With each passing week, month, and year, it becomes increasingly evident that online shopping is not just part of the future – it is the future. Not only are ecommerce sites launching at incredible rates, but brick and mortar stores are starting to feel the effects. Some sources even suggest physical stores will experience significant decline in the coming years.
China Leads the Way
According to Forrester Research, China’s total online spending is expected to surpass $1 trillion by 2015. That’s up from $307 billion in 2013 and shows just how fast the ecommerce industry is growing.
The speed of growth is likely aided by the fact that mobile devices are becoming increasingly integrated into China and nearly every citizen has access to the internet, While overall online spending is expected to grow at a rate of right around 32-33 percent, mobile retail spending is projected to increase at a compound annual growth rate of 44.2 percent.
These are impressive numbers and point to the incredible potential of online shopping. While China leads the way, the United States isn’t far behind. Total retail e-commerce sales amounted to $210.6 billion in 2013, a growth rate of 62 percent over the past five years. U.S.-based Amazon.com accounts for around $67.86 billion all by itself.
Brick and Mortar on the Decline
And while the steady growth of online shopping is great for ecommerce businesses, it’s not so welcome news for brick and mortar retailers. Just ask Wang Ning, owner of an electronics store in Beijing’s largest shopping mall. He says, “It’s dying. There are more sales staff than customers around here. Everyone buys online.” He’s not alone in feeling that traditional brick and mortar shopping is a fading into the background. And while much of that is related to the convenience of online shopping, recent customer surveys suggest it could also be tied to customer service.
In America, e-retailers saw customer satisfaction increase by 5.1 percent in 2014, compared to the previous year. During that same period, brick and mortar stores experienced a slight drop-off for the first time in years. That’s troubling news for physical retailers as customer service and hands-on engagement are some of the few remaining advantages they have.
What Brick and Mortar Stores Must Do
How can brick and mortar stores reclaim the sales numbers they once enjoyed? And is it even possible? While physical stores will never cease to exist, it’s pretty unlikely they’ll ever regain the large market share they once enjoyed. However, with that being said, there are ways brick and mortar stores can be profitable and successful. But there are two things they must do, starting now.
First, they must take advantage of the face-to-face aspect of brick and mortar shopping. Shelves must be stocked, sales associates must be knowledgeable and friendly, return policies have to be liberal, and technology needs to be integrated into the stores.
Second, brick and mortar stores need to protect themselves by investing in ecommerce. While every business may not be capable of launching a large website with a dedicated warehouse, it’s important to at least have the infrastructure in place. The future for physical retailers likely looks like a combination of brick and mortar locations and an ecommerce website.
Looking Towards the Future
Only time will tell what the future holds. However, presently, it appears there’s no slowing ecommerce websites and customers’ desires for convenient online shopping. In the coming months, it will be important for brick and mortar stores to get creative and band together to recapture the market share they once enjoyed. For ecommerce sites, the key will be efficiently utilizing the resources they have at their disposal and continually improving customer service and engagement.