Can E-Commerce Save Retail? Maybe.

I’m sure you have heard it time and time again over the past few years: “Retail is dead!” It seems like every other week there is another former retail giant declaring bankruptcy. The classic example is Sears, but there is a whole laundry list of others who have been closing stores in the wake of this ‘retail apocalypse’ (RadioShack, Toys ‘R Us, J.C. Penney, to name a few). As retail stores are closing and malls becoming ghost-towns, it is easy to blame Amazon for this. After all, if you can buy anything and everything online these days, why would anyone actually go to a mall?

Days before Christmas, I found myself in a mall in my hometown. Wandering around trying to find gifts for my family, I went into a shop that I had never heard of before to check it out. Once I stepped inside, I could tell it was just a temporary pop-up shop. There were tables set up with different gadgets on them, probably 50 total products in the entire space. One of each, no extra stock. I asked one of the employees what this was all about and he explained that the store was basically a showroom for products that had successfully launched on crowdfunding sites like GoFundMe. This concept was really cool to me, as I have always browsed the products on these crowdfunding websites, but had never actually bought one. After spending some time in the store but not finding anything that my family members would want, I walked out. I took the escalator upstairs and walked curiously into a store called Peloton with just a few workout machines in it. Later, I purchased a few shirts at UNTUCKit, tried on some pants in Bonobos, browsed glasses at Warby Parker, and that is when it hit me: retail isn’t dead, it’s just changing.

Rent The Runway store in San Fransisco

Each of these stores had started online and eventually expanded into the brick-and-mortar retail space years later. Not only do these storefronts allow brands to create a more personal shopping experience for the customer, but can serve as an introduction point to someone who isn’t as internet savvy. In addition, physical locations allow customers to actually touch, try on, and inspect the products before clicking the ‘buy’ button. All of this adds up to a potentially profitable sales channel for online retailers.

Traditional shopping malls may be a thing of the past, but the idea that physical stores will disappear altogether is a stretch. Recently, Amazon has made significant moves into the brick-and-mortar space with the purchase of WholeFoods and the opening of the first Amazon Go store in Seattle. These two events did not go unnoticed, and at the time demanded nearly wall-to-wall media coverage. Why would this e-commerce giant move into the exact retail space it was crushing for years? The answer: it isn’t. Amazon and other ‘e-commerce first’ companies are not buying up 100,000 square foot warehouse-like storefronts in a bid to recreate the retail models of the 20th Century. Their shelves aren’t chalk full of product, and they aren’t offering deep discounts. Instead, they are essentially bringing their online stores to life.

A unique culture and design that you identify with? Check. Informative customer service that isn’t overbearing? Check. Easy to browse offerings? Check. A quick and easy checkout process? Check. These are all features of e-commerce that attract customers, and these are the same features that are at the forefront when these e-commerce brands move into brick-and-mortar storefronts. Successfully bringing a great online presence into the real world is tough, but can benefit a brand well beyond profits. By exploiting an omni-channel sales strategy like this, the customer is allowed to immerse themselves in a comprehensive brand experience, which creates meaningful customer relationships and strengthens brand loyalty.

On the flip-side, the largest retailer in the world, Walmart, has been aggressively moving into the e-commerce space. In 2016, Walmart acquired Jet.com for over $3 Billion, the first of many acquisitions of e-commerce powerhouses. Following this billion dollar purchase, Walmart continued to move into e-commerce by adding ModCloth, Bonobos, and Moosejaw to its portfolio. These additions have allowed Walmart to gain expertise from some of the most successful e-commerce companies.

Much like we have seen with the introduction of tech into other industries, success will be found through a balance of technology and humans, in a mutually beneficial relationship. It will be difficult for any company to expand without some sort of physical presence, just as it is unthinkable for a retailer to not have a digital presence in this day and age. I am in no way predicting that the malls of the future will be filled with Amazon, Etsy, Zappos, and Wayfair, but that these stores will begin to pop up, filling empty commercial storefronts and potentially revitalizing traditional retail as we know it.

12 thoughts on “Can E-Commerce Save Retail? Maybe.

