Is Ecommerce Killing the Retail?

In the article published on 10th April at theatlantic.com, one can find some interesting insights on the current situation of stationary stores and the recession of retail.

What’s up?

The author of the article, Derek Thompson, notes that the last two years have been quite a tough time for traditional retail in the United States. In 2017, nine major stores have declared bankruptcy – as much as throughout the whole 2016. Giants like J.C. Penney, RadioShack, Macy’s and Sears close their brick-and-mortar stores – more than 100 locations were selected for liquidation in the first place. Stock prices of apparel companies, including Lululemon, Urban Outfitters, and American Eagle hit new multi-year lows and Ralph Lauren announces the closure of its iconic store on Fifth Avenue (the one where Rachel Green has worked for in TV series hit Friends!).

The author also tries to find the cause of this situation. As the main causes he names three factors:

– the rise of ecommerce’s relevance, the Amazon to be exact

– overload of shopping malls – built as the sign of excessive optimism on the wave of their popularity. Especially that no one seems to remember that often after closing down the main attractions of a given center, such as a popular company’s store, customers lose interest in it, traffic decreases, smaller stores close, and so the whole center slowly dies.

– rising popularity of restaurants – one of the prevailing trends is the return to tightening social ties, not through social networks, but live, with a joint meal or other social activity.

What makes online shopping so popular?

Despite the 2008-2009 crisis, the economy is growing at a normal pace. Societies are getting rich. Thus there’s some new space for spending money. For many, this means not only increasing the number of goods purchased but also increasing the overall quality of life and purchasing the so-called luxury goods. But the car, or even the fridge, is not something that is bought just like that, with a light hand.

As I have mentioned many times, a modern recipient is a person who has access to incredible amounts of information practically at the thumb’s reach. Whether in the store or watching TV commercials, each of us can, within seconds, make a brief product research followed by finding the best offer. There’s not much sense in leaving a ton of leaflets at people’s doorstep and a highly paid internet campaigns if it won’t reach the potential buyer.

Retailers have been struggling with two effects for years – ROPO (short for research online, purchase offline) and Showrooming (i.e., reverse ROPO when the client starts in the stores to finish transaction online). Both of these schemes are a big problem for marketers – they make it difficult to conduct consistent performance analytics, raise the bar for addressing the marketing message, and of course cause clients cross-channel migration.

The society’s wealth increase has one more side. People are getting more comfortable and can afford to ‘outsource’ some activities. So instead of wasting time for chasing all day at the mall, they prefer to order things via internet and wait comfortably until someone will deliver the goods, carry them on the 4th floor and sometimes even assemble on the spot. Time spared can be put to the good use, for example, to work on a new project, bond with one’s family, or meet friends in an already mentioned restaurant.

However, the fact that commerce is moving into the world wide web doesn’t mean that digital marketers can be off guard right now and just wait for their customers to come by themselves. In the online world, there is a fierce battle for the customer, especially because the reach of every supplier is far higher than offline – online shops are not limited by administrative divisions and have practically global reach. Those marketers use a variety of techniques and tools only to align themselves with their audience better and reach prospects at the moment of the highest possibility of making a transaction. Also, internet users increasingly pay attention to their security and anonymity. The trend for ever increasing online anonymity only accelerates the pace of marketing automation software development. And not in the direction of simple spambots, who gather email addresses from every place possible in order to send mass messages to all of them.

Right here, right now marketing automation gravitates towards the use of machine learning and artificial intelligence. Full personalization of the marketing message, including its content, individual customer needs, the best time for delivery, or choosing the best channel allows marketers to shorten the distance between the company and its customers and create real, long-term relationships. In other words, the market is aiming to create a system based on mutual respect – you, the consumers, entrust us with your data, and we, the business, prepare for you content that is relevant and useful.

Does it really mean the end of the traditional retail?

To be frank, I’m far from auguring the end of any form of exchange of goods and services. Yes, the internet and smartphones have turned the traditional model upside down, but clever marketers and customers are finding new ways to marry those apparently different worlds. The revolution that is already happening will not spare any of us. What will define the winners will be the way they approach it. Will they strive to separate online and offline, or on the contrary – they will fully utilize omnichannel capabilities and provide their customers with the best shopping experience possible by giving them the right to use the service in the most convenient way?

From the history of ecommerce you can conclude that a common link between the digital and real world will be the technology that enables the collection and integration of behavioral data both online and offline and integrates this data into a consistent image of the customer’s behavior. Besides, because the sheer volume of information requires almost superhuman attention and abilities – the marketers and business owners will look for solutions that translate gathered data into specific actions, such as automating marketing communication, displaying personalized advertising, or monitoring the customer life cycle, regarding e.g. the shelf life of the purchased goods. Examples of this kind of technology include beacons, analytical programs, or already mentioned marketing automation platforms.

That’s not all!

It’s easy to look at what’s going on in the market nowadays and say: Hey! I’ll just learn how to automate marketing and sales processes and Bob’s my uncle. However, we must keep in mind that technology is constantly moving forward. Perhaps self-driving cars, called with applications, and accepting mobile payments, will lead to another approach shift? Developers are always working on the artificial intelligence and marketers keep their pace with naming ways to use this technology for their purposes.

The best advice would be at this point: Learn the basics by heart and keep an eye on who’s the bull of the woods. This way you can always rely on a solid foundation in every situation and flexibly adapt to the current situation.

Will Ecommerce kill the retail? Not necessarily. But it definitely challenges it, and the ‘clash’ is changing the market’s landscape for good.

What do you think about it? Join the discussion!