Free traffic is mostly generated through social media or search engine optimization. That is generating organic traffic through optimizing your blog, content or website for search engines. On the other hand, Paid traffic involves making payments to have traffic diverted to your site. This includes strategies such as Pay per Click (PPC) where an ad platform is paid to host your ad and you are only pay for each click on the ads that eventually generates traffic to your site by redirecting the visitors.
Both paid and free traffic are acceptable ways of drawing visitors to your online store or business.