Choosing between a shared mailbox vs distribution list comes down to one question: does your team need to work from the same inbox, or just receive the same message? A shared mailbox gives several people one inbox, one Sent folder and one calendar. A distribution list simply copies each email into every member's own inbox.
Both are free to set up in Microsoft 365, and both can sit behind a friendly address like info@ or accounts@. The difference shows up later, when a customer email gets answered twice, or not at all, or when someone leaves and nobody can find what they sent. There is also a third option, the Microsoft 365 group, which mixes a shared inbox with files, a calendar and Teams.
This guide explains how each one works, what it costs, where each one goes wrong, and a simple way to decide for every address your business uses.
A shared mailbox is a place people work from; a distribution list is a way to send one email to many people.
With a shared mailbox, messages land once in a central inbox. Everyone with access sees the same items, can tell which ones have been read, moved or answered, and can reply so the message comes from the shared address rather than from their personal one. Replies are stored in the shared mailbox's Sent Items, so the whole conversation stays in one place.
With a distribution list (Microsoft calls it a distribution group), there is no inbox at all. The list is just an address that fans out a copy to each member. Each person reads, files and deletes their own copy, and when they reply it comes from their own address. Nobody else can see who answered or what they said.
A Microsoft 365 group sits in between. It has its own group inbox, plus a shared calendar, a SharePoint document library, a Planner board and, if you want, a connected Team. Members can follow conversations in their own inbox or read them in the group. Microsoft's own comparison of group types is a helpful reference if you want the technical detail.
Use a shared mailbox when several people answer the same incoming email and the business needs one record of what was said.
Typical examples:
Shared mailboxes also make staff changes easier. When someone leaves, the history stays in the shared mailbox instead of disappearing with their account, which is one reason we include them in our employee offboarding IT checklist.
Use a distribution list when people need to be informed, not when they need to respond together.
Microsoft 365 also offers dynamic distribution groups, which build membership automatically from attributes such as department or office location. They are useful for larger teams because new hires are included without anyone remembering to add them.
The trap is using a distribution list for something people need to answer. Three staff see the same customer question, each assumes someone else replied, and it sits for a week. Or two people reply with different answers. If that sounds familiar, the address probably belongs in a shared mailbox.
A shared mailbox does not need its own licence for most small businesses, but there are limits worth knowing.
According to Microsoft's guidance on shared mailboxes, a shared mailbox can store up to 50 GB without a licence. Beyond that, or if you want an expanded archive, it needs an Exchange Online Plan 2 licence, or Plan 1 with the Exchange Online Archiving add-on. Some compliance features, such as litigation hold, also need extra licensing.
Two other points matter:
Distribution lists and Microsoft 365 groups do not need licences of their own. If you are reviewing plans more broadly, our Microsoft 365 licensing guide explains how the business plans differ.
Most problems come from a shortcut taken years ago that nobody has revisited.
Many of these settings also belong in a wider review of your tenant. Our Microsoft 365 security baseline covers the related controls.
List every shared address your business uses and ask three questions about each one.
Once each address has the right type, document who owns it, who has access and how often access is reviewed. That small piece of housekeeping prevents most of the confusion described above.
NetFusion Designs (NFD), a SOC 2 Type II certified managed IT provider headquartered in Kitchener-Waterloo, helps small and mid-sized organizations across Ontario, Quebec and Manitoba set up and clean up Microsoft 365. That includes converting password-shared accounts into proper shared mailboxes, tidying distribution lists, setting permissions and retention, and fitting it all into a secure tenant. You can learn more about our Microsoft 365 optimization services.
No. A distribution list has no mailbox, so there is nowhere to store messages centrally. Each member receives a separate copy in their own inbox and replies from their own address. If you want a central inbox that several people can see and answer from, you need a shared mailbox or a Microsoft 365 group instead.
Usually not. Microsoft allows a shared mailbox to hold up to 50 GB without its own licence. You do need a licence if the mailbox grows beyond that, if you want an expanded archive, or for some compliance features such as litigation hold. Every person who opens the shared mailbox still needs their own licensed Microsoft 365 account.
Choose a shared mailbox when the main job is answering email from one address with a clear record of replies. Choose a Microsoft 365 group when the team also needs shared files, a group calendar, a task board or a connected Team. Many businesses use shared mailboxes for customer-facing addresses and groups for internal project teams.
Yes. In the Exchange admin centre, an administrator can convert a user mailbox to a shared mailbox, which keeps its existing email. This is common when an employee leaves or when an address like info@ was set up as a normal account. Check the mailbox size first, because a shared mailbox over 50 GB still needs a licence.
Not sure whether your shared addresses are set up the right way? Talk to the NFD team and we'll help you review your Microsoft 365 email setup and tidy up anything that's putting your business at risk.
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