It’s no surprise that e-commerce has been on the rise, amid the recent pandemic and the closures of thousands of brick-and-mortar stores across the US. However, this rise has revealed that there are serious constraints that come with online shopping.
“In two decades of thinking about what technology means to the demand chain, now everyone has a rude awakening to the constraints,” said Keith Anderson, senior vice president of product strategy and insights at Profitero, a tech company that houses major brands to accelerate their e-commerce sales.
The costs of e-commerce are high, meaning some retailers aren’t making as much online as they would in store. With marketing, fulfillments and returns combined retail stores are realizing that e-commerce may be less than ideal.
“With a few years of experience in buying online and several painful experiences of having to return the product, consumers realize that e-commerce is not a guarantee of seamless shopping,” said Thomai Serdari, a marketing and branding professor at New York University.
Not only that, but the environmental impact of online shopping is already detrimental on its own. With excessive packaging and the increase in emissions from delivery, e-commerce has raised concerns, especially during a time like this.
The selling of non-essential goods depends solely on discovery – which is best accomplished when consumers visit physical spaces. In April, online apparel sellers saw that their demand declined. With businesses temporarily shuttered and the new reality of employees working from home, there has been a significant decrease in outfits needed for work and leisure.
Apparel companies aren’t the only ones impacted by this decline either. Eyewear retailer Warby Parker and grooming brand Harry’s, two direct-to-consumer companies that rely solely on e-commerce, have recently accepted that partnering with brick-and-mortar retailers or opening their own store is a necessary tactic in order to market to their consumers and drive traffic.
Direct-to-consumer brands have been a trend in the retail industry even before the pandemic hit. With retailers such as these relying solely on someone’s else infrastructure, this begs the question — how will this last? It will be more difficult to get capital and investments this way, says Anderson. Despite popular belief, “e-commerce isn’t magic,” he added.
“All of a sudden you have to acknowledge it. There’s a new focus on the supply chain, and the economics of e-commerce, and the environmental consequences,” Anderson said.
Another significant effect has been the discrepancy of readiness among retailers. When this pandemic broke out, many companies were not prepared. While some retailers had already heavily relied on e-commerce sales, others had to shift to take this approach in order to stay afloat. Some, like Kohl’s and Target, were able to easily adapt to the transition. While others, such as JCPenney, have fallen short.
These shortcomings have revealed that e-commerce can’t simply pick up the slack for brick and mortar during a time like this. And, it may not serve as the long-term solution that some may have hoped for.
“You would think that (fears about shopping in stores) would then lead to big increases in e-commerce, and it has,” said Nick Egelanian, president of Siteworks Retail Real Estate Services. “But, at what cost?”