So, you’ve finally found that fantastic retail product people can’t wait to get their hands on. But that’s only half the job done. You still need to make the critical decision about the best place to get your product to your target audience — should you go online or just stick to offline channels?

Well, there’s no easy answer to this question. The right choice depends on your budget, product, and business goals.

Today's guide will pit online businesses against offline businesses, considering their unique advantages and disadvantages. You’ll have the insights you need to make a better-informed decision by the end.


What is an Online Business?

An online business is a type of business that operates entirely through the Internet. This model is also called eCommerce. Essentially, it involves creating your shop on an eCommerce platform, an online marketplace, or a social media channel.

Thanks to online shopping, customers can easily search for and buy products they like from anywhere worldwide — as long as they have access to the internet.

To facilitate this, you have to establish payment gateways for secure online transactions. Partnering with logistics and delivery services is crucial to ensure the purchased products are delivered physically to the buyers.


What is an Offline Business?

An offline business, also known as a brick-and-mortar store, operates only in a physical location. So, there’s room for customers to browse products, interact with staff, and experience the product firsthand. Then, customers may eventually complete the transaction at a checkout counter.

Like an online business, an offline business needs several tools to function. For example, you’ll need a POS (point of sale) system to process transactions and receive payments. You’ll also need a physical location, whether an entire building or just a booth at a farmer’s market.


Advantages of Starting an Online Business

The eCommerce industry is growing super fast. In fact, by 2026, 23.3% of all retail shopping will take place online.

Retail Ecommerce Share of Total Retail Sales - eMarketer

Are you still trying to decide whether this path is right for your business? Here are some advantages to expect from setting up an online shop.


1. Global Reach

The beauty of online business is that you can sell to anyone anywhere, as long as they can access the internet. So, you don’t have to wait until someone walks past your store before you make your next sale. In fact, 57% of online shopping consists of international purchases. So, you can spread your wings worldwide and tap into new revenue opportunities.

But you have to consider logistics. To take full advantage of this reach, you want to work with a fulfillment and logistics partner that enables you to deliver to most countries. That means you’ll need to consider integration with a service like ShipStation or GlobalShopex

Also, remember that this potential reach doesn’t eliminate the need for marketing. Like sharing flyers for a physical store, you still need solid digital marketing to reach potential buyers effectively. 

So, you’ll need to invest in digital marketing strategies like SEO (search engine optimization) and social media marketing. The best thing is that these strategies are usually more cost-effective than traditional approaches, which links nicely to the next point.


2. Less Operating and Maintenance Costs

Since you won’t have to set up a physical store, you can skip worrying about expenses like rent, utilities, or product displays. This flexibility makes it easier to channel more resources to other vital areas like development, marketing, and customer service.

Moreover, an eCommerce store generally requires fewer employees than a physical business. If any, the labor need is typically limited to web developers and customer service representatives. Or, if you offer services like dishwasher repairs, you’d only need your field technicians. You don’t need in-store sales staff or a cashier because your online store will be entirely self-serve.

Some eCommerce platforms can also take over some of the functions of employees. Shift4Shop, for instance, can automate your inventory management and purchase orders.

Your maintenance cost is minimal as well. The absence of a physical store means no concern about property taxes, insurance premiums, or routine maintenance expenses.


3. 24/7 Availability

You can go on Amazon any time of the day, browse through products you like, and buy. This accessibility is a significant differentiator from physical businesses that close their doors at night or on weekends.

This 24/7 availability can extend to customer service, too. For example, you can set up live chats to provide round-the-clock assistance to customers. This level of support is crucial for improving the customer experience and building trust.


Disadvantages of Starting an Online Business

Online business may not be right for everyone. While eCommerce comes with many benefits, some drawbacks are worth considering before you decide. Here are the disadvantages of starting a business online.


1. Limited Face-to-Face Communication

Everything is digital in an online store, so there isn’t much direct face-to-face interaction between you and your customers. And when people can’t see who they’re dealing with, especially if they are first-time buyers, they tend to trust you less. 

Well, you can’t blame them; countless scam websites exist. The only thing you can do is try to gain their trust by displaying trust signals on your online store. 

This includes sharing: 

  • Security and privacy policies
  • Endorsements from authorities in your industry
  • Reviews from real customers 

You also have to put extra effort into building solid customer relationships, which isn’t always a walk in the park. But most importantly, you must always be there to address their concerns.


2. Dependence on Technology

The success of an online business hinges heavily on technology, from reliable internet connectivity to secure web infrastructure and effective eCommerce platforms. Any of these technologies can get disrupted at any time. When this happens, it can significantly affect your business operations and revenue.

