E-commerce is sweeping the global markets at an extremely fast pace.
According to a Statista digital market outlook analysis, U.S. e-commerce revenue has been gradually growing since 2017 ($425 billion), made a dramatic leap during in 2020 ($645 billion), and is predicted to continue its steady incline over the next two years—reaching $1.1 trillion by the start of 2024.
The COVID-19 pandemic has accelerated consumer adoption and loyalty to e-commerce, especially when it comes to key products that people use daily. This includes electronics, clothing, household goods, hygienic items, cosmetics, and more.
According to the research conducted by ComScore, the number of consumers purchasing goods in traditional brick-and-mortar stores has been continuously declining since 2018. Up to 60% of shoppers claimed they are more likely to make a purchase online. In comparison, only 30% preferred online services just three years prior.
Old vs. new techniques E-commerce owes its popularity to a wide range of substantial advantages. One main aspect is affordability. Purchasing goods online is often cheaper, because of lower setup and running costs when offering products online. Savings on sales associates, electric bills, and property taxes cumulatively affect the final price of the goods.
Two additional aspects that promote e-commerce are availability andselection. Online shops are open 24/7, while traditional retailers are only able to provide a limited time window for purchasing. Moreover, e-commerce sellers are able to hold much larger quantities of selection in stock at one central location, therefore aiding them in shipping speed and cost.
However, traditional retailers propose substantial benefits that e-commerce retailers are simply unable to provide. Brick-and-mortar retailers are able to offer human connection, emotion, and networking. Neither a detailed review nor high-quality photography is able to replace a hands-on experience, where one can feel, smell, and interact with a product.
In 2016 Jack Ma, founder of Alibaba, coined the strategy “New Retail.” The term describes a seamless engagement between online shopping, in-person stores, and logistic business through digitalization, big data technology, and innovative financial tools. A widespread implementation of this strategy took place in 2020, when thousands of local shops in the United States turned into order-and-delivery stations for e-commerce pick-up, as a result of the pandemic.
The Experience Element I’d like to humbly offer an approach I believe every retailer can take. Think about your last order of French fries. If you ordered it at a fast food drive-through, you probably paid roughly $3. But if you ordered it at a beachfront restaurant, you likely paid closer to $9.
Even if you knew that it was the exact same brand, fried the exact same way, you would still be fine with paying triple the price. Why? Because of the experience. At the beach, you paid $3 for the fries and $6 for the experience, including the view and sound of the ocean. This is where the future of retail may lie—in how much experience we can supply, and how much customers will pay for it.
“We are not thinking machines that feel. We are feeling machines that think.” — Dr. António R. Damásio
As a brick-and-mortar business owner, I keep reminding myself of this quote. The experience that traditional brick-and-mortar establishmentsprovide will never be able to be provided by online retailers. E-commerce will forever be the fast food drive-through. And if retailers want to survive, they must make sure they are the beachfront restaurant.
Community The first time I noticed the Lululemon brand was due to the massive lines outside their New York City locations. By offering free yoga classes once a week (and incredible social media work), they were able to create a healthy, interactive community. One that made customers feel comfortable paying $98 for a pair of athletic pants. This is a great example of how a simple idea can provide the extra touch for in-person retailers.
By building a community, retailers can help customers feel a personal connection with the brand. Everyone likes to feel part of something.
The omnichannel approach Competing with e-commerce doesn’t mean that brick-and-mortar retail should allow itself to stay away from digital platforms. On the contrary, retailers should reinvent their digital presence to support the experience they’re delivering. This can be a website, online video reviews, a smartphone app, or a social media page to interact with. The omnichannel approach takes all the possible touchpoints on board.
Conclusion The fight isn’t necessarily fair. Though online retailers have major fundamental advantages and limitless technological advancements on their side, I still believe that a major part of traditional brick-and-mortar retail will survive, simply because the customer base will always be human.
I believe retailers that focus on a unique and fun experience, with additional online help, will succeed, and take over those who didn’t evolve quickly enough.