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Will E-Commerce Replace Physical Stores? 

If COVID-19 has taught us anything, it’s how to pivot – and online retailers and e-commerce stores are no exception to this. As the world has had to rethink its public health policies, how it shops, and how people make a living, so have businesses quickly learned how to adjust. 

But not all businesses have been able to adapt.

Today we are going to look at how e-commerce stores have grown and pushed to the forefront, while brick and mortar stores have also drastically transformed. Which of these two types of retailers will ultimately survive? Will the e-commerce stores replace physical stores?

No one knows for sure if e-commerce will completely dominate the retail landscape. Let’s take a look at the challenges both the e-commerce and physical stores are up against, and what they both must do to thrive going forward.

The Rise of E-Commerce

2019 proved to be a big year for e-commerce. E-commerce sales came in at a staggering $3.5 trillion across the globe. What’s more amazing is how sales are expected to almost double by the year 2023. Why does e-commerce continue to show such positive growth? Turns out, there are several factors contributing to growth in this sector, and these factors benefit both the online retailer and shopper.

Visibility

Once you open your doors as an e-commerce retailer, you can essentially become a global store. Of course not every business will pursue cross-border transactions, but the opportunity is there if you choose to set your business up for a global scale.

But even if you aren’t set up for global transactions, you have the ability to reach parts of the country a physical store might not allow. 

An e-commerce retailer can advertise and market their products the same way a physical store can. An e-commerce store can also rely more heavily on social media posts, as well as mobile transactions to market their products.

Being online means the e-commerce store is highly visible. This visibility lends itself to the growth we keep seeing with online sales.

Open Everyday, All Day

Another undeniable advantage to e-commerce is the availability to be open all day, everyday. Even while you’re asleep you can still generate orders for fulfillment. 

Whether it’s a holiday or weekend, or anytime in between, an e-commerce store is essentially open every day of the year. This is one of the many factors making e-commerce so convenient for shoppers.

Lower Costs

When an e-commerce store doesn’t have a brick and mortar, there are usually cost savings involved. Not only do these cost savings add up for the retailer, but it can be passed down to the shopper. 

There are savings through less overhead, lower number of employees and control over promotions. An e-commerce retailer can work with suppliers to negotiate costs, the same way a brick and mortar retailer can. 

Increased Customer Insights

As an e-commerce owner, you have complete control over your customer data and insights. You can immediately spot trends, understand if your online sales and profit are up or down, analyze marketing campaign results and know your customer demographics. All of this can happen right away.

You don’t have to wait for information to roll up from your stores. You have it immediately available in your dashboard and at your fingertips. This information is critical in helping shape your inventory, messaging and promotions. The best part is you have your information right away and can react right away if you need to.

Contactless Payments and Shopping

As COVID-19 has shown up, being contactless with both transactions and the shopping experience can be a big advantage. The internet provides shoppers with the ability to quickly pay for an item and have it show up on their doorstep — all without ever coming in contact with anyone. 

A recent study conducted by Small Business Trends shows the use of contactless payment is up about 26%. Over 34% of the same people surveyed used online grocery shopping during the pandemic. These trends are expected to continue, not only because of the pandemic, but also because the mobile payment market is exploding in growth overall.

The Impact of COVID-19 on E-Commerce

Allowing customers a contactless shopping experience is one of many aspects that helped push e-commerce shopping into the spotlight during COVID-19. Although numbers are still pouring in, it’s estimated e-commerce sales grew at least $52 billion from March through the end of May. 

e-commerce sales during COVID 19

Which categories of spending have seen the most growth because of the coronavirus? Not surprisingly, Groceries and Food categories have outperformed all others. According to Wix.com, Food and Groceries grew over 600% when the site compared April 2020 to April 2019. 

Other categories experienced tremendous growth as well. Take a look at these top categories:

Growth of shopping categories during COVID-19 *source: Wix.com

Not surprisingly either, retail giants like Wal-Mart and Amazon both posted staggering growth online. 

What does all of this mean for online retailers? It means the online stores that were able to react to increased demand under the extraordinary circumstances brought on by the pandemic were likely the ones who succeeded. 

No one knows for sure how long the effects of the coronavirus will be felt by online retailers, but one fact is certain: e-commerce is here to stay and is poised for continued growth.

But is this continued growth enough to actually decrease the demand for physical retail stores? 

The Case for the Physical Store

While online shopping provides plenty of conveniences for the shopper, there is a customer experience that only a physical store can provide. Although COVID-19 had a negative effect on many brick and mortar retailers, there are still advantages a physical store offers over its e-commerce counterparts. 

Product is Immediately Available

Even as Amazon continues to dominate with the 2-day shipping guarantee, or other retailers provide fast shipping services, the bottom line is sometimes you need the product right away.

Not everyone plans far enough ahead to get what they need ahead of time through the mail. There are cases where needs arise at the last minute and a shopper finds themselves in a hurry to make a purchase. 

It’s last-minute circumstances like this that a physical store can provide a solution for, whereas the online retailers have yet to solve for this issue.

