The landscape of e-commerce

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“Can you please pass me some Kleenex?” That’s what one ends up asking for, when down with a cold.

But have you ever thought why we call it Kleenex and not something else? Kleenex is just the company that produces it, and it’s not the name of the product. Organizations like Kleenex, Xerox, Colgate, etc. have established themselves as a brand and have instilled brand values among their consumers. A brand is a business mixed with emotion, engagement, and expectation. A successful brand encompasses four V’s: voice, visuals, value, and variation.  But right now, e-commerce is booming and growing exponentially.

This growth of e-commerce is impacting the brick and mortar sales along with retail jobs. Retail enterprises have been complaining about losing out to the e-commerce giants like Amazon as they continue to run away with the maximum share of sales. Recently, Jeff Glueck, CEO of Foursquare shared his opinion on Quora about the significant rise in the closure of various retail stores like Macy’s, Sears Holdings, etc. and also the slide in the foot traffic to real-world shops and businesses which is slowing.

Few statistics showing the breakdown of certain organizations like:

With the closure of the retail stores, people are out of jobs. The hundreds of thousands of jobs which are created by the new online firms are just not enough to absorb the job losses at traditional retailers. Also, the posts are mostly concentrated only in a handful of large cities and tech hubs.

Though online shopping accounts for only 8.4 percent, still it is growing exponentially. According to Statista, the digital market penetration would increase to 63% by 2019. Or the findings of this 2016 report by Forrester Research suggests that:

  • E-commerce sales are expected to rise by an average rate of 9.32% annually over the next five years as US consumer expenditure will reach $523 billion online by 2020.
  • The number of consumers browsing e-commerce businesses and e-commerce stores, and buying online is expected to hit 270 million (mainly driven by mobile).

Why are the retail enterprises losing out to e-commerce?

The brick and mortar are losing significantly to the e-commerce websites. The three plausible explanations for the recent demise of America’s storefronts are:

People are buying more stuff online than they do offline:

The answer to the death of brick-and-mortar shops is that Amazon is taking most of the retail. Amazon’s sales in North America increased from $16 billion to $80 billion which is enormous, and this suggests the grip of Amazon over the market.

Still, online shopping has been doing well for a long time in categories like books, music, etc. Certain conveniences like easy return policies, favorites have made online shopping cheap, comfortable, and risk-free for consumers. The success of the online stores has forced the brick mortar ones to come up with such similar features, discounts, etc.

We built way too many malls:

Today, there are over 1,200 malls in America. In another few years, there will be an inevitable decline in these malls due to “structural decay” according to Cowen and Company Research. In a lengthy and detailed paper on the demise of departmental stores, Cowen and Company research analysts offered reasons for the “structural decay” of malls.

These include the stagnating wages and rising health-care costs which forced consumers to spend less on fun stuff, like clothes. Also, the failure of one or more department stores can ultimately shut an entire mall down.

Consumers are shifting their expenditure from materialism to personal goals:

People around are mostly interested in spending quality time with their family and friends. It’s more about life now which includes travel, dining out, etc. As more and more Americans become bargainers, discount hunters, the e-commerce websites are sliding according to what their customers need.

Few organizations have understood the above reasons, and hence they are readily building up to compete with various e-commerce brands.

Though we are making a distinction between the statistics of the digital versus the brick and mortar store sales BUT for consumers, it’s just “commerce,” or omnichannel. Omni-channel is a well-integrated shopping experience across various channels (both online and offline) considering the needs of customers. An excellent customer experience is what determines the brand’s ultimate success. It’s essential to grasp that digitally influenced physical-stores sales far exceed the sales, online. But ultimately, it’s not a battle between online vs. offline retail, but it’s the strive to bring out the best of both the channels on behalf of the customer.

AthenaThe landscape of e-commerce

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