Saturday, May 10, 2014

Where Does Ecommerce Stand In The Global Commerce World?

E-commerce is at a very interesting stage of its life. It has been about 20 years that Amazon has been founded by Jeff Bezos, and no one should question how big it became.

Depending on the activity related (music, electronic devices, groceries, traveling...), the E-commerce had sometimes a huge impact on the brick&mortar business. Let's take the most obvious example: Cultural goods such as music/video retailing business
  • Some activities have been discontinued, like the DVD rental business, with the end of Blockbuster.
  • Some activites are going in limbo like Barnes & Nobles
  • Some activites have lower to their minimum levels, such as what Walmart or Carrefour in France does, proposing the minimum of range.
But now that E-commerce is entering into a phase of maturation, with lower growth rate, and actually basing its growth with multi channel strategies (opening drive through and in store pick ups for example), will the Internet business replace brick & mortar business? Will it become the leading retail channel? Will it remain the main source of sales growth?

I read an interesting article about this issue that I wanted to share with you. It shows the marketshare E-commerce owns of the whole Retail business in the US in 2013.

The chart shows clearly how important the E-commerce is growing, at a steady pace, but it also shows that traditionnal retailing remains the main show.

I also participated in a conference last year at Paris Dauphine that was leading to the very same remark. What is important, is to understand what will be in the next 10 years the share of e-commerce. I believe it will still grow at a steady pace, but it won't exceed maybe 10% (which remains a lot, as it may double in ten years). What will be interesting to see, is that obviously this growth will impact the way brick&mortar companies operate, and to see what kind of adjustment they will make.

I am jumping to the conclusion: There is room for growth in the brick&mortar world. What needs to be found is how you can create added value thanks to the contact and relationship you may create once in a point of sales.