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The Physical Retail Apocalypse of Online Shopping is Finally Here

2017 has seen an unprecedented closures of physical big-box department stores and several major chains going bankrupt, and online commerce is growing faster than ever.

I write about the future of retail, and we’ve never seen anything like this. The YOY growth of events like Single’s Day, the November 11th event, is showing the signal that millennial consumers are opting into E-commerce even faster than anticipated.

If you haven’t noticed, the smartphone has basically killed Black Friday. Online sales from November 1 through 22 totaled almost $30.4 billion this year, counting for nearly 18% year over year growth according to Adobe.

Gone are the days when E-commerce only made up 10% or less of all retail sales and traffic. Gone are the days of saying brick-and-mortar retail still rules, and if it does in some western countries, it’s only because we are behind leaders like China in E-commerce nativity.

The Black Friday hoopla is of course very much an E-commerce event for Millennials of shoppers in North America. Canadian Tire have invented a sale called Red Thursday, and then there is Black Friday, Cyber Monday and so forth. Chinese 2nd place E-commerce player JD.com this year celebrated Singles’ Day for 11 days culminating on November 11th, and Amazon has pushed augmented reality on its app as a way to showrooming products in your home. Walmart is improving too in E-commerce, but not as fast as E-commerce is itself entering a new phase of more rapid adoption.

Online Shopping to Hit Unprecedented Global Growth Rates

I’ve written dozens of articles on the retail apocalypse of 2017, but what we are seeing now is an acceleration of online shopping as the go-to discovery and conversion channel. Online shopping is set to double in Australia where Amazon has recently arrived. In India, there’s also 40% YOY growth in one of the fastest growing markets for e-commerce in the world, where Flipkart is pushing Amazon India in their holiday festive season.

What we are seeing in China and India, I predict in 2017, we’ll also see in the west. In 2016, Ecommerce only accounted for 11.7% of retail sales in the U.S., and only up 15% from 2015, but this lag with the rest of the world also might explain why so many stores closed in 2017. Walmart’s new found enthusiasm for E-commerce with the acquisition of Jet.com means from here on in, E-commerce adoption rates of total retail sales should increase a lot quicker.

Online shopping hits new record

Online shopping has already hit new records ahead of the Thanksgiving holiday, bringing in $28.6 billion from Nov. 1–21 — a 17.9% jump year over year, according to a report by Adobe Analytics. Cyber Monday is projected to see even bigger results, with $6.6 billion in sales. Holiday spending — which is expected to jump 14% for $107 billion in sales — will likely continue to rise once Thanksgiving hits, CNBC reports. (Source: LinkedIn).

At $1 billion a day, or more, online shopping has already set new record.

The U.S. is no longer where the action is in E-commerce, while Cyber Monday is expected to be the largest online shopping day in history (in the US), with $6.6 billion in sales. Compare that to Singles’ day that was approximately more than 7x that.

The abundance of physical infrastructure and stores makes U.S. shopping unique, and also less agile to new trends in the industry. China can scale automated stores faster, as evidenced by Amazon’s cautious approach testing out AmazonGo stores. If Amazon acquired Whole Foods, Alibaba is investing considerably in brick-and-mortar stores as well. At a time when Tencent (the maker of WeChat) is valued at more than Facebook, it’s not clear just how big Alibaba can get. We do know that Alibaba is working on the “Netflix of China”, gaining steam in the Cloud and doing retailtainment better than anyone on the planet.

So, when seen globally, online shopping hasn’t even hit its peak point of adoption on the curve yet — that should come around 2020.

Nothing can stop the shift to online shopping

We know E-commerce will continue to slowly take market share from brick-and-mortar stores, we just don’t know how fast. As Alexa and Google Home devices improve how consumers shop via voice enabled AI, and as these firms continue to do AR, VR and even digital influence in stores better, E-commerce growing in the U.S. under 20% YOY is a disappointment!

E-commerce sales in the third quarter of 2017 in the U.S. jumped 15.5% totaling $115 billion (a new record), says more about consumers changing preferences than the decline of physical stores per se. Less discretionary spending means more attention to discount events, that are primarily conducted now online. The rise of the Asian consumer also shows a slowing of the spending of the North American one.

China isn’t just more native at E-commerce than the West, the chinese consumer is gaining influence over the future of the global economy. Alibaba isn’t just that much better than Amazon, all of online shopping is reflected in a more mobile-centric consumer base of the Asian target audience and shopper.

Bloomberg

A Small Pond, a Bigger Winner Amazon > Walmart

After all, Amazon accounts for 43% of US online retail sales ( Slice Intelligence, 2017). We also know that the retail infrastructure of the U.S. is changing very fast.

50% of shopping malls will close by 2023 — only the retailers who cultivate meaningful experiences will survive.

We know that Millennials prefer online shopping and younger generations will favor voice activated shopping like on Google Express and via Alexa. As Millennials are starting to have families, E-commerce then becomes the method of choice for the discounts, speed, convenience and on-demand fulfillment improvements.

Accoring to BigCommerce:

67% of Millennials and 56% of Gen Xers prefer to shop on online rather than in-store.

That’s exactly what we are seeing in China as their one-child policy is fueling new growth rates in the appetites of the urban luxury consumer. China has successfully combined influencer marketing into their mega discount events that are in sync with younger Millennials and GenZ shoppers.

Retail Apocalypse of 2017 Brings Faster Online Shopping Adoption Growth

Whether you can call what we have seen in 2017 a retail apocalypse or not, many retail analysts see the U.S. in isolation to global trends in online shopping. They also forget or fail to realize how tech’s impact on our shopping decisions and journeys is only beginning, and will scale with each coming generation in ways that transcend their generation. If China is 5 years ahead of the U.S. in online shopping, it’s 10 years ahead of places like Canada and Australia.

Amazon and Alibaba are just catalysts, and we are just now at the beginning of online shopping. Retail won’t die, but the consumer and their and how we use their data is changing. Ultimately in the future of retail and the smart city, we are now seeing how retail and transportation are on the front lines of technological disruption, and automation is no longer far on the horizon, but coming nearer.

As E-commerce native firms improve their AI, and ability for consumers to order customized products with 3D-printing and VR showrooming, shopping in stores will be less and less appealing. Until circa 2050, shopping in stores will indeed be like a blast from the past.

Check out the E-commerce warehouse progress of JD.com on YouTube. If you don’t believe a robot economy is coming, then you haven’t been paying attention.

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