Ecommerce has been crushing classic brick-and-mortar retail, and, unfortunately for offline businesses, this trend is set to continue! In this article, we are going to study the pros and cons of e-commerce and show you why more and more brands are focusing their efforts on online channels in 2022!
Ecommerce Trends and Stats
Did you know back in 2010, under 5% of US retail sales were made online? However, fast forward to 2020 and now, over 15% of retail sales took place online. The rise in online shopping is directly related to the proliferation of smartphones and 3G and 4G networks. This number is only set to continue as the barriers to shopping online are decreased, and more businesses focus solely on selling online.
Ecommerce adoption has been ramped up by the pandemic, which saw millions of shops forced to close down. Amazon has also played an immense role in revolutionizing the way people shop thanks to the easy-to-use platform, great prices, and super fast shipping. The growth in the sector isn’t likely to slow down as even conservative estimates have over 85% of retail trade taking place online by 2035!
A major reason why e-commerce growth won’t slow down is because of the changing preferences of young people. Nowadays, young people are spending more and more time online. Young people are socializing online (social media and online games), ordering food online (UberEats, DoorDash), and finally buying goods online (Amazon, eBay, and e-commerce stores of their favorite brands). Check out these stats to see why e-commerce is going to expand every year:
- Nearly 70% of Millennials believe e-commerce is better than brick and mortar retail
- Almost 60% of Gen X prefer shopping online
- Less than 30% of people over 65 choose to shop online
- Only 28% of senior citizens have made the switch to online shopping
This trend is only going to continue, and you can expect Gen Z to have an even higher preference for shopping online than millennials. In 30 years or so, millennials will be senior citizens who will be almost exclusively shopping online!
Pros of Ecommerce
Let’s look at some of the pros of e-commerce. These pros explain why e-commerce continues to grow!
- Operating hours – Ecommerce stores can effortlessly run 24/7 thanks to the internet. It doesn’t matter if someone wants to do some shopping at 11 pm on a Tuesday or at 6 am on Sunday. They can simply head to the company’s site, check out all of the products and make an order! This flexibility is a major reason why so many people prefer to shop online and helps many e-commerce stores win sales from brick and mortar retail.
- Lower operating costs – Starting an offline retail business is extremely costly! You need to rent a physical location, hire local employees, and purchase insurance. Many of these operating costs simply do not exist for e-commerce stores, particularly renting a location that, if you are based in major cities, can be obscenely expensive. With much lower costs, e-commerce stores can achieve higher profit margins.
- Access international buyers – Thanks to the internet and low-cost shipping options, e-commerce stores can sell their products to billions of people around the world. These online shops are no longer constrained to selling their goods to people in their local area. With such a larger total addressable market, they can quickly scale their business and increase their sales.
- Faster and smoother shopping experience – How long would it take you to look at 100 different handbags in a physical shop? Probably hours! Well, online, you could quickly browse through this many handbags in less than 10 minutes! Also, if an e-commerce store doesn’t have what you are looking for, you simply open another tab and instantly enter another store!
- Ultimate convenience – Is your closest shopping mall a lengthy drive away? Well, thanks to online shopping and e-commerce stores, you can order anything you want from the comfort of your own home, at work, or even on the beach! As long as you have an internet connection and a smartphone, you can shop anywhere in the world. You can’t beat that level of convenience!
With so many different benefits, it starts to become obvious why most retail experts expect the entire industry to shift online within 30 years! If you don’t have an e-commerce store but are thinking of starting to enter the retail space, you better start creating a website right now!
Cons of Ecommerce
While e-commerce is an amazing invention, it is not perfect. To see why not everyone has converted to e-commerce, check out the cons below:
- Can’t receive the product immediately – Even with Amazon delivering express shipping, you can’t receive your goods immediately after hitting that buy button! And some e-commerce stores are incredibly slow, making customers wait weeks. This is where offline retail stores have a major advantage because whatever you buy, you will leave the shop with it in your hands and get to use it that day!
- Can’t physically test or try on the product – Whenever shopping online, you always run the risk of buying a dress two sizes too small or a jacket that could fit you and your twin! A key selling point for offline retail stores is that they allow buyers to try out and try on goods to make sure they are suitable. When you go to an offline shop, you are much less likely to purchase something you don’t need or like.
- Customer service can be slow – Many e-commerce stores have slow customer support that can take days to respond to inquiries or process refunds. Fortunately, many e-commerce stores have started to invest in the right software and improve their marketing and customer support. Many shoppers prefer interacting with people and want instant customer service, which is something that many e-commerce stores can’t currently offer.
While e-commerce does have some cons, its extensive benefits still give it a strong advantage over traditional brick-and-mortar retailers. Ecommerce can still make developments to improve while offline retail is unable to innovate and has remained the same for hundreds of years.
Don’t panic! Your favorite retail shops are not going to go the way of the dinosaurs anytime soon! There will still be a sizable portion of buyers who want that in-person buying experience. However, many offline retail stores are shutting shop and focusing on their online channels due to less operating costs, lower cost of acquisition, and overall higher profit margins. As more and more buyers shift to online shopping, you can expect an acceleration in brick and mortar store closures, particularly from small independent shops. However, many of the top brands will still pursue a hybrid model where they use offline stores as marketing.
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