The Impact of E-Commerce on Traditional Retail: Strategies for Survival
Online shopping (e-commerce) has revolutionized retail. E-commerce allows retailers to acquire new customers more easily, improve communications with existing ones more effectively, track finances more accurately, increase sales at lower costs – all while expanding customer bases cost-effectively.
E-commerce has also opened up new opportunities for traditional retailers. Some businesses have successfully taken on board this trend while others have struggled.
1. Online Shopping
Before eCommerce existed, purchasing items meant visiting either a physical retail store or shopping center to purchase products.
Shopping online provides customers with convenient access to items they desire from both home or work, saving both time and money with this timesaving method. Customers can research products prior to making their decision allowing for time savings as well.
Early forms of eCommerce sales were B2C sales between businesses such as manufacturers and wholesalers or retailers, or between individuals like consumers themselves and retailers with no physical stores selling products directly through their websites. Other online shopping options include C2C or consumer-to-customer sales where sales between individual consumers occurs – sometimes retailers only operate websites instead of physical locations!
2. Increasing Competition
Before online shopping became widespread, most shoppers would go into physical stores and browse items to locate what they needed; some would also shop from home using catalogs or shopping networks.
E-commerce retailing is relatively new compared to brick-and-mortar shops and has created increased competition between them and traditional retailers. Businesses have responded by revamping merchandising, increasing employee training, and expanding loyalty programs as an answer to this growing threat.
These efforts have not provided relief for all traditional retailers; some types of stores have been particularly hard hit by eCommerce competition – including dollar stores, pet shops and the auto industry.
3. Easier Access to Information
Many traditional businesses now leverage the Internet to connect with customers and provide detailed product information for ease of shopping experience. This creates an easier shopping experience.
However, it is essential not to become overly dependent on technology and the Internet for news and basic information. While an instant search may provide answers, remembering facts and thinking for oneself are also vital components of success.
As more information resources have become accessible to individuals, they have also created an increased need for increased information literacy among individuals. Information literacy can be defined as the set of abilities necessary for an individual to recognize when information is required and then acquire, evaluate, and use it effectively.
4. Convenience
Customers report that convenience is another important factor in their purchasing decisions, with customers willing to spend more for an enjoyable shopping experience. They want the freedom to shop anytime from any location.
E-commerce has caused dramatic transformation across industries and created significant shifts in buying behavior. Now buyers can easily connect with sellers from all around the globe – creating an ideal opportunity for creatives with innovative product ideas to monetize them online quickly while making life easier for long distance travelers.
5. Global Competition
Contrary to popular belief, eCommerce has not caused traditional retail to decline. Nielsen research shows that retail store square footage was reduced, yet overall industry growth continued apace. Dollar stores, pet shops and auto parts and electronics stores were hit harder than others by online competition.
Researchers conducted research to explore the impacts of e-commerce on retail employment and wages at a county level, finding that fulfillment centers decrease retail employment growth nearby; this effect was caused by factors including firm size, financial health and internationalization strategies.
6. 24/7 Sales
As customers demand convenient shopping experiences, traditional retailers must adapt. Some smaller businesses are taking steps toward ecommerce while those that haven’t quite taken the leap may consider using mobile/online options to reach new consumers.
Establishing a fulfillment center has been shown to result in lower retail employment growth, with hourly workers experiencing more of an effect than salaried employees. Part of the job loss may be compensated by wage growth in warehousing and transportation services; Ecommerce also facilitates global commerce by connecting buyers from around the globe with sellers instantly – making business experience more convenient on both ends.
