventory and supply chain management. 

E-retailing is a relatively new phenomenon, with the primary focus being an online store. They offer the benefit of a large dataset on consumer behavior, which is generally absent in traditional retail models. Plus, the supply chain and logistics of e-retailing can be automated, unlike traditional retail. 

FeatureTraditional RetailingE-retailing
In-store vs. Online Shopping ExperiencePhysical stores, in-person interactionsDigital storefronts, virtual experiences
Payment and FulfillmentCash, credit cards, or digital wallets
Immediate fulfillment
Online payment gateways, digital walletsDelayed fulfillment
Inventory Management and Supply Chain VariationsPhysical inventory and warehouse managementDigital inventory tracking, efficient logistics

Growth of Online Shopping in India

All e-commerce sellers will agree – the Pandemic was a turning point in the history of Indian retail e-commerce. It expanded the reach and adoption of e-commerce. 

As a result, Indian online shoppers come from all financial backgrounds and live in metros as well as tier 3 cities. Their search patterns and priorities when it comes to price, delivery times, and product quality vary greatly. 

How E-commerce Has Revolutionized Shopping in India

E-commerce has transformed the way Indians shop, offering convenience, choice, and affordability to millions of consumers. For instance, shoppers in tier-2 cities and smaller towns place up to 60% of online orders. These shoppers look for discounts. While, urban shoppers look for speedy and convenient delivery options. 

Key Milestones in the Growth of Online Shopping in India

As per an estimate, the e-commerce market will grow to $230 Bn by 2030. And the CAGR is expected to be around 19.6%.

Factors Driving the Rise of Online Retail Business

3 key pillars drive the growth of online retail business in India – 

  1. Internet Penetration and Smartphone Adoption: Access to the internet and mobile devices enables consumers to shop online. 

Consider the following numbers – 

  1. Digital Payment Infrastructure Growth: The development of secure and convenient digital payment solutions has boosted online transactions. While UPI accounts for about 75% of all retail payments in India. Other options, like credit cards, QR codes, payment points, etc, are gaining more popularity. 

A report predicts that digital payments that stand at the volume of 159B transactions, amounting to INR 265 trillion this year, will 3X and grow up to be 481 Bn, worth INR 593 trillion by the year 2028-29.  

  1. Consumer Demand for Convenience and Variety: As discussed above, Indian e-commerce buyers have diverse needs when it comes to product choice, category, price point, etc.  

Products from international brands and niche offerings are in demand in rather remote parts of India as well. E-commerce can fill this gap as it leverages advanced supply chain management and isn’t limited to warehouse capabilities. 

The convenience of easy returns and doorstep delivery are huge boosters to the growth of e-commerce. 

Also Read: Omnichannel Fulfillment: Everything you Need to Know

Types of Retail and Ecommerce Companies

Notable Ecommerce Companies in India

These platforms keep the consumers coming with a strategic ecosystem of verified sellers, tiered memberships, site-wide sales, and super-fast delivery across the country. 

Impact of International Ecommerce Companies in India

International E-commerce giants like Amazon and AliExpress have made significant inroads into the Indian market, offering global products and services to Indian consumers.

Benefits and Challenges of Retail and Ecommerce

Benefits of Ecommerce for Businesses and Consumers in India:

Advantages of Retail Traditional Markets

Common Challenges Faced by Retail and Ecommerce Companies

In Ecommerce: 

  1. Logistics and supply chain challenges: The success of E-commerce is heavily reliant on how a business handles its logistics. Smooth and speedy delivery is a huge part of customer experience, making or breaking the business. 
  2. Intense competition: The low barrier to entry, though, is beneficial on one hand. On the other hand, it promotes intense competition to capture the customer base. 
  3. Data security concerns: Many smaller online stores don’t have the necessary resources and knowledge on legal compliance and ethical data management.  

