E-commerce versus Brick-and-Mortar Businesses

Posted on October 21, 2018

Worldwide retail e-commerce sales amounted to 1.3 trillion USD in 2014 and have grown to 2.3 trillion USD in 2017. This dramatic growth has challenged a lot of traditional, even well-established “brick-and-mortar” companies. Moreover, the internet revolution has wiped out several industries (like print journalism) that people highly depended upon less than a decade ago.

Businesses across most other industries, however, have found a way to move online. The increasing demand for products and services offered online has caused this shift. 4 in 10 purchases are made using only an online channel for searching and buying. The convenience of ordering from the comfort of your home/workplace or even on-the-go, home delivery, lack of need to travel, easier browsing, etc. are some of the factors that have caused customers to prefer online purchases. For companies that alter their product portfolio based on real-time market research, this sudden change implied a risky investment, but one that eventually brought them very high returns.

The advantages of going online are many.

  1. Catering to a wider target market – By going online, businesses can easily target customers from various geographic and demographic segments.
  2. High-impact marketing – Using the internet to market products and services is efficient and impactful. It is also much easier to do than traditional marketing as it doesn’t require salespersons or printing. It can be done from the comfort of your workplace with just a small marketing team.
  3. Increased savings – A smaller workforce, lower operational costs, reduced investments (in terms of having a big workspace, buying equipment, etc) contributes to reduced expenses.
  4. Better adaptation to customer preferences – By efficiently gathering information about sales trends, ecommerce platforms can aid businesses to better understand their customers’ preferences
  5. Increased efficiency – Going online means replacing humans with machines. While it may provoke ethical considerations, automation streamlines several processes including market research, advertising, sales, etc.

However, going online has a cost of its own. It is also a risk that a business takes as the existing customers that a specific business caters to may or may not prefer the internet medium.

Traditional brick-and-mortar businesses have little risk involved in comparison. Business owners know the marketing strategies that have been working well for them. Hence, they do not need to bare the risk of trying out new products/services, altering their products/services to cater to new markets or implementing new channels of marketing the same products/services. These businesses also allow customers to get a touch and feel of products before making purchasing decisions, which adds to their sales. Moreover, brick-and-mortar businesses support the community by continuing to hire people.

However, such businesses always have the threat of being completely wiped out by their counterparts who offer an easier, faster, more convenient way of delivering the same product/service, by simply using the medium of internet.

In the words of Steve Jobs, “Innovation is the ability to see change as an opportunity, not a threat”. The internet is an innovation and needs to be harnessed by companies to expand their business. Going online, hence, implies consciously carrying forward your business with a deeper insight of the future.