E-Commerce Versus Traditional Commerce

The e-commerce age has arrived. Amazon is past its 20th birthday and eBay follows in Amazons footsteps being just one year younger. E-commerce is now a $200 billion-plus industry in the U.S. and is set to increase up to 15% a year as shoppers come to the realization that there is no longer a need to go out to the traditional mall anymore. In the war between e-commerce versus traditional commerce, e-commerce is clearly becoming the winner. Due to e-commerce traditional commerce is being driven to its grave.

Well-informed traditional businesses recognize the inevitable rise of online shopping. In truth they are adapting to the new and very evident realities. The megalith retail chain Macy’s shows facts indicative of this. This 154-year-old retail chain saw online sales rise 40% in 2011 while traditional retail store sales grew just 5.3%. Macy’s is currently overhauling almost 300 of its retail stores into distribution hubs in so doing speeding up the entire process from purchase to shipping its for online shoppers. It has come to the point where this retail giant is taking into consideration the option of online kiosks in-store. Another traditional commerce big-shot, Nordstrom, is going about it even more aggressively. With perks such as free shipping and free returns in its online store, Nordstrom’s showed a 35% gain in online sales over the last three-quarters. It can also be noted that the company plans to invest $1 billion into its online ventures over the next five years. The online trends and approach of such huge, well-established traditional commerce concerns validates the acceleration in e-commerce’s growth. Simply put, if they don’t become current, they will not survive.

Upon the purchase of a product in traditional ways, what the consumer does not know is that the item has been marked up at least three times. It has been marked up once when it changed hands from the factory to the brand, again as it passed from the brand to retailer and again as it goes from the retailer into the shopping bag of the consumer. Companies that are exclusively online essentially cut-out the last mark-up by selling directly to the consumer. By doing this they are able to be much more competitive. They don’t have the costs of maintaining large networks of physical retail stores. It is good to keep in mind that the staff requirements of an online site are far fewer than those of retail outlets.

There are numerous advantages to e-commerce that have traditional commerce buckling under its competitive presence.

1. Geographical limitations are not necessarily taken into account. With e-commerce the world is your oyster.
2. Consumers can be reached by making use of internet and search engine visibility.
3. Lower Costs
4. Fewer Personnel
5. Traditional commerce relies on physical store space that needs to be rented. With e-commerce there is no cost for real estate.
4. Locate the Product Quicker
5. Travel Time and Cost eradicated
6. Shopping by Comparison
7. Easy and Plentiful Information
8. Communication is targeted
9. Open 24/7
10. Create Niche Markets

E-commerce is not only the future, it is the now. The bottom line is that traditional commerce business will need to take a long hard look at how they conduct business to be able remain relevant and competitive in the huge commerce reality of today.

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