“What if you could buy anything you wanted online?”
It’s hard to believe, but this was once a novel concept in the early days of eCommerce. Very few things were offered online, and what you could buy was likely to be poor quality or coming from an unreliable source.
Enter Amazon.
Jeff Bezos set out to create the “everything store” to solve this very problem: to give consumers access to everything online. This first wave of eCommerce was centered around optimizing for price, assortment, and convenience.
But now that everything is available online, the problem is, that everything is available online.
The simple “search and filter” that modern eCommerce was built around can often return millions of results and the burden of navigating through these search results falls on the shoulders of the consumer.
When we are “online shopping”, we are actually spending our time scrolling through pages of static cataloged images, sifting through reviews and customer images all to try to determine if we want to buy something.
And after all of that work, 20-30% of products bought online are then returned.
The New Paradigm
We are now entering a new paradigm; the second wave of eCommerce. This second wave will be much more interactive and personalized and digital will become an integral part of the shopping experience rather than tangential.
China is already many years ahead of the US in this new paradigm, and so we can look to them to better understand what the future of shopping will look like. In a recent report released by Bain, they highlight the key platforms that are succeeding in Asia and will likely drive eCommerce growth in the US in the future.
Media will become the store, social media apps will continue to drive purchasing decisions, and AI will aide help us navigate the millions of products available online today.
Given how quickly things are changing, my prediction is that the next generation of retailers will be companies that we have never heard of.
Featured Article
The Future of Retail in Asia-Pacific
Some of my favorite articles are research pieces from consulting firms like Mckinsey and Bain. Most recently, Bain released a report discussing how we can look to China to understand how our retail landscape will evolve.
Through partnering with social media apps, leverage artificial intelligence, and focusing on solving the “last mile” delivery challenge, Chinese retailers are leaps and bounds ahead of their western counterparts. This thesis creates a whole new set of opportunities for the digital retail landscape. Highly recommend this article!
Retail News
Rent the Runway Closes All Stores
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Background: The clothing subscription company Rent the Runway invested a huge amount of capital over the last few years in opening physical storefronts. Now, as it suffers through the carnage of the pandemic, it’s opting to close these stores in order to focus more on its digital marketplace and to expand its network of dropbox locations. The company’s flagship store in New York City will be turned into a permanent drop-off site.
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Details: Rent the Runway is just one of many businesses choosing to move away from physical retail spaces, with more than 6,000 businesses announcing permanent store closures already this year. The company was hit particularly hard by the pandemic, as a large portion of their business is in renting out clothing for special events, which have been largely brought to a halt since March.
Amazon is Delivering Most of its Own Packages as E-commerce Thrives
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Background: As Amazon scales, it’s eCommerce business, they have been working to reduce their reliance on external delivery services like UPS and FedEx. This strategy has become even more important during the pandemic as in-store dollars shift online.
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Details: Now, they are on track to 66% of their own packages through their internal fulfillment network. By next year they are estimated to be delivering almost 80% of their own packages. With Amazon taking on its own deliveries, UPS and FedEx will have to find a way to replace the Amazon business.
North Face Stands Behind Climate Change
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Background: Patagonia currently has the top rank in the outdoors market and is rapidly growing, a success which can be in part attributed to the brand’s emphasis on sustainability. The North Face is now actively supporting sustainable agriculture and manufacturing both to offset its own emissions and to boost its business.
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Details: While the coronavirus pandemic has led to less retail profits across the board, the outdoors gear market is expected to benefit from many people now choosing to spend their vacations doing outdoor activities that are close to home. To compete with Patagonia, The North Face has been taking measures to use sustainable fabrics and support climate activism. Research has shown that this is an effective strategy, as many customers, especially younger people, are willing to pay more for sustainable products.
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Xoxo Jackie
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