14. September 2021 Will E‑commerce one day rule the entire retail market space?
Will E‑commerce one day rule the entire retail market space?
The e‑commerce retail platform is a billion-dollar industry that continues to grow at an exponential rate. 75% of consumers shop online at least once a month and online retail now accounts for 11% of retail sales in the United States. Additionally, the catalog of products and services available online has doubled several times over the last ten years, with both small and large businesses joining the e‑commerce space by either using established marketplaces (e.g. amazon, eBay) or by developing their own platforms. The evidence for the strength and reach of e‑commerce is clear. The question that now stands is how far will it go?
When the Covid pandemic first hit the global market, it provided the circumstances for a range of experiments testing the strength, reliability, and flexibility of the e‑commerce market. Demand for online delivery base purchases skyrocketed as consumers were confined to their homes due to either social or legal restrictions. This drastic increase in demand immediately began to show flaws in the e‑commerce platform. Websites slowed or shut down as company servers were faced with more consumers than they could handle, logistics was affected as travel and transport restrictions limited the speed and number of deliveries being made, and production of certain goods slowed or halted as all resources and manpower were directed to pandemic relief.
These shortcomings were best exemplified within the consumer technology market. Retailers of computer components such as Nvidia graphic cards suffered greatly, with the release of a new line of RTX 3000 graphic cards. The release set around the end of 2020 attracted great consumer demand. However, both and the large enthusiastic demand during launch caused all counterparts to become incredibly overburdened. The launch was very unsuccessful as retailers were only able to fulfill a fraction of orders at a significantly slower rate. The aftermath of these circumstances is still being observed to this day, with many retailers having no stock of products released 6 months prior.
However, despite these failures, the e‑commerce industry has continued to grow. E‑commerce News Europe found that German e‑commerce was valued at 83 billion euros rising by 14.6% from the year prior. In 2020 the grocery industry was one of the few industries which was allowed to continue operating during the pandemic. This took the stress off online channels and allowed grocery retailers to further develop and perfect their e‑commerce presence. E‑commerce now accounts for 10% of all grocery sales according to supermarket news. With the ability to provide perishables effectively and efficiently to consumers remotely, a large gap has been filled in the e‑commerce market. Consumers can now fulfill most basic needs without ever leaving their homes.
What the COVID-19 pandemic has shown is that the e‑commerce retail platform still suffers from many weaknesses, that keep it from taking the majority market share within its market. However, despite failure and loss, the convenience and flexibility of e‑commerce options continues to attract more consumers. E‑commerce as a retail platform will continue to grow but will still coexist with a physical retail experience.
Author: Hugo Göransson , Glasford International Deutschland Research & Analytics