Monday, March 16, 2015

Why Ecommerce Startups Are Looming On Retail

Very interesting article of Techcrunch, explainig why Ecommerce Start Ups Are Bullish On Retail. This is a topic we will see more and more now coming up. Indeed, Ecommerce is maturing, the growth rate is slowing down, you can clearly see now mergers and concentration coming up. Meanwhile, brick & mortar businesses are investing more and more on the web, to find new land of growth. These two strategies are forcing Ecommerce companies to launch some store networks.

Obviously, traditionnal retailers have an hedge on this one, as it takes time and some kind of expertise to launch a vast store network. Nevertheless, the article emphasizes on the advantages that Ecommerce start ups have on their competition:

  • They can negociate more flexible real estate lease: Now that comemrcial real estate is struggling, landlords tend to give short term leases, allowing Emerchants to test new concepts without much risks.
  • They master better their inventory: it is probably easier to master brick & mortar inventory once you have a clear inventory online, than the other. Their ability to work with modern tools their inventory allows to cut off some costs.
  • A retail networks allow to cut off some of the shipping costs: Obviously, it changes the way they work their business modell, and their ability to work with the brick & mortar operationnal costs (especially wadges) will be a key to the success of their retail network
  • They may propose a more customized customer relationship management. Ecommerce has thrived on customer data, and their ability to do it better than brick & mortar companies will be a key to beat the competition.
Now, the article is obviously one sided. Developping a retail network is a hard task to undertake. Moreover, it requires large investments in order to have a clear impact on the Emerchant revenues.

Nevertheless, I really like the way the article shows out that E commerce may really change the way we shop.