\ Why Brick & Mortar Stores Can't Loose To E-Commerce
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Why Brick & Mortar Stores Can't Loose To E-Commerce

By Karthik Reddy

Though many would assume that the rapid rise of e-commerce in the last 2 decades would surely bring down the conventional brick and mortar stores, that simply hasn't proven the case. The in-person retail sector is at an all-time high with strong growth and bigger profits than ever. E-commerce, too, has grown exponentially, and what was once a niche idea enjoyed by a very small segment of the population is now used by almost everyone.  Indicated by these market retail statistics gathered by shopping.fm. Americans, in 2017, spent $459 billion USD online, which is a rise of 15% from 2016. Though that number is impressive, considering it is more than the GDP of most countries, it is nothing compared to the nearly $5 trillion spent in-person.

Though the in-person growth rate is less than one third of the online growth rate, the growth of the in-person retail sector in this past year is equivalent to more than half of all e-commerce sales in the US. For the pundits that predict e-commerce will one day kill brick-and-mortar, the simple fact is that at the present growth rates, if ecommerce was to one day outgrow in-store sales, it wouldn't be in most of our lifetimes. Furthermore, there are a series of reasons why brick-and-mortar stores will always have a place in the retail landscape. The whole ecommerce revolution is actually driving sales growth offline and that is not likely to change anytime soon.

Here is why in-store retail can't lose to online retail, ever.

Tactile Reasons

The top 2 reasons given by consumers as to why they prefer to shop in-person rather than online is the feel-factor. 56% of people say that seeing and touching an item is why they shop at a store. 55% say it's to try the item on or use it, and 41% are concerned the product will look different than in the pictures. These shortcomings are all impossible for an e-commerce store to address. If you have ever ordered an item only to receive a wrong size or color, then you can surely relate. When it comes to higher-end products that have bigger price tags, many consumers want to know exactly what they are getting and won't take the chance of getting something they are not happy with. This causes them to trek to the shops, markets and stores in order to see, touch, feel and try the product.

Store & Product Credibility

As the internet becomes saturated with millions of sites and shops, it becomes extremely difficult to ascertain which stores are credible and which ones are not. Unlike a store where you can check quality, specs and authenticity, online shoppers are left at the mercy of the e-commerce brand. Consequentially, if a product was not fairly represented online, the return process can be expensive and complicated. 24% of shoppers list a product as being too valuable to buy online as a key reason for in-store visits. 15% enjoy the ability to verify the products' authenticity. 13% say not trusting internet security is a reason to not shop online and others are worried about dealing with unknown vendors. For all these credibility issues, it is hard for many people to trust what they see online, as a plethora of warning and scams do exist. Plus, going to the store in-person actually adds the human factor and can make a consumer much more comfortable, especially with returns and warranty claims.

Convenience & Delivery Times

Though for some e-commerce has made shopping convenient, especially in rural areas, many still prefer the convenience of going to the store instead of waiting for a product to arrive. If, for example, you needed some toilet paper, it would be rather inconvenient to wait 2 days for delivery. Additionally, shipping costs can be high and simply make the bargain of purchasing online no longer worth it for the average consumer. 34% listed too long delivery times as a primary reason why they prefer to shop in-person and 25% blame their aversion to e-commerce on shipping costs.

We live in an age where we have gotten used to instant gratification and the American consumer is not patient. Waiting days or weeks for a product to arrive is not in our programming and we prefer, in most cases, to buy what we want and so that we get to have it immediately. In the event that a product is not available in our local market, that's when e-commerce is likely to appeal to almost any consumer.

Market Trends & Demographics

Though e-commerce has enjoyed a much higher growth-rate to conventional stores, it is important to point out that stores have enjoyed their lower growth rate for centuries, if not millennia. E-commerce is a relatively new channel of retail and is going through its most heavy adoption period. In fact, a closer look at the growth rate shows that e-commerce saw a gradual increase in growth rate from the early 2000's culminating in 30.6% growth of the sector in 2004. Since then, the growth rate has actually been falling and, in 2016, dropped all the way to 9.2%.

In the same period, in-person retail has remained at a steady 2%-5% sector growth year on year. This tells us 2 things; first, that market growth-rate has already peaked in e-commerce and, second, that the market adoption is cooling off as most e-commerce users are already factored into the market.

Another telling sign is the demographics. One would assume the younger tech-savvy millennials would prefer to shop online more so than Generation X or their parents. In fact, that is not true. Generation X remains the largest segment that shops online and the younger millennial segment actually do more of their retail shopping in person and enjoy it more. About only 7%-8% of the consumers say they solely shop online and that number is falling in the younger segments. All this points to a cooling of e-commerce growth-rates and we will likely see very similar growth rates across the entire sector in the years to come.

The in-store market sector is 10 times bigger than the online sector. The growth-rates are becoming closer and closer. It is highly unlikely e-commerce can ever catch offline in the marketplace. People still prefer to feel and try their products before purchase. Also, as credibility, convenience and delivery times are in most cases better offline, brick-and-mortar stores can't really lose to e-commerce. Most shoppers turn to the online realm to research and compare pricing, especially for big-ticket items. However, those same big-ticket items are often researched online and then usually purchased in-person. In essence, people turn to the internet to price check and use that as a baseline for making their buying decision. In most cases, many of us all still prefer to buy from a store where we can double check quality and ensure a smooth experience. 

Infographic URL: https://love.shopping.fm/online-vs-offline/

Karthik Reddy, Community Manager at https://love.shopping.fm, is the author of India's Number 1 travel blog. Boasting an MBA in computer science, he once decided to get away from the office desk life and take a breathtaking journey around the world. He is eager to use the power of the global network to inspire others. A passionate traveler and photography enthusiast, he aspires to share his experiences and help people see the world through his lens.

Related Keywords:e-commerce, brick and mortar

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