We live in the age of the Internet; where the number of people shopping online is at an all-time high. The trend of online shopping might soon edge out the traditional shopping experience in a brick and mortar store. According to the United States Census Bureau, e-commerce sales are, sales of goods and services where the buyer places an order over the Internet, mobile device, or any other comparable online system. As, shown in table 1 from the United States Census Bureau from 2015 to 2016 e-commerce sales have increased 14 percent. As shown in table 2 from the United States Census Bureau from 2012 to 2016 e-commerce sales have increased in every merchandise line.
The reason for this growth is that online shopping can be done at any time of the day. The increase sales from e-commerce are not only changing the retail industry but the food industry and logistics industry as well. E-commerce has changed the retail industry by the way people shop, which has changed dramatically in recent years. The popularity of online shopping has caused brick and mortar retail stores to close at an alarming rate. According to Bankrate.com, there were nearly 7,000 stores that closed in 2017 and the trend is still going to continue into 2018, just not as bad.
Online shopping has created an even more competitive market for brick and mortar retailers. Some of the brick and mortar retail stores closing are; Toy R’Us, Sears, Kmart, Payless, JCPenney, CVS, and Footlocker to name a few. This is due to declining sales in brick and mortar stores. Another change to the retail industry is that online shopping has allowed millions of people, the option of shopping in other countries.
E-commerce has increased international trade by allowing many companies the opportunity to enter the global marketplace. Globalization through the internet is connecting the world with a click of the mouse. Another change in the retail industry is, the power that Amazon has in online sales has disrupted the retail market both online and in brick and mortar resulting in the term the Amazon Effect. According to Forbes Business, the Amazon Effect, “has introduced consumers to an almost frictionless shopping process with near immediate results.” The e-commerce giant Amazon has made it harder for companies to attract customers due to Amazons low competitive prices, as well as, their same day, next day, and 2-day delivery.
Consumers are not only looking for the best deals on the internet but availability and shipping as well. Amazon has forced many competitors to modify their sales tactics by luring customers through digital sales promotions. The online shopping is not only affecting the retail industry but the food industry as well.The growth of technology has caused us to grow accustomed to instant gratification through online shopping. The convenience of online shopping is now reshaping the food industry. Our lives are even more fast-paced than ever before.
Giving rises to fast food delivery services. Online food delivery is expanding from the tradition delivery service of pizza and Chinese food to a plethora of different restaurants. This expansion in the availability is allowing customers to order from many restaurants with a single tap of the phone from service providers like, GrubHub and Door Dash. Another change to the food industry is the rise of meal kit delivery services. Meal kit delivery services have gained momentum among consumers due to their convenience. Consumers can just open a box and cook, saving precious time in their hectic lives.
These meal kit services offer new recipes as well as all the ingredients of a well-balanced meal at the consumers doorstep. Meal delivery services have made eating a well-balanced meal easy with service providers like HelloFresh, Blue Apron, Home Chef, and Sun Basket. Another section of the food industry being changed by online shopping is grocery stores. Grocery stores where once thought of as a brick and mortar necessity but thanks to Amazon, Jet, and Boxed our basic life necessity, like food, no longer require us to physically shop in store. According to James Melton from Digital Commerce, a survey taken by Unata a digital grocery company helping grocer compete online. Indicates that online grocery shopping will increase to 36% in 2018 up from 22% of consumers shopping for groceries online. The rise in online grocery shopping has been implemented by major grocery chains like Vons, Stater Brother, Albertson, and Ralphs.
Each offering money off a customer’s first order, as well as, free shipping on low grocery cart totals to compete with Amazon Fresh and other online grocery stores.In the, I want it now world we live in, many consumers now expect purchases made online to be delivered quickly and accurately thanks to the e-commerce giant Amazon. This has lead to a change in the logistics industry. The first sign of change seen in the logistics industry due to online shopping is the impact it has on the trucking industry. According to Shorr Packaging Corporation, the total population of trucks on the road will increase 26% by year 2023. Likewise, the United States Department of Transportation predicts that the amount of freight will increase by 45% to 29 billion tons being moved by trucks by the year 2040. Consequently, this increase will also increase employment in the trucking industry, because the trucking industry cannot be automated or outsourced to another country. Which bring up a concern for many businesses the increased cost of shipping.
According to Shorr Packaging Corporation, Amazon as felt the pain of its free shipping which costing the company billions of dollars a year. Therefore, Amazon has been building more fulfilment centers around the United States to lower their shipping cost. Leading to the second change in the logistics industry the opening of new warehouses. Although retail brick and mortar store may be closing left, and right warehouses are opening at an astonishing rate.
For instance, Amazon has been opening fulfilment centers to provide customers with fast delivery times, as well as, to help lower their delivery costs. The third change in the logistics industry is the drive for intelligent logistics with the highly anticipated use of drones. According to Rene Marsh from CNN, Amazon has applied for their drone patent allowing them to deliver anywhere at any time. Many companies are eager to utilize drones because they will make deliveries less expensive and speed up delivery times. Google and United Parcel Service (UPS) are interested in drone use. These companies are testing drones out for their selves. Drones provide a bright and promising future for online shopping creating a logistics evolution with the promise same day delivery from many retailers.
Online shopping shows no signs of slowing down. Based on the evidence that shows many industries are changing due to online shopping; there is only one thing for companies to do; which is to except the reach online shopping has. Business needs to plan and strategize around this growing trend to stay relevant.