E-commerce! Online shopping! E-retail… not even a day passes without us hearing these buzzwords at least once. Many physical stores are also either going online, or marking their online presence through Pinterest and Instagram. This phenomenon has revolutionized the entire retail and trade scenario, expanding a brand’s geographical reach and opening up a whole new world of customers.
One question that often pops up in the minds of retailers and customers alike is whether e-commerce will takeover physical retail entirely. Here’s what we think.
Online Retail- A Dream Run
Let us consider a few statistics to understand just how rapidly the e-commerce sector is growing. By the end of this year, Christmas sales included, online retail would have touched a whopping $1500 billion worldwide!
As we can see from the chart above, online shoppers from the United States and United Kingdom have traditionally been spending the highest amounts- about $2000 dollars per person in a year.
There are four main reasons for online retail’s phenomenal growth, and only one of them is the sheer evolution of the physical store.
- The physical store, through payment gateways and digital catalogs, is moving online. The key to making the online experience fulfilling for the customer and fruitful for you rests in providing an experience that is as close to the touch and feel the experience of a physical store.
- Mobile technology and the use of apps improve access to online stores and can even build brand loyalty- one reason so many online stores ask consumers to install their apps.
- Social media is a game-changer when it comes to advertising. With diverse platforms, you can now use text, visuals, audio, and just great pictures to promote your products.
- Online sales patterns vary across age groups. The 18-24 age group prefers to shop more online compared to the older counterparts. This can possibly be attributed to this being the first generation that grew up alongside the internet.
But as instinct, why do people prefer to shop online? Wouldn’t a physical store experience just be more fulfilling? Moreover, wouldn’t we have the goods in possession immediately after purchase?
- The main reasons for increasing online sales are undoubtedly the high discounts and greater convenience of buying online.
- The wide variety of choices all visible at your convenience, the option to pay through digital wallets and the good logistics services all stand as reasons for the increasing popularity of online shopping.
- Developing countries are adding internet users with each passing minute. This means more people have access to online stores with each passing day.
In spite of this, the fact is that physical stores aren’t going anywhere. They continue to thrive in malls and shopping centers and you’ll always see crowds thronging to these places during sales. Why is it that with such rapid evolution of online retail, offline stores aren’t entirely fading away? Why is it that the percentages of online sales (on a web browser) and offline ones still continue to compete?
Is Offline Retail Going To Thrive?
In spite of such impressive growth in the online retail sector, about 36% of all shoppers who see a product online prefer to buy it from a physical store. This would be even more relevant for products of high value, such as jewelry.
Beyond this, there is the unorganized offline retail sector that includes everyone from your neighbor grocer to Walmart. And one look at Walmart will tell you they ain’t shutting shop anytime soon.
What is helping these physical stores still remain the primary choice of people for shopping?
- Consumers, especially those in older demographics, may have trust issues buying online. They may still want to buy products after experiencing them firsthand.
- Going to a physical store is an opportunity to interact with society. Moreover, people may prefer to shop in groups and the option to do so is effectively non-existent in online stores.
- Establishing a brand exclusively online can be daunting, considering the largest gateway for discovering these products is Google. Even online retail giants such as Amazon have seen the benefit of opening up a few physical bookstores.
The Rise Of Omnichannel Retail
Analysts say that the future of retail lies in a hybrid model, wherein both online and offline retail will function as one single entity. According to an AT Kearney report, a stunning 95%of sales are achieved by brands that have an offline presence. The physical stores could serve as everything from display cases to service centers. Even if customers do end up buying online eventually, the source of value creation lies in the physical product sitting at a physical store. This reason alone is enough to keep brick-and-mortar stores around for a long time to come.
Suggested reading: All You Need To Know About Omnichannel Retail
The key is to transgress from being just another physical store to one that sells products on multiple sales channels.
“The big benefit of the flagship stores is that they’re terrific marketing vehicles. Not only do those stores tend to be economically successful on their own but they generate a huge lift in incremental shopping to the online store, ” said Jason Goldberg, senior vice-president Razorfish in a Guardian article dated early 2016.
This synergy that offers buyers a choice of retail channels to make the purchase from, known as omnichannel retail, is a way for brands to provide consumers with options. People can choose whether they’d want to visit a store or buy through other channels. There are a few other things brands can look into to make this hybrid retail experience seamless:
- Keeping the branding intact, be it in physical stores or online. The easiest way to avoid brand confusion is by staying consistent across channels.
- Offering the best of both worlds. Offering in-store pick-ups for online sales and letting customers experience a product in-store before buying online are some ways to integrate both.
- Managing inventory seamlessly across all channels. A dynamic inventory management that tracks levels across channels, 24X7 is absolutely essential. At Primaseller, we have developed a software whereby sellers can integrate POS and online channels of sale and manage all their orders and inventory from the same panel.
So, will online retail will take over physical stores? Not anytime soon. As long as shoppers still want the experience and not just the product in a box, offline stores are here to stay. However, both online and offline stores would do well to consider selling on other channels and diversify their brand presence.