How Brick and Mortar Firms can Compete with E-Commerce Giants

Traditional Businesses and Internet Businesses
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Anthony Jackson
Professor, Korea (South)

How Brick and Mortar Firms can Compete with E-Commerce Giants

The role of logistics in retail is always changing with new technologies and trends, though none have impacted the structure of warehousing and distribution more so than the emergence and rapid expansion of e-commerce. The demand for online marketplaces with fast delivery and accurate service has dramatically changed the business models of much traditional brick and mortar companies, which, in turn, has transformed order fulfillment requirements for logistics providers. As this trend continues to grow across the world, supply chains and distribution channels become increasingly complex and more expensive to maintain with manual processes.

What happened to the retail industry to make them insignificant to e-commerce?
In the past, before the emergence of e-commerce giants like Amazon and eBay, retail distribution centers were primarily working with bulk orders and very large online orders, and automated technology focused on pallet orders of goods. Fast forward to the present. With online sales, retail distributors are now required to supply stock to brick and mortar stores but ship individual items to online buyers and for items to be picked up at the store. Manual processes and outdated technologies are unable to keep pace with the velocity of the ever-changing e-commerce environment that touts same-day shipping and next day delivery demanded by today's consumers.

How can the retail industry compete with e-commerce?

LEVEL THE PLAYING FIELD WITH E-COMMERCE
Online sales at the present account for about 8% or possibly more of the total retail sales in all of North America. And for brick and mortar stores who hold economic power, this means they are losing traction quickly. Brick and mortar stores must enter the fray of online e-commerce because as of right now 28% of small businesses are using the internet to sell products and as e-commerce continues to develop and grow these small businesses will be limited in their potential due to having a location-based business. Retailers will see the limits of a location-based business disappear when they supplement their operations with the internet.

DISTINGUISH YOURSELF FROM THE COMPETITION
To separate yourself from the competition as an online seller you should ask yourself "what can I offer that the competition can't"? If you can answer this question than you have already set your business apart from the others. When consumers order and buy online they usually have to pay for shipping an extra change that can range in price. As a brick and mortar store, you can offer customers a unique experience having sales with your online store in conjunction with the brick and mortar or even an event that links the two. Engage anything that will offer convenience for the customer to buy.

OFFER LOCAL PICKUP AND LIMITED DELIVERY SERVICE
Forty-four percent of all consumers make purchases online based on local pickup so it should be quite obvious that local pickup is another avenue to generate sales online for brick and mortar stores. Limited delivery in the local area is another option that could also spur more sales. Some customers may not find it convenient to drive to the store to pick up and the item or maybe busy at work so having a limited delivery service could also encourage customers to buy online from your retail store.

OFFER IN-STORE SALES AND PROMOTIONS
Consumers like good deals especially if it will save them money and it could also direct traffic to your brick and mortar store. It also allows you to interact with the customer as well as ensuring that they won't get scammed when buying online. Security is a big problem with online scammers or seller's price gouging but interacting face to face would some level of comfort and trust for the customer.

COORDINATE ONLINE AND OFFLINE PRICES AND SERVICES
Your efforts online should be like your brick and mortar store in terms of prices and services. If a customer sees that your online prices are higher than the store prices they may move on to another seller because they won't understand why the difference in prices and feel that they are being cheated. After all, you want traffic in your online store and well as the brick and mortar store and retain them as long-term customers. Customer service is essential too because if you don't have a system where a customer can return a defective or damaged item or even answer customer inquiries it can ruin your online store and the brick and mortar store too.

In the end, there are various ways for brick and mortar stores to compete with e-commerce and gain a larger share of the market. E-commerce doesn't have to be a death sentence for the brick and mortar store. Level the playing field and enter the success and expansion of e-commerce.

References
Gallaugher, J.M. (2002). E-Commerce and the Undulating Distribution Channel. Retrieved from http://online.fliphtml5.com/wdnj/dsyj/#p=1
Honkanen, J. (2018). E-Commerce's Impact On Distribution.
Wertz, J. (2018). How Brick and Mortar Stores Can Compete With E-Commerce Giants. Retrieved from ECompete https://www.forbes.com/sites/jiawertz/2018/05/17/how-brick-and-mortar-stores-can-compete-with-e-commerce-giants/#2c4738153cc0.

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