WILL E-COMMERCE KILL TRADITIONAL STORES FOR GOOD?
Spring has come. I need to buy a new jacket, and a lighter pair of jeans wouldn’t hurt. And speaking of which, it’s time to go on a shopping trip, we’re running low on coconut fat, but last time there was a shortage at the store, and my sister’s birthday is coming up, she should buy something, too. A few years ago, that would have meant a valuable Saturday morning. Now I’m going to be out of the computer pushing the phone for an hour. I’m going to kill traditional shops?
GLOBAL TRENDS
The thought process is not unique, shopping habits change. And as a result of declining barriers to international trade and secure payment solutions, global e-commerce is soaring. In 2018, sales in 2014 ($1,300 billion) are expected to more than double, with annual growth of 17 percent forecast by 2021. Online sales accounted for about 3 percent of global GDP in 2017 and 7 to 8 percent of retail.
There is a very uneven distribution among the countries of the world, with China at the top of the overall amount, the United States second, but the order reversed in spending per capita. Online purchases are not limited to the buyer’s country, with an average of 57 percent of orders coming from sellers on another continent. This figure is the highest in Europe (63.4 percent) and the lowest in North America (45.5 percent).
The USA – THE FRONTRUNNER
It is a known fact that with Amazon’s advance, the United States is at the forefront of online commerce, with spending per capita already exceeding $1,200 a year (the world average is $300). The company, which started out as a bookseller, now offers everything from the engagement ring to the coffin (with online sales halving the average price of coffins in the U.S., making it one of the most markedly influenced by e-commerce) on its site, making it responsible for 44 percent of U.S. online sales in 2017, which was 4 percent of total retail sales. The Amazon effect it generates is no longer a foreign concept, shopping is increasingly online, and physical store networks are slowly degrading, companies unable to keep up with the technological competition is going down. Due to the new structure of retail sales, the demand for labor has decreased, which allows for lower prices. With Amazon’s rise, the change in the United States is already tangible, with the number of old-fashioned department stores falling significantly.
EUROPE – ON TRACK
Two-thirds of the total European online retail trade is made in Western Europe, with the Central and Eastern European region responsible for only 7 percent. The differences in development in the sector are well shown by online spending per capita, in the UK it exceeded $1,400 in 2017, $800 in Germany, but only $200 in Poland and Hungary.
Although we are more aware of the impact of rising online sales on retail in the US, signs have already emerged in Europe in 2017, with many companies struggling to maintain their shop networks in addition to increasing e-commerce. The phenomenon, called the “retail apocalypse” in the United States, is already feared by European investors, not for nothing, as Amazon has ambitious plans for Europe in the near future. In 2017, a third of UK and German e-commerce growth was linked to Amazon.
Sector by Sector
The need for e-commerce has affected different sectors to varying degrees and intensities. There are products and services that we still consider important to choose and try. This is true for food (I prefer to go to the store and choose tomatoes myself, lest the wilted be delivered) and beauty products.
Although it is not yet visible in India, food retail is one of the most affected sectors by e-commerce. With online food trade still at a rudimentary level in the United States (only 2 percent of food sales), Amazon’s acquisition of Whole Foods has served as a wake-up call for the sector. In South Korea, 17 percent of food sales are made online, 7.5 percent in Japan, 7 percent in the UK, and 5.5 percent in France.
We are already braver to buy IT devices and household electronics online, one of the reasons is that we have access to thorough reviews through users, and in many cases, they are cheaper to obtain from foreign sellers. Electronics, books, fashion, and household appliances predominate, but food sales are also high on the market. This is a rare occurrence, as it is not typical that food is also traded online in the top ten most popular product categories. The most popular foreign webshop is Aliexpress, which belongs to Alibaba.
Garments, shoes, and other accessories are also among the most commonly purchased products online in the United States and Europe (although the proportion of people who purchase these products exclusively online is not very high, those who shop here do so more often than other products).
