E-commerce through online stores has been taking market share previously dominated by brick-and-mortar stores. But what does this mean for their future?

Whether you live in a metropolis or in the countryside, the e-commerce revolution over the past few years has touched almost all consumers. All but the most remote places can now get their packages within a few days. Prices, too, are generally lower online, begging the question of what advantages physical stores still have over their powerful online counterparts.

The booming figures of e-commerce giants show a world in which they are driving consumption growth and changing consumer behaviour. The question of course is, will online stores eventually replace brick and mortar completely? While it is true that we have seen a huge shift from brick-and-mortar stores to online stores over the past two decades (think Woolworths, Shoprite/Checkers in SA),  we are also seeing pure online stores starting to open physical stores (American Apparel, Amazon, Misguided and even Youtube to name a few). Findings by retail omnichannel platform Hero show that a staggering 67% of online brands have launched a physical store or showroom in the past 36 months.

Some experts believe that we have gone too far to go back. The e-commerce and remote work trends that happened in 2020, primarily related to the pandemic, were largely predicted to happen – just more slowly. But outside conditions forced a lot of these changes to happen all at once, which is why we saw a lot of news about businesses “pivoting” to e-commerce or putting more focus on their online sales.

Companies won’t be re-restructuring as much to return to brick-and-mortar in the same way, and they won’t be giving up on the efficiencies and cost savings that e-commerce offers. Other advantages of online stores include the ever-improving virtual shopping experience, no need for space inexpensive, hot retail areas, and logistically being able to reach more people more easily.

So why then are online retailers starting to open brick-and-mortar stores?

While online stores provide plenty of conveniences, there is a customer experience that only a physical store can provide. Although COVID-19 had a negative effect on many brick-and-mortar retailers, there are still advantages a physical store offers over its e-commerce counterparts like the product being immediately available, the fact that customers can see the product, the employees in the store that represent the brand, an easier return policy to name but a few.

Physical engagement (experiencing the product physically) is necessary for what some researchers have described as “deep” products. These products require ample inspection for the customer to make an informed decision. Items like shoes, glasses, headphones and furniture require extra tactile interaction to determine if they fit. You don’t get this in a solely digital transaction.

Another big reason why online brands are turning to the physical world is because maintaining an online presence is becoming more expensive. With Apple’s privacy changes limiting tracking of potential customers and rising advertising prices on Facebook and Google, it’s harder for brands to get the most bang for their buck by advertising digitally only.

It seems therefore that the answer isn’t so clear cut. Will online retail continue to grow? Sure. Will more and more online retailers continue to open physical stores? It seems so. Perhaps the future doesn’t have to exclude either but rather arrive at an equilibrium point where online and physical stores live ‘in harmony’, complimenting one another instead of competing against each other.

As always your AdMarula team is here if you have any questions. Drop us an email at contact@admarula.com

Happy selling!

The Publisher Management Team