Why Traditional Retail and E-commerce Are Not (Always) Competing Strategies

Sep 09, 2015 — Allan Pulga
In Harvard Business Review's (HBR) article titled “E-Commerce is Not Eating Retail”, Darrell Ridby defends retail stores and outlines why they’re here to stay despite the growth of eCommerce.
The HBR article points out two examples of retail segments that are on either end of the physical stores vs. purchased online spectrum - - “e-commerce sales will increase from 11% of Forrester’s top 30 categories to about 18% by 2030—higher in some (such as music) and lower in others (such as food).”

It really comes down to the types of goods that would determine the success of retailers who mix online and in-store.

It’s interesting to note what types of retailers would fall somewhere in the middle and would benefit from a strong blend of in-store and online strategies. It really comes down to the types of goods that would determine the success of retailers who mix online and in-store. My thoughts on the kinds of goods that would be great for the mix are:

  • Goods that are not commodities. If there are physical differentiators for a product set, then it becomes more important to have a physical store channel for consumers to validate a choice that they might make online.
  • Goods that are actually physical. Music is essentially a virtual ‘product’. The distribution lends itself to a strictly electronic form. Books are another example of this class of virtual product.
  • Fashion is a prime industry for an online and in-store mix. The goods are differentiated physically in terms of cut, material, and colors.
  • Technical physical products are another category that benefit from an online and in-store presence - gear that requires good maneuverability or feels good in the hand.

Perhaps another way to think about it is - what kinds of products carry a higher risk of disappointing the customer if they only ever had exposure to it online?

The article points out that “so many companies that began as pure e-commerce plays have added physical stores, including Warby Parker, Athleta, BaubleBar, and Bonobos.” But there are examples of where the reverse is true as well. Physical stores converting to entirely online shops such as old music stores, for instance. A&B Sound and Sam the Record Man were two massive music stores that have since disappeared from the Canadian retail landscape. That being said, moves to purely online aren’t as common.

Physical stores can offer consumers experiences that are difficult to replicate online.

Physical stores allow customers to make decisions based on important physical differentiators between products - feel, fit, smell, color/texture, and noise. Some might argue that a physical presence allows people to better establish the brand. I think this is true, but I think that the nature of the product you’re selling has more to do with it.
So knowing that the physical retail store isn’t disappearing, I’m not arguing that it can stay the same either. Retailers need to work towards bringing online experience and conveniences in-store.

Here are my top 3 tips for how retailers can remain competitive within the growing trends of E-commerce:
1.) Manage your online content to ensure its accuracy and quality. This includes not only product descriptions, but also the most recent availability and pricing information.
2.) Have a consistent brand experience between online and offline so that people feel the continuity across all your marketing channels.
3.) Seamlessly point back and forth from one channel to another. Get your eCommerce site to drive traffic to your store (and show accurate store location information such as hours of operation and directions.) Leverage the higher data density available online to your customers that are in your store – perhaps using mobile calls to action or using in-store kiosks that show online information.

The future of retail is not deciding between physical or online but finding a way to bring the best of both experiences together.

Topics: Retail Operations, Business Intelligence, e-Commerce

Recent Posts

Comments