Why Traditional Retailers are Moving to the World of e-Commerce
Strategy & Best Practice
May 2, 2017

The rise of the smartphone and the ubiquity of home computers has made a rough go of it for traditional brick-and-mortar shops as consumers shift their focus to online purchases. As a result, many retailers have jumped into the bustling world of e-commerce, and for good reason: Since 2000, online channels have provided three-quarters of retail sales growth, according to Strategy&. Furthermore, those merchants slow to pivot to the online marketplace - Borders, American Apparel and Aeropostale, to name a few - have either collapsed or filed for Chapter 11 to restructure their debt.

Looking to avoid the mistakes of these brands while taking advantage of the growth opportunities in the e-commerce space, retailers have been staking out digital territory and setting up shop online. This shift is nothing new - the big department store displaced the corner mom-and-pop shops, and before that the introduction of catalog shopping disrupted the flow of in-store traffic. Retailers are adaptive and innovative, and they can see the promise that e-commerce brings.

"Since 2000, online channels have provided three-quarters of retail sales growth."

The profitable allure of e-commerce

The convenience of sites like Amazon coupled with a growing shopper preference for experiences over tangible products has caused a steady decline in foot traffic and same-store sales for retailers. Department stores ranked last in terms of sales growth - 197 out of 197 - according to the Investor's Business Daily industry tracker.

To capture a greater market share, brands that previously only had a physical shop have migrated to the e-commerce space. Websites and mobile apps have leveled the playing field between the corner shop and the big-box retailer, making the digital migration even more attractive. However, it's important that these companies realize the same processes and workflows that worked for a traditional brick-and-mortar shop will not translate to the digital market space. Implementing the same inventory management or customer order management techniques can leave the e-commerce site understocked or sluggishly fulfilling their customers' orders - all of which will have a major detrimental affect on margins.

Maintaining a physical presence in a digital world

Although e-commerce sites provide many different options for consumers to research, compare prices and purchase items, a physical store still offers many benefits for retailers. For now, online sales only account for roughly 8 percent of total retail sales, Strategy& reported.

For instance, many customers prefer to browse for items in traditional shops so they can get a better sense of what they're buying. After seeing, feeling and perhaps even trying out the item in the physical store, the shopper will then go home or just pull out their smartphone and make the purchase online. This process, known as "showrooming," requires a retailer have an omni-channel strategy that includes both a brick-and-mortar shop and a robust e-commerce site.

Retailers with both an online and offline presence need to ensure they have a cloud commerce platform with omni-channel capabilities. It's important that these companies have a streamlined customer experience throughout both the in-store and online journey. This allows retailers to effectively and optimally manage inventory fulfillment, customer orders and many other aspects of the e-commerce site without sacrificing their processes already in place for their brick-and-mortar locations.

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