Barely two weeks into the holiday shopping season, some retailers are feeling relieved that their most important selling season isn’t turning out as bad as expected. But they still need to spend some time thinking about other forces besides the economy that are affecting their industry in the mid- and long-term.
Ten years ago, traditional brick-and-mortar retailers had no fear of Internet retailers (e-tailers). Times have changed, however, and the way that today’s shoppers use the Internet has also dramatically changed the playing field for all retail businesses.
Internet e-tailers tend to be deep discounters. Face it, they can be. They don’t have huge overhead like retailers do in malls and they can be located anywhere where labor and warehouse space is cheap.
Even eBay is putting pressure on certain types of small business retailers. According to ComScore, a leading online analytical firm, eBay had more visitors on Cyber Monday 2008 (last Monday) than any other online e-tailer. EBay beat out Amazon.com (in second place), Wal-Mart (third place), and Target.com (fourth place). ComScore estimated that eBay had 13 million visitors this Cyber Monday verses 9 million on Cyber Monday 2007. The top 20 most-visited onine retailers had a total of 57 million visitors to their Web sites this year, a 33 percent increase over last year.
During the last five years, consumers have become more confident in online shopping security and are much more likely to make a big online purchase.
Many traditional retailers also have a significant online presence. Wal-Mart had a rough start at trying to find their way as an Internet e-tailer some years ago, but has now become the number three online merchant. So today a traditional retailer doesn’t just have to compete against Wal-Mart down the street, but also against their online store.
Of the top 20 online e-tailers visited on Cyber Monday 2008, 15 are also major brick-and-mortar retailers. In addition to the companies mentioned above, names like Toys ‘R Us, J.C. Penny’s, Best Buy, and Limited Brands (Victoria Secret) were included in the list. Clearly, these retailers have learned that, in order to thrive, they can’t simply rely on their mall locations; they must also have an online presence.
Shoppers have found a number of ways to use the Internet for shopping. Obviously, they can go on a site like Amazon.com and search for a book by topic, buy it, and have it sent to their home two days later. More and more though, consumers are using the Internet to research their purchases and find the source to buy it from with the best price and terms. For example, say I want to buy my son a laptop computer. I may be willing to buy it online, but it’s just as likely that I can buy it as cheaply at a local computer discounter. Without having the pressures of a sales clerk breathing down my neck, I can go on my favorite retailer’s site, research laptops, and narrow down my selection to the top 2 or three choices. Let’s say I would like to purchase the computer at Best Buy. I can either buy it online from them or instead find the store closest to me, pay for it online, and have it held at the customer service counter. When it is time to pick it up, I simply run into the store and they hand me the computer, paid for and ready to go. For those of us who hate shopping, this actually makes the process tolerable.