In a recent Los Angeles Times Business-section article, Best Buy to downsize brick-and-mortar footprint amid weak sales and growing online competition, the sub-heading gives us a bird’s eye view of the general plight to which bricks & mortar retail is responding:”Best Buy plans to sublease space at its stores to smaller retailers, joining the ranks of big-box giants that are shrinking store sizes.”As bricks & mortar stores, like Best Buy, take it down to the scalp, they’re downsizing square footage, and sharing space with smaller, non-competitive retailers.
Another poignant quote from the article: “On Wall Street, Best Buy’s shares are down nearly 7% so far this year. Amazon.com, by comparison, is up more than 6%,” shows ecommerce has found a way to keep their tresses intact.
Low Overhead
First, let’s clear one thing up: Ecommerce is not cheap, unless your selling handfuls of knickknacks out of grandma’s sock drawer from behind a ramshackle ecommerce booth. From our experience, it’s better to just have a garage sale, as these low-rent shops are rarely anything but disappointing. We’ve spoken to many a would-be merchant who took the time setting up a free or inexpensive generic ecommerce shop, only to wonder six months after launch why not one single shopper has purchased. This isn’t the 1990s when it was easy pickings–now, EVERYONE is online trying to sell something–even the most scarce of products can be procured starting with a simple Google search. And to even think about competing with mainstream big-box retailers it’s going to require a lot of cash–BUT it’s not like we’re building mega malls here, so construction costs and month to month overhead on large commercial bricks-and-mortar doesn’t even compare. For even as little as a few thousand, merchants can buy a quality-developed ecommerce store that will at least be competitive in this crowded space, and even building an international ecommerce store, Wal-Mart style, won’t come close to topping the millions it costs for the prime bricks-and-mortar real estate alone.
Wide Reach
One ecommerce store is many times just as effective and profitable as 100, 1000, or 5000 local stores trying to cast a sales net around target markets separated by significant geographic barriers–Just ask Amazon! How many bricks-and-mortar stores do they have, and how many people from all over the world do they serve?
Innovative
Because ecommerce is tethered directly to the internet technology revolution, there are always new innovations being released that make shopping safer, quicker, more intuitive, cheaper, and geographically convenient for shoppers around the globe. This iscounter to bricks-and-mortar’s very nature, as these stores still require customers to drive through traffic, walk through aisles, push around a clunky cart, and perhaps even find their desired purchase is out of stock. It’s true, ecommerce hasn’t evolved features capable of emailing or faxes over recent purchases, but even shipping standards and processes have chipped away at the “buy it now-own it now” advantage bricks-and-mortar has over e-tail. As mentioned in the LA Times article in the first paragraph, shoppers are using bricks-and-mortar to do their “look and feel” shopping, and then going online and buying what they want from reputable ecommerce merchants. Scot Ciccarelli even cited an old joke about Best Buy being Amazon’s showroom.
Ecommerce, Immune from the Economic Crises?
It’s still not safe to say that ecommerce escaped the economic crises because a lot of etail merchants felt tough times just like their bricks-and-mortar counterparts–but ecommerce merchants typically operate at a higher profit to cost ratio, it’s easier for them to respond to sales slumps by re-organizing a highly flexible internal matrix of code, labor, advertising, etc., versus dealing with hundreds of large moving physical parts on a massive scale.
