Fuel Cycle

How Physical Stores Boost E-commerce

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E-commerce needs physical stores at the end of the day. A new study reveals that U.S e-commerce giants use pick-up stores and are increasingly restrategizing their businesses to include brick-and-mortar models. 

And while the number of online consumers is reaching record high-numbers over the last year, consumers report preferring physical stores where they can see the product and have human interaction.

Here is what 2018 taught us about the changing retail landscape. 

 2018 was the second year moving towards physical stores 

On October 9th, Amazon confirmed the rampant rumors–after the opening of their Chicago and Seattle stores, the Internet giant will soon open its first European “Amazon Go” supermarket in the UK.

Amazon Go, the first supermarket without any staff, requires customers to download an app to shop. Just like in Amazon Prime, clients get special rewards and deals straight from the app.

The existing stores are already extremely popular. According to Bloomberg, Amazon is planning to open more than 3,000 AmazonGo locations across the United States within three years.

Amazon’s strategy? Quietly – but surely, Amazon is implementing a digital presence in the 479 physical Whole Foods stores it acquired a few months ago.

Customers can now pick-up packages in Whole Foods stores and receive special discounts.

As Fortune reported in their first article mentioning Amazon in 1996: “Like most Web retailers, Bezos says that the race is for market share first, profits later. ‘If we’re profitable within the next two years,’ he says, ‘it’ll be by accident.’” It seems that Amazon’s founder has remained true to his values.

For physical stores that are willing to go online, it is a completely different story. A lack of understanding of e-commerce and technical skills seem like a bad combination many are experiencing missing business incremental growth.

For physical stores, going online is complicated

 Physical stores might have their pros when it comes to seeing and touching the product in real life, but when it comes to going online, they are still lacking visibility.

According to Nielsen, more than a third of physical stores do not have an online e-commerce presence – and 33% do not provide support for online purchases, such as click and collect, store delivery, or home delivery.

Times are grim for retailers. According to NY Mag, the average life expectancy of a physical store is five years, while it was 20 years in the nineties. This has become such a global worry that Wikipedia has a page for it called “The Retail Apocalypse”. Since 2010, more than 12,000 stores have closed in the United States.

These numbers are just a few examples of how physical stores still struggle to compete against giants such as Amazon, as the “War of data” has only begun.

Collecting data, the key component for success

While leading e-commerce websites own pitless user data (this might be limited since new laws were passed ) smaller businesses and physical stores struggle to know what their clients want. Here are a few insights:

According to Nielsen, the top three products bought online are health-related, personal care items, and cleaning products.

As for curbside pick-up, chips, fresh fruit and vegetables, and canned food are the most popular products. In-store pick-up best sellers are routine products – top three are items such as toilet paper, vitamins, and laundry care.

For the best-oriented marketing team, a real win is when a client is subscribed to buy a product repeatedly. At the moment, more than 20% of online clients in the United States are subscribed to at least one category. Most popular products are pet food, diapers, wipes, meal kits, and vitamins.

With all this pointed data is gathered, it is without a doubt that physical stores could exponentially increase their sales, as well as online stores, can raise awareness of online brands to less digitized communities. Potential synergies between the two worlds seem inevitable in order to survive in the competitive retail market.

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