The inevitable is happening with retail. I know, in the early 2000’s when the Web and online retail was in its infancy, it was popular to say it was just a fad. The dot com bubble and the stock market bubble hit at the same time and people tied the two together. Well, the stock market is back and dot com is way back.
I have been amazed between then and now how many retail people I’ve talked to that still don’t believe that online retail will make a dent. Really? Ask all the brick and mortar retailers that have gone bankrupt how online retail affected them. The latest casualties and casualties-to-be include: Payless, Rue21, Sears, RadioShack, Macy’s and J.C. Penney, Kenneth Cole, Bebe, to name a few. Online retail now accounts for about 30% of retail sales and department store sales have been halved since 2000 to less than 15% according to Yardeni Research.
You have to give Amazon credit. Amazon is the gold standard in retail. So many didn’t believe they would succeed. Amazon accounted for 53 percent of e-commerce sales growth in 2016, with the rest of the online retail industry combined sharing the remaining 47 percent, according to Emarketer, Inc. That is astounding. Amazon is on track to become the first trillion dollar market cap company. That’s pretty impressive for a company that was never expected to make money.
Why is this happening? It’s very simple. Consumers save time and money. In the old days (before the Internet), we couldn’t do much research on products. We would go from store to store and listen to the sales people or read the packaging. That was how we researched and how we comparison shopped. Really? Get in the car and drive from store to store? Yes. Now, we can do a little research online, order the product and have it at the door step within a few days at most. If you’re an Amazon Prime member, you can have that package within 1 or 2 days (or possibly even the same day!).
Amazon is so incredibly good at it., Every now and then, I order something from another online retailer. Today, (a Friday) I’m waiting for something that I ordered last Saturday. I won’t be using that retailer again.
Only those retailers that get with the program and develop a serious online presence will survive. Walmart is doing it. Sears is not. The results are showing as Walmart is hitting it’s stride with a great online strategy. Sears’ Web strategy is clunky and Sears just announced that it may not survive.