In Retail: 

  1. High operational costs: Rent and utility costs eat up a lot of profits of physical stores. Buying a store upfront is a huge real estate investment. Plus, a lot of middle-men in the supply chain also lower the profit margins. 
  2. Limited store locations: There’s only so much expansion that traditional retail stores can do, depending on available funds and market conditions in their service area. Their success depends on foot traffic, and the consumer base is limited to their vicinity alone. 
  3. Need for digital transformation: These stores can automate and be more efficient if they monitor and manage their daily operations like accounting, inventory management, etc. Because you can only improve upon what gets measured. 
  4. High dependency on unskilled labor: This is an unorganized sector and employs mostly low-skilled or unskilled local labor. Though not a major bottleneck, skilled and trained labor can help implement new ideas and concepts to boost business. 

Trends Shaping Retail and Ecommerce in India

Key Trends Driving the Ecommerce Sector in 2025

Image Credit – Statista

Also, Instagram and Facebook shopping has been on the rise, ever since Covid. Online stores often livestream their products and customers can buy instantly. Social media ads and influencer-driven campaigns add to the sales volume as well. 

Online stores have access to very large data that enables them to make personalized recommendations. Ecommerce businesses can use sophisticated recommender engines that study the past behavior of similar buyers and predict the products that shoppers are likely to buy. This helps in product discovery, personalized user experience, and revenue gain. 

These tools function as an online salesman to help you discover the right products for your needs. 

Automation can truly transform the health of an e-commerce business. From auto-updating the inventory in the back-end and front-end or updating customers about delivery status, automation has simplified the daily hassles of store owners while enhancing the user experience manifold. 

Emerging Retail Trends in 2025

For example, jewelry brands like Giva and Kalyan help customers with the feature of virtual try-on to select jewelry pieces with their specialized apps. 

A similar feature was launched by Lenskart to try their frames virtually using their native app and select the best product. 

H&M group (Sweden) helps customers create a virtual avatar by using 3-D body scanners. Herein, shoppers can then have personalized recommendations of fit, color, and styles. Then, customers can place customized orders for jeans that are tailor-made for them. 

VR, on the other hand, is experiencing the virtual world as if it were the real world.

Brands like Ikea have offered a virtual showroom or ‘Virtual Home Experience’ where they help their customers experience interior and home decor options. Buyers wear VR headsets and now they can inspect products as in real life, giving a 360°visualization of all possibilities.

 Check the video here

Immersive technologies are enhancing product visualization and customer engagement.

It’s safe to conclude that consumers are increasingly prioritizing sustainability and ethical practices. In the example above, garments manufactured post-personalization won’t add up to retail garbage and turn out to be climate-positive. 

The circular economy has opened new doors for reused and rental products to appear in the market. 

Mindful shopping is another trend where shoppers want to buy high-quality products, even if that means paying a higher price. The focus is on quality instead of quantity. 

How Retail and Ecommerce Are Adapting to Consumer Behavior Changes

Retailers and e-commerce businesses are adapting to changing consumer behavior by:

Future of Retail and Ecommerce in India

Opportunities for Growth in Retail and Ecommerce

Challenges Ahead in the Retail and E-commerce Landscape

Small businesses need to listen to their target audience and commit to solving their real problems to stand a chance against huge sellers with large budgets. Only offering discounts or free delivery can’t help them stand out in the long run. 

The Long-term Outlook for Retail and E-commerce

The future of retail and e-commerce in India is promising. As technology continues to advance, we can expect further innovation and disruption in the industry. A hybrid approach, combining the best of both worlds, will likely be the key to success.

Conclusion

Recap of Key Differences Between Retail and E-commerce

How Retail and E-commerce Complement Each Other in the Modern Market

Both retail and e-commerce have their own advantages. They can complement each other to create a seamless shopping experience for the customers. For instance, retailers can use online channels to expand their reach and provide additional services. At the same time, e-commerce businesses can establish physical stores to enhance brand experience and offer offline support.

Final Thoughts on the Evolving Landscape of Retail and E-commerce in India

The Indian retail and e-commerce landscape is dynamic and ever-evolving. By understanding the key differences, challenges, and opportunities, businesses can navigate this complex environment and emerge as leaders in the industry.

Need assistance with your logistics overhead? Get in touch with us before your competitors start offering free delivery. 

Key Takeaways on Retail and Ecommerce- 

The Ecommerce way is more favorable for upcoming brands that need to grow fast. 

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