The e-commerce market where
companies such as Amazon, eBay and Alibaba operate is just 8% of the total
retail market. The retail is still dominated by brick & mortar players such
as Walmart, Target, Carrefour and Tesco.
After seeing this chart, you
shouldn’t be surprised when you see headlines such as:
Ecommerce players are trying to
enter traditional retail, and at the same time retailers such as Walmart and
Target are improving their e-commerce experience. Even though total retail spending is
increasing globally year on year, the share of ecommerce is growing at a higher
rate (11%), and traditional retailers cannot ignore it anymore.
Let’s look at some of the key retail
attributes and how e-commerce players are pitted against the retailers:
From the table above, it seems that
the game is even with both sides having certain advantages and disadvantages. The
fact is that these companies are constantly innovating to get an edge over
others. For e.g. Amazon’s recent move to establish a dedicated area in the
P&G warehouse to supply consumer products has not gone well with physical
retailers: P&G's Pact With Amazon Angers Target. On the
other hand Walmart is copying Amazon to offer service like Click & Collect
to its customers, who are not comfortable sharing their card details online. Outsiders
may see this as battle for supremacy, but it is a good example of how competitive
moves from either of players are leading the retail industry towards
optimization, and a better customer experience.
It is early to predict who will be
the winner in this war between bits and bricks. Growing penetration of mobile
devices and changing buying behaviour of young generation may have tilted the
balance towards e-commerce players, but they can’t provide the human need to experience
things before buying it, especially when buying an expensive item.
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