by Dave Gardner
The dreaded new competitor to traditional retail success, dubbed e-commerce, is also becoming a valued partner for merchants who choose to adapt.
The power of e-commerce as a market disrupter is clearly unstoppable. Five years ago, national e-commerce sales topped $1 trillion for the first time, and online markets are expected to achieve growth exceeding 50 percent in the five-year period of 2015 to 2020. Traditional markets are only expected to grow two percent during the same time.
Despite all of the disruption generated by expanding e-commerce, this retail system is still only 10 percent to 12 percent of America’s total retail market. This indicates that enormous opportunities exist for further e-commerce penetration into new markets.
Rodney Ridley, Ph.D., director of the Allan P. Kirby Center for Free Enterprise and Entrepreneurship at Wilkes University, explained that the top tier of e-commerce merchants within NEPA is impressive. These include companies such as Pepperjam and Web.Com, who are exploiting the demographics of retail spenders and understand the nation’s youth are not store patrons as much as the preceding generations.
According to Dr. Ripley, the natural bond that has developed between Internet software and youth has set the stage for the e-commerce genie to never recede. Service from sellers is also not as important for the millennials as the preceding generation, setting the stage for e-commerce to continue its march forward.
“Older people may have a distrust factor with certain types of e-commerce, such as food and clothing, but it’s also true there are always normal buying differences by age,” said Dr. Ripley.
Food may become the last hurdle for direct e-commerce sales, but when these obstacles dissolve Dr. Ridley expects supermarkets to suffer just like traditional hard-good retailers are now. Expanding technologies, such as home three-dimensional printers than can create goods after electronically purchasing construction patterns are also near.
“I can see the slow death of traditional retail,” said Dr. Ripley. “In the future, many of the current store types will no longer be needed.”
He added that paper currency implications go hand-in-hand with e-commerce disruption. Perhaps a new speculative currency not based on gold will appear and become the standard for e-transactions.
“This is all part of natural ongoing business disruption,’’ said Dr. Ridley. “It’s no different than how Netflix wiped out the old Blockbuster approach in home entertainment.”
Successful penetration of the e-commerce arena by a traditional NEPA retailer has been achieved by Danielle Fleming, founder and CEO of NOTE Fragrances. Her company, formerly a conventional retail operation with limited e-commerce, has evolved to a point where one-third of total sales are Internet-based.
Fleming achieved these gains by marketing her products through social media. Previously, she sold electronically with a $10 flat shipping charge and free shipping for a $75 order, or free store pickup after ordering, but this approach generated only some spattered returns.
“Initially, web-based sales were a convenience for our current customers,” said Fleming. “It was a back-burner thing.”
Fleming converted these occasional e-commerce sales to a mass merchandise operation and major revenue provider by joining the sampling system known as IPSY during January of 2017. This e-market allows consumers to gain membership for $10 a month, resulting in a monthly box of varied beauty samples to be received.
“It took a full year for me to seal this contract to be included in the IPSY samples, and I had to shoulder the financial liability up front, which wasn’t cheap,” said Fleming. “But the deal has paid off big-time.”
Fleming sent a new proprietary fragrance know as Pink Peony to 252,000 homes through IPSY, and her e-commerce sales exploded. The scent received a five-star rating, and the sales boost is still continuing.
Fleming also has opened another retail store in Clarks Summit, and uses the combo of traditional retail plus e-commerce for expanded market penetration. Her e-sales formula now includes partnering with Kris Jones and LSEO to insure her website is customer-friendly, image-rich, easy to navigate and optimized for search engine operation plus Bing, Google and Facebook advertising.
“E-commerce is not in my skill sets, so I have worked with LSEO because they are true experts,” said Fleming.”
She has also used the boost from e-commerce to launch business into new areas. NOTE Fragrances is involved with fragrance development and contract manufacturer for other brands, plus business consultation based on Fleming’s success.
Mark Mathews, vice president of research development & industry analysis with the National Retail Federation, frequently reminds retailers that successful e-commerce allows great control over a market sector. Consumers buy for multiple reasons, such as features and price, and e-commerce is another buying option as opposed to some fearful opponent.
“This is a great time to be a consumer,” said Matthews. “Retailers must offer buyers the options and the experience they want as they cater to needs, and e-commerce is a great new vehicle to do this.”
Matthews also explained that e-commerce gains are not as impactful as many people believe. The delivery end of this business is crucial with packages being delivered by a huge supply chain infrastructure.
“The last 50 feet of delivery is vital, and we’re seeing a lot of innovation here,” said Matthews. “Ship-to-store for customer pickup is also popular.”
As e-commerce advances, retailers now have an increasing list of options to capture sales. Examples include how online sales can be tied to conventional store inventories, customers can apply cyber-makeup to an image of their face at home while on the Internet, virtual rooms with furniture can be presented, and cyber-stores complete with entire virtual aisles can be created.
“The key for the retailer is to create a seamless transition for the customer with ease of purchase,” said Matthews. “Expectations for returns must also be met, with minimal costs.”