Global Material Handling System Integrators

Brick and Mortar in E-Commerce 2.0

Brick and Mortar Store FrontsWith the recent release of the Samsung Galaxy S4, I finally reached the tipping point and tossed my antiquated Blackberry to the wayside to upgrade to a smartphone with many more features and apps to make my life easier. I’m left wondering why I didn’t take the advice (as well as considerable peer pressure) from my fellow coworkers and make the plunge much sooner. When I was researching which smartphone I wanted to select, I looked online only to be overwhelmed by the number of phones to choose from, not to mention that many of them physically looked the same. When it comes to technology, I consider myself very tactile and need to physically check out the equipment before arriving at my buying decision. As a result, I visited a small Verizon kiosk in the mall and narrowed down my selection to the device I wanted. Armed with the needed information, I opted not to make the purchase at the mall but order directly through Verizon’s online store as the pricing was much more favorable; thus, the storefront in this situation served to augment my online buying decision. Just recently, online men’s clothing retailer Bonobos decided to open their own brick and mortar stores so their customers could try on the clothing first before deciding to buy it online. Bonobos observed the trend that a growing number of its customers wanted to try on their clothing before making the decision to buy. This led Bonobos to setup stores in larger cities to serve as guideshops whose sole responsibility is to provide this service to their customers, many whom will order the clothing through the company’s website which provides free shipping, fast order processing, and free returns. Other e-commerce companies are observing this trend as a growing number of consumers in the global marketplace continue to leverage the Internet to find the most competitive prices and reduce the likelihood of buyer’s remorse by confirming they’ve found the best deal. Amazon is talking about a potential brick and mortar storefront, leaving us to speculate just what it might look like and how large the store might be. Industries within e-commerce in which there is a need to try, touch, or use the product before making the buying decision are likely to continue to see this future brick and mortar growth, while other industries such as books and music, are likely to see a decline as this physical need is not as important to the consumer. Consider how Amazon used this to their advantage to push Borders out of the marketplace. A recent study of e-commerce consumers found that 85% were more likely to purchase from a website offering free shipping, 75% were more likely to purchase if free return shipping was offered, 66% were more likely to buy if discounts were made available on the company’s home page, and 53% reported a greater likelihood of purchasing if consumer generated reviews were made available online. While these brick and mortar stores provide customers with tangible products they can try on or evaluate before they buy, they also serve as a local pickup point for customers who might prefer to pick up the item at the store or make a return to a store directly. These stores could also serve as a means of getting orders to customers faster for companies who lack an extensive supply chain infrastructure and could assist with the extreme peak seasonality typical in the e-commerce business. A recent report from eMarketer estimates that 2013 e-commerce sales will reach $1.3 trillion and that e-commerce will continue to grow 20% year-over-year. While 95% of the retail in the US remains brick and mortar, it will be interesting to observe the growth in e-commerce through brick and mortar storefronts as companies seek to gain more of the market share within e-commerce. Equally of interest will be how this affects the supply chain of companies making this move.

Author: Roberto Zarur


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