Very interesting article (in French) about the evolution of the Ecommerce landscape and how it will evolve in a near future.
If you are a frequent reader of this blog, you must know I am discussing a lot about how Ecommerce and brick & mortar retailing are actually merging right now, with emerchants trying to find ways to get concrete locations while brick & mortar businesses are investing a lot on Ecommerce.
The article shows out clear statements which are important to always keep in mind:
- Ecommerce is maturing, and most of the historical leaders of the market are struggling to deliver 3 to 4% growth on their domestic market. Actually, aside Amazon, most of the growth in the Ecommerce landscape is brought by brick & mortar competitors online.
- Two trends are making pure players struggling online by lowering their profitability: The low price competition (which was the core factor of their growth) added to the cost of acquisition (the money spent on online advertizing). If pure players may have cost advantages on the inventory, real estate & workfore, those strengths are actually lower due to those two main factors.
- The web to store is one of the most important growth lever of the moment: If Internet is clearly one of the main source of information during the decision making process, more and more customers tend to finish up their transaction in store.
- Even though they invest online, it is difficult for brick & mortar company to buy a pure player: Obviously a company like Carrefour could benefit fast of a purchase of a pure player to develop its market shares. But Ecommerce businesses encounter a lot of speculation which make them difficult pray to get for historical retail tycoons. Especially as traditionnal retailer shares are relatively low compared to their sales. Therefore it is not so obvious to see a retailer like Carrefour or Tesco buying out a Emerchant, even though the strategy could make sense. Nevertheless, why wouldn't they merge?
Once again, the strategical war that is happening at the moment in the retail business is yet to come, and will be very interesting to watch.