eCommerce and Retail Outlets in 2016
eCommerce forecasts estimate online total sales to reach more than $325 billion in 2016, a number that is still less than 7 percent of the total US retail sales of $4.9 trillion forecast for 2016. The steady eCommerce growth reveals increases in online consumer confidence and a growing preference for the attractive savings to be had by purchasing online.
However, key differences still exist between eCommerce and brick and mortar outlets that drives customers to prefer one over the other, with differentiation that is often driven by the type of product, customer service availability and factors related to ease of purchase.
In this article we look at 5 differences that still exist between eCommerce and brick and mortar retail outlets and affect customer purchasing preferences.
1. Shopping Preferences
Marketing analysis firm, Forrester Research, produced a report in 2014 showing that there is a definite online consumer preference for certain types of products. In their report the top selling online products were books, music, computer software and hardware, and other electronics, supplies purchased for office use.
While consumer preference for purchasing more personal items such as jewelry, makeup, clothing and shoes, toiletries, hygiene and groceries, and household appliances are still by and large purchased at retail outlets.
2. Shipping Costs and Time-frames, and Sales Tax
The purchasing experiences of online vendors and retail shops differ, largely because of inventory management differences. Many online companies ship from a remote warehouse or drop ship through a third party, while retailers stock their products on shelf and rely on a barcode scanning system to scan the UPC code at the register.
Online purchasers generally accept reasonable shipping costs and reasonable shipping time-frames. However, it can still be a deciding factor swaying a consumer to purchase from a brick and mortar outlet if that outlet will price match and the product can be carried home that same day.
Sales tax thresholds can have the opposite effect, driving a customer who has reviewed a product in-store to make the purchase online.
3. Customer Returns
Returns are hands down easier carried out in retail outlets. With increasing frequency, however, online etailers are improving their responsiveness in this key area of customer concern with quicker RMA generation and turnaround, paying the return shipping costs and in some cases shipping a replacement item after authorizing the customer's credit card. The charge is refunded when the customer's return is received.
4. Customer Service
Customer service is another area where retail outlets exceed their online merchant counterparts. Here again, online retailers are offering more channels and consumer oriented options including the ability to send an email or open an online case any time of the day, request a call back, get answers to most frequently asked customer service issues, download product manuals and even contact some customer service call centers that offer 24 hour availability.
5. Online Reviews vs. Sales Staff
In the area related to the means by which customers acquire product information, online retailers win. Companies that do not even offer online product reviews benefit from those that do offer them.
Millennials, those born between the mid 1970's and mid 1990's, express a preference for seeking product reviews before making purchase decisions.
The sheer volume of online product review information allows customers to sift through noise in the review data that can be caused by everything from a consumer who was having a bad day when he bought the product to a company attempting to damage its competitor's brand reputation.
Even paid positive reviews are generally able to be revealed after users have read reviews from a couple of different websites. Online reviews also have the benefit of being able to be performed anywhere at anytime and without the high pressure created by a salesperson attempting to close a sale after answering product inquiries.
Online companies will continue to prove formidable competitors to brick and mortar operations. Nevertheless, there will always be a need for walk in stores for certain products, at least, for a long time to come.
Robert Cordray is a freelance writer for Income.com and expert in business and finances. With over 20 years of business experience, Robert is now retired and hopes others can benefit from his writing.