A Shopper Can See the Product

Another advantage a physical store provides is allowing the shopper to touch and feel the product they intend to purchase. For example, trying on clothes. Sizes vary from brand to brand and unless you’re certain of a fit, then shoppers still need to try it on. 

Physical stores allow the customer to see the quality (or lack thereof) firsthand, not to mention the fit, feel and finish. As long as shoppers want to see certain products in person, there will continue to be a demand for physical stores. 

Employees Represent the Store and Brand

Shoppers need information, and sometimes this information comes in the form of a store employee helping guide their decision. For instance, if someone wants to purchase a brand new computer, but they have questions they need answered by an expert, they can turn to a knowledgeable store associate for help with their questions.

While the internet provides answers to almost every question you can think of, it doesn’t replace the human voice. It also can’t replicate someone walking the store floor with you and demonstrating how specific features work. 

Maybe a shopper doesn’t always need help when choosing a product, but when it is needed, this is something a physical store can provide.

When a store associate provides a great customer experience, or helps a shopper by answering questions, the associate is essentially a brand ambassador. The employee represents the store in a way a website can’t. And make no mistake about it – customer service is still a high priority among shoppers

Easier Return Process

If an item doesn’t work out, it’s much easier for someone to walk into the store, physically hand the item over and get a refund or exchange. Compare this to the return process for e-commerce, which can become frustrating for the shopper. 

The return shipping is typically paid for by the shopper, not to mention the hassle of getting the item shipped back. The shipping time typically delays the refund or exchange, causing further frustration along the way. 

Increased Customer Loyalty

When a shopper has a great customer experience, especially in a physical store, it increases the likelihood of customer loyalty. Whether the customer experienced an easy return or had their questions answered, it can lay the foundation for a great relationship.

Although not impossible, online retailers have to use different methods for increasing customer loyalty, versus that of a physical store.

The advantages of e-commerce and the advantages of physical stores are powerful on their own. But what happens if e-commerce and a physical retail store can work together? Isn’t it possible the two can become stronger?

E-Commerce and Physical Stores Can Work Together

Let’s look at how e-commerce and physical stores can benefit one another. In addition to how it helps both the retailer and the shopper.

Buy Online, Pickup in Store

No matter if a shopper wants to buy online or go into a physical store, one shopping truth still remains: customers like choices. 

The rise in popularity of the buy online, pickup in store option (BIPOS) shows how customers like the convenience of shopping online, but still being able to physically inspect the product. BIPOS has experienced tremendous growth, and the pandemic has increased the popularity of this option even further.

Definition of BOPIS

BIPOS has grown so much that over 67% of shoppers have used the service. The number one reason cited for using it was so the shopper could physically touch the product, followed by avoiding shipping costs. 

This statistic illustrates how e-commerce and the retail store can work hand in hand. But how else can a retailer benefit from offering a choice, such as BOPIS? Here are a few ways:

  • Additional purchases from the shopper
  • Lower shipping costs for retailer (instead of shipping to a shopper)
  • Inventory control (same inventory for both online and in-store purchases)

For the shopper, there are multiple benefits of BIPOS:

  • Avoid shipping costs
  • Confirmation the product is in-stock
  • Faster, more efficient service

Physical Stores Increase Traffic to Websites

While some people might think of retail as either e-commerce or a retail store, it turns out that the retail store can have a big impact on a website.

The International Council of Shopping Centers found opening a new physical store in a market leads to a 37% average increase in overall web traffic. The same study went on to find emerging brands (brands less than 10 years old) see on average a 32% climb in their share of web traffic when a new store opens.

Based on this, a physical store actually supports web traffic and helps increase it. 

E-commerce and Physical Stores Can Offer Flexible Payment Options

Not only do shoppers want a choice when it comes to buying online and/or picking up in store, but shoppers want flexible payment options too. 

Companies like Splitit, offer convenient Buy Now, Pay Later options for shoppers, whether it’s online or at a brick and mortar. Monthly installment plans offer many benefits, both to the retailer and shopper. 

For shoppers, an installment option allows them to budget for a higher-priced item and choose their own payment terms. Depending on the installment plan, the shopper’s own credit card during the approval process, making the application seamless and easy.

For business owners, offering an installment solution like Splitit, can increase cart conversions online and increase the average order value (AOV). This results in a more qualified shopper and can lead to higher customer satisfaction. 

The best part? Whether your business is a brick and mortar, all online or a combination of both, your business can benefit by offering this payment solution to your shoppers. 

Will E-Commerce Replace Physical Stores? Probably Not.

Even with the rise of e-commerce the last several years – and in particular in 2020 – it’s clear e-commerce and physical stores are both important. The shoppers want the convenience of e-commerce, but also like the option of picking up in-store. An in-store customer experience allows the shopper the chance to look at the product for themselves, ask questions and pick up immediately.

E-commerce and physical stores can benefit from one another. Offering choices such as BOPIS and flexible payment options can help both the online retailers and brick and mortar stores. 

Are you curious how Splitit can help your business, whether you have a physical location or online presence only? Request our free demo here 

Sara Coleman (Content Contributor), September 21, 2020 Share this article

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