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E-commerce, the future of the retail industry!

Opinion by :Mimoza Selimi

Each day we are witnessing massive changes as technology is reaching the highest peak of its development, while the world is switching towards a digital approach rapidly.

The purpose of this Opinion is to analyze the retail as an industry, its shift towards E-commerce, the future of e-commerce, its innovation, and its correlation with retail industry

Tweet on the rising trend of the e-commerce

*Statista chart on eCommerce projections 20-25

What is E-commerce? 

Shortly explained, e-commerce is a form of online purchasing, goods and services. To be clear, E-commerce is not the latest technological invention, however, this business model did not have much popularity until the last 10 or 20 years.

Following are the main contributors that helped to set the ground for E-commerce growth:

  • Unlimited worldwide access to the internet
  • Personal Access on electronic devices (smartphones, laptops, tablets etc.)
  • Improved ways of transportation and global infrastructure
  • Online and secure payments using bank cards and accounts, and other alternative ways of online and digital payments.

Nevertheless, the mentioned factors also were achieved a couple of years ago.

Why didn’t E-commerce become popular until last year? 

The pandemic C-19 played a huge role in speeding up things in this direction. Otherwise, the switch towards E-commerce would be slightly slower due to the old ways and mindset of both clients and the merchants.

It’s only fair to say, covid 19 was a tipping point, due to the pandemic, entrepreneurs and businesses had to make emergency adjustments, by adapting digital and electronic platforms.

This was the point that pushed everybody out of their “comfort zone”.

Even the most stubborn industries were pushed to think about online alternatives to survive in their line of business. To comply with the new trends, amazingly, a lot of new platforms and new business scopes emerged in a really short time.

Following are the statistics of E-commerce as a share of total Retail U.S., these statistics show the great impact of the pandemic and its correlation to e-commerce popularity. (Timeline, from:2016 -to:2021)

(Timeline, 2016 – 2021) 

Source :Statisa

As it is shown on the graph, the peak of E-commerce in the U.S. was during the lockdown Q2 2020.

Nevertheless, we see a slight drop after the lockdown ended.

However, from a comparison of E-commerce purchases during Q2′ 2016 and Q2′ 2020, we see that over the period of five years there is an increment on E-commerce usage of 66.25%, furthermore, this number is going to grow even faster in the next five years.

Why E-commerce?

While we could manage to prolong most activities during the lockdown, we still had to do grocery shopping, shop for clothes, or do other kinds of shopping. In this case E-commerce was the most convenient platform for both: customers and businesses. It offers a lot of benefits on both sides, in comparison with the old classic ways of business. This type of E-commerce is otherwise known as B2C (business to customer).

Businesses: Advantages and Disadvantages 

Unlimited Prospective Customer Base– While owning a shop, or even a shopping mall, businesses get access to a limited base of customers, only those who visit the shops are the potential buyers. While, with E-commerce, everybody who has access on the internet is a potential client, E-commerce provides worldwide clients for the businesses.

Cost Optimization- businesses that own shops have a lot of fixed costs such as: rent expenses, electricity, salaries, and other fixed costs for running the shop. On the other hand, they have a limited customer database to cover all the costs and get profit in the end.

E-commerce might have the disadvantage of paying more for IT infrastructure and marketing.

But, here comes the benefit of selling globally and not being just a shopping mall with limited buyers in a given city.

Customers: Advantages and Disadvantages  

Time saving and Improvement of Customer Behavior: adopting E-commerce grants commodity and flexibility for customers. It is time efficient, especially for people with long working hours, who lack time for outside work activities.

Price and Product Checking: Online shopping provides more advantages for the customers who can cross-check and make a price comparison between different businesses and make the best choice for their benefit.

Customers can easily follow up on all the sales, and by not going physically they save money for fuel, they avoid the syndrome of “psychological purchase”.

Of course, on the terms of the customers, online purchasing means buying a product you do not see physically, and did not try it on either. This is the main disadvantage, but here is where augmented reality comes to play.

Augmented Reality is another topic to discuss, and is not the subject of this discussion, but shortly speaking, AR gives the customers the possibility to see how a product would look dressed on them.

What happens to all the people who work on this line of business?

By switching to online, there will be a higher demand for people on marketing profile and transportation as well, so all the people who work in retail currently, might develop these skills.

What needs to be improved for E-commerce to be the leading platform for purchases?

To increase E-commerce usage, a business needs to invest in the following directions:

  • Marketing Strategy, having a high focus on digital marketing, SEO, Website and advertisement.
  • Augmented Reality, is another innovative and crucial investment that is necessary to make any e-commerce stand out is Augmented Reality
  • Delivery & Shipping Costs, in this direction, it’s necessary to have broader cooperation between transportation industries, Retail and Production to reduce the costs, as well as minimize the negative impact on the environment.

To sum up, E-commerce is a growing business model, soon it will be the only business model for some types of industries.

E-commerce will be a widely used platform for almost all types of retail, be it: Grocery, Clothing, Accessories, Shoes, Personal Care Products, all the types of Technological Products, Books, Home and Kitchen Appliances, Office Products, the list goes on and on.

Even pharmacies will start to use E-commerce, this way the world of pharmaceutical industry would be slowly transformed.

Still, there will be a few industries who will need a physical presence such as fragrances and similar types of activities.


*edited by arsim@thejournalbiz.com