Customer Growth Strategy · Customer-centric · Omni-channel · Retail

The end of e-commerce

We’ve gotten pretty used to talking about e-commerce and brick & mortar retail as if they were two entirely separate things operating in parallel universes. In fact, industry commentators often treat the “on-line shopper” as some sort of new species.

Yet more and more the notion of e-commerce as a channel unto itself is collapsing. A distinction without a difference.

Yes, some on-line only businesses like Amazon will continue to thrive, and no doubt we will continue to see purely digital retailers launched. Some will carve out profitable niches.

But with few exceptions, the real action–and the biggest source of future growth–lies with omni-channel retailers, that is, those brands with a compelling presence in brick & mortar and on the web (and mobile, and social, etc.).

When the media quotes the rapid growth of e-commerce, don’t forget that much of that growth is fueled by the digital operations of traditional brick and mortar players such as Macy’s, Best Buy and Neiman Marcus.

The reasons for this are simple. Consumers think brand first, channel second. Consumers use multiple touch points on their purchase decision journey. More and more, consumers value the unique convenience of on-line shopping, but often will appreciate the unique benefits of a physical store.

Forward thinking omni-channel retailers like Nordstrom have stopped breaking out the sales of their e-commerce division and their brick and mortar stores because they accept the idea that the distinction is increasingly meaningless. More importantly, they act on this insight and have worked hard (and invested mightily) to eliminate shopping friction and make their brand available anytime, anywhere, anyway.

So forget e-commerce and brick & mortar. Stop with the separate P&L’s, non-sensical incentives and channel-centric customer analysis.

Put the customer at the center of everything you do, and build from there. Rinse and repeat.

 

 

 

 

 

19 thoughts on “The end of e-commerce

  1. >”So forget e-commerce and brick & mortar. Stop with the separate P&L’s, non-sensical incentives and channel-centric customer analysis.”

    Yes! This is such a critical message. As a former accountant, so often I see retailers get lost in an extensive chart of accounts that is meaningless when their customers are purchasing some where else … at a better brand.

  2. The economy in melt down, retailers going under. The stark warnings have been around for the past three to four years and still too many have have only just embarked upon the multiple channels. I agree that this is where the problem exists. “Lets start an ecommerce channel” – spend loads of money, confuse our customers, confuse our staff, confuse all parts of the business. So if I am a customer i am not interested in anything but the brand I shop at – Steven is right. Brands have to reflect an omni channel presence. In the next few years everyone will say that they are an omni-channel retailer but without the single connected view……..they will not last

  3. Well done. I think it’s also important to understand that brands realize that consumers want an experience when shopping online as well. It’s not just about having a store online anymore but also being able to extend your brand an the B&M experience to the online consumer as well. Hence why wire framing and user experience insight is becoming very important.

  4. Indeed omni channel is here. Add to the mix 100 million smartphones in the US alone being used to assist shoppers and with users now able to opt in to rich mobile apps, retailers and brands can now create an interactive and personalized location based marketing program. Amazon what you got?

  5. I totally agree with the core premise – brand first, channel second. Your brand should be delivering your desired experience wherever the customer is, and no channel should be ignored.

    But, breaking out channel in P&L is still useful. E-com and brick & mortar are going to have different rates of growth, and tracking your e-com growth vs. the industry benchmark will help you know if you’re executing properly in that channel with the right strategy and team.

  6. Well stated- consumers do not shop in “channels” and the reality now is that it isn’t “bricks and mortar retail”, “online-retail”, “mobile-commerce”, or even “omni-channel retail”: it is just simply “retail”.

    The model has evolved- as consumers we are trending ahead of the curve in our behaviour- the long tail of retail businesses struggle with the fundamentals of these concepts, but are beginning to figure it out now.

    All of the above are the tools that all retailers should employ and embrace because that is what their customers want and the retailers that are in tune with this will reap the benefits

  7. Great post. Now to get retailers to start thinking this way and then to establish those customer centric performance measures that transcend the channel. As soon as those are in place at the highest level, the organization starts to shift as individual and departmental performance goals become consistent with the customer rather than the channel.

    This morning, I read a post that was symptomatic of this problem at Best Buy: http://www.hunterwalk.com/2011/11/big-box-retailers-are-amazon-showrooms.html

  8. @David W.

    “But, breaking out channel in P&L is still useful. E-com and brick & mortar are going to have different rates of growth, and tracking your e-com growth vs. the industry benchmark will help you know if you’re executing properly in that channel with the right strategy and team.”

    That was one of my first thoughts too but on a second read I assume Steven is meaning the “real, consolidated statutory accounts level P&L”.

    There is no reason why each division / department / programme shouldn’t still track its own “P&L” (or ROI) to show that it’s pulling it’s weight (and delivering wrt industry benchmarks).

    @gammydodger Re new models of retailing you might want to read the comments over here – http://econsultancy.com/uk/blog/7707-how-can-retailers-appeal-to-mobile-users-in-store

    We talk about a “consignment store” or a “permanent trade show” – a venue dedicated to showcasing the products where you are encouraged to “try it out” and then buy online.

    Think of it as “affiliate referral”, just in the physical world…

  9. Hi Steve,

    I guess it depends upon what you are shopping for. The trick to e-commerce is getting people to use your site to sell a basic commodity, something they don’t need to go look at in store. For these sales loyalty points or cash-back that can be used worldwide and multi-store are the future. It’s already happening here in Europe.

    For other items people will need to know that there is a bricks and mortar store out there to visit, and these shoppers will also be driven to the stores via the points or cash back they generate via the rest of their purchases (online or in other club affiliated stores).

    I think what we will see is a drop in advertising revenues and an increase in cash incentives to shoppers connected to the stores via their smartphones and loyalty groups.

    Obviously I am not retail or e-commerce expert, but I have a business to develop in the USA that works here in Europe if anyone is interested ??

    Thanks,
    Rony Weissman

  10. Even the use of the phrase “brick and mortar” stores is now completely outdated. Coined by now-defunct dotcom consultants in the late 1990s, anyone who uses this phrase clearly doesn’t understand retailing. Those using it should be made to pay £50 to The Retail Trust, Livestrong, etc…

  11. I agree with Steve’s core premise that a retail brand can & should transcend channel. Still, I think there is value in distinguishing e-commerce from B&M for a couple of reasons.

    Operationally, the two are quite different – an e-commerce business consists of the website, an IT back end, fulfillment/logistics, and – increasingly – strong customer service during and AFTER the buy. Real estate, facility management, space optimization, and good old ‘fluff ‘n buff’ remain staples of B&M retail. As such, B&M retailers need to make significant investments to move into e-commerce, as do e-commerce players looking to establish a B&M presence.

    Channel strategy also benefits from a deep retailer-specific understanding of the role your B&M establishments play from a shopper perspective and the role your e-commerce operation plays – there should be a clear distinction between the two.

    We’re sure to see more shopping moving online across the board owing to greater convenience, choice, and price transparency, and an associated decline in the number & size of B&M stores.

    This has lots of implications on everything from employment (will retail workers become the 21st century version of farmers?) to the landscape of our cities and towns. Over the long haul, look for the demise of strip malls, and perhaps a return to something like the old town center, where a dense cluster of mostly smallish stores coexists with other commercial & even residential spaces.

  12. Brilliant Steven, they should stop considering it as an ennemy. It starts looking like going to the doctor and listening him talking about one part of your body without considering you as a whole.
    There is no e-commerce, there is no bricks but there is just commerce and if brands could just think like this they will incease tremendously their turnover!
    Brilliant Steven ! Thank you !

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