“Throughout the world, physical retailers are feeling the pinch of the rapidly-expanding e-commerce industry.”
In my previous article I spoke about the impact of e-commerce on traditional brick-and-mortar stores. Throughout the world, physical retailers are feeling the pinch of the rapidly-expanding e-commerce industry. More and more people are buying their goods online and fewer are venturing out to malls.
The situation is so dire that in the US alone stores are closing down at an unprecedented rate, with experts predicting that by 2025 a total of 75000 stores would have closed down. Large shopping malls are closing down and are lying empty.
But why is e-commerce so successful, and why is it taking so much away from traditional stores? Why are people abandoning the age-old practice of visiting the mall to buy their goods?
Since its early days in the 1990s, e-commerce has become a massive, burgeoning business for a number of reasons. The most obvious reason is convenience.
There is nothing as simple as browsing on your computer, tablet or phone, making a few clicks, and then having your goods delivered to your door a day or two later.
But there are a number of other reasons that drive the success of e-commerce, such as the range of goods offered. Online stores are able to display a vast range of goods, more so than physical stores can.
“E-commerce is expected to become the largest retail channel in the world by 2021, according to Euromonitor International, outpacing sales through retail outlets like supermarkets, independent grocers, apparel and footwear retailers, among others. E-commerce will account for 14% of total retail sales in that year”
Online stores do not need much space because they rarely keep stocks of their merchandise. All they do is display images and descriptions of their goods, and as and when orders come through, they simply ship directly from the source.
This mode of operation gives online stores a bigger advantage: lower prices because they don’t have to pay huge rentals for prime shop-front premises. Because they are buying directly from the factories or distributors, they can save on shipping and warehousing costs and pass this saving on to customers.
They’re able to offer shoppers a fully customised experience, allowing them to customise their items to their exact needs. For example, when buying a computer, you can design your own by choosing the processor, memory, storage, screen size, etc.
Online stores even display customer reviews, so you can see what others think about the product you are considering purchasing.
Combine these conveniences with the security of making a purchase from the safety of your own home, it’s no wonder why e-commerce is growing at an incredible rate.
In South Africa, it is smaller than most countries but has shown major growth and has become mainstream. It’s a matter of time before it overtakes most other forms of commerce.
The biggest driver of e-commerce is that, even though there are big global names like Amazon and Ali Baba, e-commerce has reduced the barriers to entry for small and micro businesses to almost zero.
It is now possible for just about anyone to enter the lucrative e-commerce industry with nothing more than a cellphone and a bit of data.
In next week’s article we will meet some enterprising people who are doing e-business in a surprising way.