Online Shopping — the Opportunities and Challenges Facing Retailers Today
Online shopping — the idea that revolutionised the retail sector. Quick, affordable and efficient, what could be the issue? Whilst online shopping creates great opportunities for retailers, it similarly poses significant challenges as technology continues to progress. This can vary, from clothing retailers like Pretty Little Thing and ASOS, to grocery stores like Waitrose who offer an online delivery service. A recent comScore survey shows that shoppers made 51 percent of their purchases online in 2016, compared to 47 percent in 2014. As these numbers continue to increase, will the competition become all too much for online retailers?
According to the Commerce Department, for the first time ever the total “non-store” (online) retail sales was larger than general merchandising sales in the US in February 2019. This is a significant milestone showing how the digital society is becoming ever more influential. However this must initiate a change in retailers’ behaviour. One of the many issues retail companies face is being ‘stuck in the past’ when it comes to online advertising and selling. The equivalent of unsuccessful online retailers would’ve previously been derelict shopping sectors and their closing down.
Whilst shifts in customer spending behaviour is adding pressure to retailers, a factor in online shopping which must be recognised is the creation of 24/7 browsing. Where shops may be closed for days on end during holiday periods, one can take advantage of the internet, leaving online retailers with profits coming in at all hours. Customers can take further advantage during sales like Cyber Monday — an extra sale promoting online shopping. This cyber sale creates a convenience for shoppers that wouldn’t be possible if people had to traipse around a shopping centre for hours on end. As Skylar Fiscus writes on Medium, shopping becomes desirable and simple.
Whilst online retail can be praised for increasing convenience for shoppers, the situation of employees must be considered. It can be criticised that reducing the “brick and mortar” retail, is reducing the employment in this sector, as department stores have had one of the steepest job losses out of every other sector in recent years. Whilst this criticism has its value, the flip side must be considered, as online retail requires a wide range of expertise — since 2013 department stores cut around 80,000 jobs yet online retailers created roughly 100,000. Therefore it could be seen that online shopping created employment opportunities.
This development of online shopping and the opportunities it provides in the employment sector is all a consequence of the digital revolution. From speaking to my peers, the internet can be used for everything, and most people noted that online shopping was one of their main uses. However without the direct interaction with people, is online shopping as effective as face-to-face? Emphasised by Chris M in the topic of the “Internet”, people are an important part of marketing, so without this direct analogue communication it brings into question whether companies can bring about as much success and maintain customer loyalty.
For some companies like Waitrose, both the online and face-to-face experience is offered through their delivery service from online grocery shopping. This creates great diversity in their opportunities through technology as a company. However, does this mean that online-only retailers are disadvantaged? The success of companies like Pretty Little Thing and ASOS would criticise this view, yet in fact one of the biggest concerns with this online shopping is actually the issue of data protection. Online retailers can utilise this digital platform to offer products similar to ones previously viewed on your device, as well as storing card details for later use by the customer.
This issue of data protection poses great challenges for online retailers as it presents new laws which were not relevant when providing “brick and mortar” retail only. An individual must consent to data processing by clicking a yes/no button on the website by law. Along with other regulations, online retailers must stay within these legal boundaries in order to run successfully. Whilst this may seem a tough job, the result provides opportunity, with this data creating an even more convenient shopping experience for customers, allowing quick browsing and checkout. Without this high quality technology, online shopping would not be as successful as it is today.
Born out of the digital revolution was the rise of social media and its influence on the retail sector. With 50% of twitter users buying online as a result of a tweet from an “influencer” (someone with a large following online creating a huge marketing platform), social media has great power in the promotion of products. Almost all of my peers have the social media app ‘Instagram’ or have done at some point in the last few years. When looking at this globally, according to Statista in June 2018, Instagram had a stunning 1 billion active users.
As noted by Chris M in the topic of ‘Digital Engagement’ digital brings to life new ways of customers interacting with products, and higher levels of word-of-mouth marketing through platforms like Instagram. With these staggering figures of active users on Instagram, sales have rocketed, with retailers like ‘Pretty Little Thing’ being able to offer a new dimension to customer visualisation of their products. This is therefore an opportunity to promote products at a lower cost, pushing online sales and making it an even bigger success. When controversy emerged from influencers not making it clear that they were being paid to promote a product, Instagram overcame this challenge by introducing the new ‘promote’ feature and ‘paid partnership’ tag to prevent the leading on of customers and users.
There is no denying that online shopping has revolutionised the retail sector. Whilst it can be argued that this huge new change provides overwhelming challenges to be overcome by retailers, for example the growing competition, the opportunities outweigh these. In reality, times are changing — sales are now open 24/7 and the whole population is becoming more digital. As noted in the Harvard Business Review, the leading companies in the largest sectors have workers who are 13 times more digitally engaged than the rest of the economy. In modern society, digital influence equals success and will continue to as technology develops further into the future.