In recent years, e-commerce has emerged as the fastest growing sector of the U.S. Marketplace. Despite the contraction of most businesses during our most recent recession, firms and new startups have continued to enter and expand their presence in e-commerce markets. In addition, consumers have increased the number of purchases made online.
E-commerce currently represents a very small share of overall commerce, but it is expected to continue to expand rapidly in coming years. As e-commerce grows, so will its impact on the overall economy and the retailers that support Bricks and Mortar (B&M). Already we are hearing about the closure of over 100 Macy’s stores and Limited announced they plan to close all retail stores. Consequently, as more demand is required for e-commerce fulfillment and shipping services, FedEx answers with the launch of FedEx Fulfillment, a logistics network for small and medium-sized e-commerce businesses. Participating businesses will warehouse products at FedEx warehouses in the US and Canada.
New online e-commerce shopping carts are well outpacing the opening B&M locations creating disparity when it comes to online versus retail shopping. However, while 94% of all retail sales still take place in stores, e-commerce sales are expected to increase annually by 17%, reaching $414 billion by 2018.
In the next few years I can envision e-commerce having a huge effect on the economy at large through its impact on all business sectors. Businesses and users that are either in the game or plan to jump in, will most likely benefit from a reduction in costs in terms of the time and effort required to search for goods and services or to even complete sales transactions. I still think we will see more reductions in retail B&M especially when we are seeing the expansion of shared / virtual work space officing, such as We- Work, Regus, Davinci just to names a few. This furthers the reduction in costs and results in higher productivity. Continued expansion of e-commerce may also lead to greater competition, cost savings, and changes in price-setting behavior of sellers. So the burning question is… will e-commerce continue to cause a decline in the traditional B&M store model?
“It’s very hard to launch a brand these days that’s just online-only. It’s an incredibly difficult and crowded e-commerce environment,” says Sucharita Mulpuru, a retail analyst at Forrester Research. She noted there are more than 800,000 online stores, all vying to attract customers through the gateway of Google. In an article published by The Guardian, she said, “In the last few years, some 20+ online companies in the US have launched a physical presence to better market their wares, forge closer customer relations, and yes, boost online traffic and sales. These include mostly specialty and clothing stores such as Warby Parker, Bonobos, Birchbox and Casper. Even the e-commerce giant Amazon is beginning to take a stab at traditional retail.”
I can only conclude that retailers that include and/or evolve to an online presence with an efficient online store front, shopping cart, and a reliable low cost delivery model will have greater opportunities in the marketplace to prosper and grow. Which leads me to a new buzz word “Omni channel” – Omnichannel is a multichannel approach to sales that seeks to provide the customer with a seamless shopping experience whether the customer is shopping online from a desktop or mobile device, by telephone or in a bricks and mortar store. searchcio.techtarget.com/definition/omnichannel
The most successful retailers will not only be those with a B&M presence, but they will have a great front-end web presence, providing a multichannel presence. However, all the front-end sales and marketing presence becomes trivial if the back-end delivery model to the consumer is not highly reliable and most efficient. AMS is poised and ready to support your back-end fulfillment model for most any type of consumer goods or products.
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For more information please contact John Bevacqua by phone or email at the following: Office 661-775-0611 or [email protected].
About the Freight Freak:
John Bevacqua is the VP of Logistics at AMS Fulfillment. His area of excellence is in creating distribution and fulfillment operations that function as a capable interface between suppliers, retailers, and wholesale distributors. His experience includes developing and leading FedEx/ Kinko’s Distribution Services into the FedEx post acquisition, USA Wireless Technologies, and a top Logistics Management company. He has also worked with third party fulfillment companies, preparing him for his current position with AMS Fulfillment.