Online Business vs. Physical Business

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Alisha John

Online Business is easier to manage since you only need a computer and an internet connection. Because it’s online, you can find customers from all over the world, which means you make more money, plus it’s easier to advertise.

On the other hand, a physical business allows you to see your customers and build relationships with them which is more challenging when running an online business.

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What is Online Business?

Online Business vs. Physical Business

The online business sells products or services, primarily for industries, over an online system such as the internet. The key person involved in such a business is called an Internet entrepreneur.

In the online business model, the online owner is responsible for bringing new business to his site and controlling marketing promotions. You can market your online product or service using different channels such as Adsense, Amazon, eBay, etc.

Advantages of Online Business

  • It has low start-up costs
  • You can access the global market
  • It’s a Tax-free income if done right
  • Easy to do without being physically present
  • It’s easy to sell your business
  • You can promote your business using social media and search engines.
  • You get more audience to sell your products or digital assets

Disadvantages of Online Business

  • You have to market your product
  • There are many competitors in the market
  • It’s challenging to build relationships with customers
  • You have less control over your product
  • You’re vulnerable to theft or loss of money if you are not careful
  • It requires strong analytical skills
  • It’s a 24/7 business, so you need to be committed

What is Physical Business?

Online Business vs. Physical Business

A physical business is a business that has an actual physical presence, often with employees and through storefronts or other brick-and-mortar venues. It is more likely to have physical products, which need warehouse space and distribution channels.

In a physical business, you need to deal with employees, transportation, and physical space. You have to be concerned about the design of your store or office, how it’s going to look like, etc.

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Advantages of Physical Business

  • You can build relationships with customers
  • You can see your product instead of just looking at pictures
  • Your business is more stable and less likely to fail
  • There are fewer competitors, so you have more control over the market
  • You can hire employees if needed for assistance.
  • Have a business license for a tax deduction. You can also pay fewer taxes since you have a physical business
  • You can sell your business for more money

Disadvantages of Physical Business

  • It costs more to start a physical business
  • You have less control over your product because you depend on the delivery service
  • Your employees can be a liability if they mess up or steal from you
  • There’s a higher risk for theft and robbery, so you have to ensure your stores are safe.
  • You have to worry about the design of your store or office
  • You’re limited in a physical space, so you need to find a way to stand out
  • You need to pay for your employees, which is the highest cost in the business.

Key Differences between Online Business and Physical Business

  1. The main difference between online and physical business is that there is no need for inventory in the former.
  2. There is no need to maintain inventory in the warehouse in an online business, and so much maintenance cost is saved. In physical business, you need to have a warehouse, and so much money is spent on maintaining the same.
  3. There is no need to maintain much staff in the office in an online business. In physical business, you have to hire people to take care of the office and handle other activities.
  4. Online business has no geographical boundaries, while physical interaction is limited to more countries.
  5. In an online business, there are no laws that you have to follow, while in a physical business, you have to abide by the local rules.
  6. Online business doesn’t have any policies, and thereby it is flexible. Physical businesses require policies for compliance.
  7. There is no need for any training in online business whereas you have to spend a lot of money in training the employees for the physical business.
  8. You can start an online business within a few days, but setting up a physical business takes time.
  9. In Online businesses, there are more chances of earning money while it takes a longer time to make money in physical interaction.


Both online and physical businesses have their advantages and disadvantages. As we advance, the world is moving towards technology, so it is highly likely that physical businesses will be phased out, and online business is the best option for the future.

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