Will online retailers replace traditional brick and mortar stores one day? With the convenience of online shopping, do customers really need to physically go to a store? What unique value can brick and mortar stores offer to consumers? In this post, I’m going to focus primarily on online shopping for apparel and groceries, discuss barriers of consumer adoption and also look at what online retailers are doing to address these challenges.

Personally, I am an avid online shopper and believe that e-commerce has revolutionized the retail industry. E-commerce has made shopping easy and simple; Shopping can now be done from anywhere and anytime, requiring significantly less effort and time from customers. With the breadth of product selection online, customers now have access to more products than ever compared to the options available at their local store. Online retailers can also offer more competitive prices due to relatively lower capital expenditures compared to traditional brick and mortar stores. Given that online shopping is generally more convenient, cheaper and provides a greater selection, should we say good-bye to brick and mortar stores? Even with this laundry list of benefits, customers seem to favor online shopping only for certain product categories, such as books or electronics, which require less physical interaction between the customer and product in the purchasing process. However, in other areas of retail such as in apparel and groceries, online retailers are facing more challenges in terms of consumer adoption and conversion.

Apparel Shopping

I have always been skeptical about purchasing clothes online because I am someone who likes to try clothes on to ensure the proper fit. As a consumer, I typically do not have confidence in the generic size guidelines that are posted online. For this reason, I do find value in visiting a brick and mortar store for apparel shopping. To indirectly address this concern around fit, many online retailers provide free returns policies. As a result, consumers like me would order multiple sizes of the same item, fully anticipating to ship back a portion of the order.

For others, the need for fashion advice from sales associates is another reason to visit a physical store. Many shoppers will go into a store, tell the salesperson the clothing item (e.g. a pair of black jeans) they are looking for, then have the sales associate bring them a number of options leveraging the salesperson’s expertise in recommending styles and brands that work best with the customer’s particular body shape and type. To mimic this service, some online retailers such as Macy’s have started implementing clothing recommendation systems which require that the user answers a number of questions (http://www1.macys.com/campaign/social?campaign_id=36&channel_id=1).

Fit technology companies such as Styku are making advances that could theoretically change the game for online apparel retailing and solve the two barriers discussed above. Styku’s technology would enable online shoppers to build an accurate, self-scanned avatar that is used to virtually try on clothes to address the sizing issue. From the consumer’s body measurements, online retailers can also create personalized clothing recommendations for fit and style. There is certainly a lot of potential here but fit technology is still in its early stages and largely unproven.

Groceries

Can online retailers find a way to mimic the fun user experience of grocery shopping? Many consumers enjoy hand selecting their own produce and meat prior to making the purchase. People also tend to have personal preferences regarding grocery characteristics e.g. the exact color shade for meats, the firmness of fruits and the softness of baked goods. With online grocery shopping, consumers are inherently taking the risk of purchasing items that do not align with their mental preferences. With groceries, there is just no guarantee that the product will be the same as the display product image, in contrast to retail products such as books. There are also concerns regarding delivery, such as bruising of produce or melting of frozen foods in transit. Lastly, there is typically no pricing advantage when it comes to online groceries, as the grocery business is already low margin.

Given these disadvantages, is the online grocery business destined to fail? Not necessarily, there has been a trend toward retail giants investing in this area with the introduction of online grocery services such as Amazon Fresh. Amazon has been trying to refine the online grocery shopping experience with a user-friendly interface to emphasize the value of convenience and simplicity. For example, from suggested recipes on the site, the consumer’s shopping cart can be auto-populated with the recipe’s ingredients. Amazon Fresh also offers an “Expert Pick” section which provides customers with news about which produce are most in season, with real customer product reviews. Lastly, most online grocers provide a product freshness/quality money-back guarantee, which certainly helps with consumer adoption.

So where does this leave us – will online retailing take over the need for brick and mortar stores? The possibility is certainly on the horizon, though I do not think this paradigm shift will occur in the immediate future. There is an important social element to shopping and human/product interaction that online retailing has not been able to capture…at least not yet.

 


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