  1. Hey George! Great post. You make a really good point about retail merely being in a state of change, as opposed to the claims that brick and mortar stores are on the way out. It’s honestly difficult to give up the ability to actually feel the threads of the sweater you want to give your mom, or the fabric of the tie you want to gift your dad. E-commerce giants are leaping at the opportunity to expand from their online marketplaces to physical locations that provide customers with a more personal, intimate experience. I look forward to seeing in which direction this trend will move.

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  2. Really interesting post George! I know that for me me personally there is no quicker way to get a feel for a retailer than walking into their store. That kind of experience is really hard to recreate online. Another interesting point was brought up in a Thomson Reuters report. It claimed that in order for e-commerce giants like Amazon to expand same-day delivery they will actually need to move into the brick and mortar space. The underlying assumption was that a brick and mortar store provides both a small distribution center as well as its own revenue. Really interesting topic!

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  3. Nice analysis George. While you detailed some of the physical changes happening in the retail space. I wonder how the shifts in the sector will affect job numbers. Retail employs just over 10 percent of all Americans (this is a 2016 stat, and I’m not actually sure which exact job functions are considered retail). Regardless, lots of people work in retail, and interestingly 2026 projections have the proportion dropping from 10.3 to 9.7 percent. I wonder if this projection is overly optimistic, but as your post detailed, it is not as if retail is going away. Additionally, the retail is generally considered low-wage and low-skill job, and so I would guess that it will likely be difficult for people laid off in retail to reinvent themselves and transition to a new line of work.

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    • Charlie, thanks for reading! You make an interesting point about job numbers, but perhaps this problem could just be an opportunity. I could see employees in the retail space moving up in the value/supply chain, perhaps to warehouse, fulfillment, and delivery? I also think that stores like these will inevitably still need some human presence in-store, so elimination of the entire 10% seems unlikely. It will be interesting to see what happens. Another idea to solve this problem is more funding for job re-training programs, something I want to look more into.

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  4. I think your post offers a nice change of perspective from how people generally see the rise of the internet and online retailers. I really appreciate your closing point on finding a balance between tech and human and I think the retail market offers a lot of different possibilities for this. Perhaps one day we will see almost all retail stores coming from e-commerce turned brick and mortar and then there will be a few stores that strictly avoid being online in order to corner a niche, maybe anti-internet market. Who knows it might one day be trendy to buy products labelled “not available online.”

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  5. I really like your analysis and I do believe physical retailers won’t die completely. From my own experience, I do like to go to physical retail stores, especially for clothes. During last summer, I learnt that Walmart China has launched an app that you can scan your product while shopping and pay on your phone and scan a code to check out, kind of like Amazon Go Store. During this winter break, I noticed Walmart in US also has an app now and saw a really cool commercial for its at-the-curb pickup service. Retail business is definitely changing and adapting to different “needs” in different countries.

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  6. Hey George! Great post. I think you make a really interesting point about the intersection of digital and physical worlds in retail, the same way mechanical BC h

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  7. mechanical and human capabilities create new and innovative solutions. It’s especially interesting to me to hear about Amazon’s evolution, because I realized quite recently that I had forgotten that at one point, Amazon only sold books. I had gotten so accustomed to the Amazon suite of services that is available today that I had forgotten at one point, physical booksellers were their greatest competition. I wonder how the retail world of the future will be different, and what novel realities future generations will regard as nothing beyond commonplace.

    Rachel

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  8. Hi George! Nice post! I also can tell from my own experience that retail stores are transforming and really putting customers’ in-store experience a focus of their entire operation. For Alibaba’s off-line retail store Hema, they actually do a perfect job in integrating technology in every aspects of the business. Customers can use Hema app throughout the store to scan barcodes, check prices and get recipe ideas; when they leave they can just put things into bag, click a bottom and directly pay with Alipay using their phone. The purchase records will be stored by Alibaba and the app will provide personalized and correct preference for customers to select if they want to buy it online next time. Moreover, in Hema supermarket, customers can have a meal made out of the veggies, seafood, and meats they just purchase and be served by robot. Alibaba is trying to merge the online and offline retail together and providing a better customer experience with more personalized services.

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