Eddie Machaalani and Mitchell Harper, co- CEO of BigCommerce made an intresting statement. They said - "By 2022, brick and mortar retail spaces will be little more that showrooms". What Eddie and Mitchell alluded to is known as the "Amazon Effect" - the disruption that brick and mortar stores are facing competing with eCommerce companies. Just three days ago, the Amazon Effect took its latest toll - retail outlets of car companies in the USA.
The global growth of eCommerce has been nothing short of phenomenal. According to Statista, in 2018, global e-retail sales stood at USD 2.8 Trillion likely to go up to USD 4.8 Trillion by 2021. The Indian eCommerce story is no different. Ecommerce has seen amazing growth in India. According to India Equity Brand Foundation in its Indian eCommerce Industry Report 2019, the eCommerce market in India is likely to grow from 38.5 Billion USD in 2017 to around 200 Billion USD in 2027.
Apart from other things, one of the big drivers of eCommerce adoption has been the emergence of a new category of eCommerce software called the eCommerce platform available in Software as a Service or SaaS mode. The essential idea behind the eCommerce platform comes from the organic need for front and back office services integration. Oracle Netsuite nicely explains the eCommerce Platform idea in this interesting post. Another good explanation of eCommerce Platforms and their business benefits can also be found here.
So what's the road ahead for eCommerce in the time to come ? T.J. Welsh, VP Marketing at Stryde, in this short insightful post on Forbes, lists some key eCommerce trends in 2019 and how they are likely to influence digital marketing strategies.
While eCommerce has had a phenomenal run in India so far, it is probably facing its biggest challenge yet. There has been a significant development in the last couple of months that, according to some observers, has the potential of dampening eCommerce growth in India. The government has announced the new FDI rules for eCommerce primarily intended to create a 'level playing field' between eCommerce companies and brick mortar shops. As reported widely in the media, this is a move that in intent, proposes to benefit offline shop owners and traders by preventing eCommerce companies to offer deep discounts to consumers. A recent article in India Today provides a synoptic overview of the new rules and how they are likely to impact eCommerce companies and consumers in the time to come.
To conclude this post, I would like to mention that recently, Amazon has taken the 'Amazon Effect' to a whole new level, redefining the very concept of a brick and mortar store by opening 11 Amazon Go stores in Seattle, Chicago and San Fransisco California USA. To shop in these stores, all you need is the Amazon Go app on your mobile phone. You just walk into the store, pick whatever you like and just walk out of the store. The store runs without human assistance and when you pick something off a shelf, it is detected automatically and charged to your account. Watch this video to experience the Amazon Go store yourself. Pretty amazing stuff by any standards !
In conclusion, these are exciting times and with higher internet penetration, eCommerce will break new ground in the time to come. It still has a long way to go when you look at the total share of retail selling, but as Cushla Sherlock of Credit Suisse says, "The eCommerce industry is a force that no investor can afford to ignore".
In conclusion, these are exciting times and with higher internet penetration, eCommerce will break new ground in the time to come. It still has a long way to go when you look at the total share of retail selling, but as Cushla Sherlock of Credit Suisse says, "The eCommerce industry is a force that no investor can afford to ignore".
Sir, as in your blog you have mentioned about the amazon go stores, I would like to add a point that almost similar strategy was tried by the Indian market leader in e-commerce i.e. flipkart way back in year 2015(https://www.livemint.com/Companies/3UVCMKpuBIzh3s6NX76BwO/Flipkart-opens-20-stores-across-India.html) later on they also opened the myntra stores after acquiring myntra.
ReplyDeleteSince the new FDI rules for ecommerce are meant for securing the brick & mortar retail stores but as flipkart has been acquired by the Walamrt & they have around 50 stores which can be used to exploit the new rules & later on the opening of more offline stores by these ecommerce giants can negate the effects what govt. wants to put in through this law.
Second point I would like to point the timings of implementation of new eCommerce law could be a political ploy by the ruling party to garner the votes from the huge base of brick & mortar shops. Loksabha elections are going to happen in april 2019 & this policy could be a boost for the ruling party.
Amazon Go Store is an excellent idea from the consumer perspective. Albeit, it will reduce employment opportunities for humans. In my opinion, E-commerce, on the other hand, is beneficial from the environmental aspect. In a bricks and mortar shop, there is a requirement of land which is critical nowadays. And for that clearing of forest is one of the ways. Also, Costs for bricks and mortar stores like rent, licensing fees, store fixtures, initial inventory etc. are add-on. These costs require significant initial start-up capital which makes starting bricks and mortar store, a financially more risky venture than starting an online store.
ReplyDeleteAmazon go is not a virtual place it is also like a bricks & mortar shop albeit with no humans so other than humans interference everything like land, rent store fixtures will be required(https://www.pocket-lint.com/phones/news/amazon/139650-what-is-amazon-go-where-is-it-and-how-does-it-work), Amazon Go store, at the Troy Block complex in South Lake Union, is the largest at 2,100 square feet (200 m2) and opened in September 2018(source- Wikipidea) & by 2021 they are planning to have 3000 such stores..so you can expect a lot of land use, and environmental aspects coming into fray.
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