You have to factor in the cybersecurity risks, too. Online businesses are prime targets for cyberattacks, such as data breaches and malware. These attacks could compromise customer information and damage your business reputation if successful. That’s why you need to prioritize enhancing your retail cybersecurity.


3. Absence of Physical Interaction with the Product

According to a study, hesitation is the most common problem in online shopping. And this makes sense because we’ve seen several cases of “what I ordered” not matching “what I got” online. That’s why customers today want a tangible experience before buying a product. This is especially valid for appliances or apparel.

Unfortunately, an online business doesn’t afford customers the luxury of trying out new clothes or testing out appliances before purchasing them. So, always expect a level of hesitation or uncertainty among buyers.

Although nothing matches the feeling of experiencing the product firsthand, there are still some good ideas to help you get something close. 

First, ensure your product description is well-written, capturing every essential detail about the product. You can back this up with high-quality visuals like videos or photos from every angle.

Next, use emerging technologies like augmented reality to your advantage. For example, if you’re a furniture seller, you can use Amazon’s showroom to display your product. This helps potential customers visualize how the furniture would look in their rooms before buying.

Amazon Showroom AR

Source: Amazon

Sephora also has a similar idea, where buyers can try out lipsticks virtually before purchasing.

Sephora AR

Source: Digital Commerce 360

The key is to bridge the gap and replicate the concrete experience of physical shopping as closely as possible.


Advantages of Offline Business

Even though eCommerce is becoming popular, offline businesses continue to hold their ground in retail. Here are some benefits you can expect if you opt for this business model.


1. Enhanced Customer Trust

Customers usually don’t need to worry about getting scammed when buying from an offline store. After all, they have all the time to inspect the product thoroughly. They can also directly engage in person with you to ask questions if anything seems unclear. This is a perfect environment to build trust with your customers. 

But that also means you have to train your staff to go above and beyond in helping customers out. Since they’re directly interacting with customers, customers can also read their non-verbal cues. So, they must always put on a smile and show that they genuinely care about customer needs. Essentially, you always want to make customers feel valued and appreciated. Then, trust follows. 


2. Assurance of Product Quality Before Purchase

Offline stores usually let customers try out or examine products before buying them. This hands-on experience assures the customers of the quality, feel, and suitability of what they’re buying, reducing uncertainties in their purchase and eventually maximizing customer satisfaction. As for you, you’ll also enjoy a lesser product return rate on your retail sales. 

The other part of the story is that your product now has to be top-notch for you to have a good chance of making sales in the first place. That’s why you must be intentional about the supplier you’re sourcing from. Also, you want to ensure that you have reliable quality control measures in place.


3. Potential for Public Relations and Brand Building Events

Finally, offline businesses usually have a physical presence in the community. Therefore, that’s an opportunity to engage with the local community to cultivate positive customer relations and build your brand.

For instance, you can host community events, such as seminars, product demonstrations, or seminars. Doing this will build your reputation positively while increasing your brand visibility.

Another opportunity is to support local charities whose values and missions align with your business. This demonstrates your social responsibility and helps you create a positive perception and solid brand.


Disadvantages of Offline Business

Lastly, on our online business vs offline business showdown, let’s take a closer look at the downsides of setting up an offline business.


1. Fewer Hours of Operation

Unlike online businesses that can run around the clock, offline businesses are confined to specific operating hours. They typically only operate in the daytime and can be closed on certain days. This limited availability can restrict customer access.

For instance, you can’t sell to those with busy schedules who prefer shopping outside traditional business hours like early mornings or weekends. And as a result, your overall revenue potential might be limited in an offline business.


2. Constrained Reach

An offline business model has geographic limitations, usually within the radius of its physical location. As a result, expanding the customer base and tapping into new markets can be challenging, especially when compared with online businesses.

The only way to potentially expand your offline business is by considering strategic expansion to new locations. This means opening additional retail stores or partnering with franchises to expand your geographic reach. Believe it or not, this isn’t in any way cost-effective.


3. Limited Data Gathering

An eCommerce business allows you to easily track metrics like website traffic, customer interactions, and even purchase behavior to understand your customers better. But if you run a physical shop, you’d typically rely on traditional methods like surveys and customer feedback forms. Sadly, these methods often provide less detailed and less actionable insights.

Thus, the ability to understand customer behaviors, create personalized marketing campaigns, or even make data-driven decisions is relatively limited in an offline business.


Offline or Online Business: Which Will You Choose?

Choosing between online and offline business isn’t the easiest decision. But don’t worry; this comprehensive guide will get you up to speed.

Now, create a list of your business goals and your budget. Compare this to the advantages and disadvantages of each business model. For example, if you’re working with a very minimal budget for now, it’s best to go for an option with less operating and maintenance cost, which is online. After weighing these key factors, finding the best fit for you should become clearer.

Good luck!