Why eCommerce is the next big thing

You may have heard the news; people are buying products on the internet.  While this news could legitimately be filed away under “obvious news we have all heard”, some people are still in denial about the size of the threat to the high street that eCommerce could bring to the table, but make no mistake, your town centre is changing, and it is down to online retail.

The Age Of Online Business

Amazon, the biggest of all eCommerce stores, now has around 65 million Prime members alone, not to mention all the other customers who don’t pay for the subscription service.  To quantify that number further, a recent Morgan Stanley survey revealed that 40% of Prime members spend over $1’000 a year while using the service, and that number is growing every day.

So why has eCommerce become so popular?  How has it succeeded?  Why would people choose it so vehemently over walking into a high street store?  The main boon is quite obvious; convenience.  Where as most stores have a certain amount of hours that they are allowed to trade every day, online retailers don’t suffer from this particular restriction. No matter what your need, chances are you can buy it online, at any time.  If you want to buy yourself a kayak at 2am, online you can. Finding a 24hr kayak store on the other hand, could prove to be quite a tiresome affair.

Another aspect of eCommerce that customers find appealing, are prices.  Despite your goods being ferried to you rather than you collecting them, online purchases tend to be cheaper than the same items in stores.  This is down to the fact the eCommerce industry doesn’t have to pay for shops to showcase their products.  Without these rental overheads, the saving can be passed on to you, the customer. 

Drop shipping

There are also different aspects of eCommerce that appeal to the seller, as well as the customer.  So called ‘Dropshippers’ use eCommerce in a way that limits the need for investment capital, but leverages all the great aspects of online retail.  In essence, a dropshipper will set up an online shop, take orders, and then place orders with another company to procure the goods at a cheaper price. They then send them to the customer, and take a slice of the pie for their troubles.  This type of commerce is becoming increasingly popular online, and in some cases it is indistinguishable from direct sales in the eyes of the average customer.

When it comes to the future, the stats don’t look any better going forward for brick and mortar stores either, with some analysts believing that 40% of all product sales by 2030 will be online, and half of all real-world stores will be closed down.  While some of these sales are for companies who have ‘cannibalized’ their regular sales with their own online stores, the writing is very much on the wall for the smaller retailers who believe that a ‘walk in’ experience is still needed.  Even clothes and food, two areas that took longer to adapt to web-based sales, are now falling in line and trading at ever increasing rates.  When it comes to shopping in the busy, modern world, convenience will always win out.

A new dawn for the entrepreneur

While this is bad news for the high street, this isn’t bad news for entrepreneurs looking to start new ventures.  Stores like Alibaba allow anyone to buy and sell products that can be altered, personally branded, and delivered to other eCommerce stores directly, which has meant that building supplies chains, for the relative novice, is now easier than ever.  From plastic bowls to tractors, sites like Alibaba now provide a digital marketplace where businesses from around the world can trade at the click of a button.  The town centre, or trading outlet near the highway was never going to be able to compete with that.

So does this mean town centres are going to disappear completely?  That is highly unlikely.  There are still plenty of places on your highstreet that simply cannot be recreated online.  Coffee shops and restaurants for example, will not be taking a hit from the online retail revolution.  Most other shops though, should be a little nervous.

Amazon Prime in particular, has been the driving force behind such a rapid rise to dominance for eCommerce worldwide.  Once people started checking out the free trials, there was no way back for industry.  With the ability to now pay even more, for a delivery within the hour (certain cities only at the moment), and the fact Amazon is building a new distribution hub in Australia to coincide with the release of Prime in the country, means that we should be seeing the effect of eCommerce first hand, and even more prominently than before. If you have avoided the online shopping revolution so far, chances are you won’t be able to avoid it for much longer.  And why would you, anyway? Just ask current users, It’s so convenient.