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Keeping E-Commerce in Perspective

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It’s Black Friday and there is constant bombardment of emails, text messages, and news coverage with enticing offers on deals and discounts. The tradition of large-scale discounting after Thanksgiving in the US on the following Friday, has spawned the creation of Cyber Monday – and spread all over the world. In Australia, the National Retailers Association is forecasting $5.6B in sales over the weekend – which would cover online and traditional channels. The prediction is that 36% of this would be spent on online sales. In the US, the situation is more subdued with supply chain issues, rising prices, and shipping delays.

News coverage on Black Friday, Cyber Monday, and the seemingly fantastic discounts create an impression that e-commerce has taken a strong foothold and that the days of traditional stores and brick-and-mortar are numbered.

Let’s have a look at the numbers.

Although campaigns such as Singles’ Day in China, Click Frenzy in Australia, Black Friday and Cyber Monday create noticeable spikes in sales, the lion’s share of retail sales still occur through traditional channels. In the data compiled by UNCTAD (United Nations Conference on Trade and Development), even in developed markets like Canada and Australia, more than 90% of retail sales occurred through traditional channels – even in 2020 during COVID19.

As discussed in How Brands Grow (and the revised How Brands Grow: Part 2), it is important for brands to make their products readily available to buyers when they are ready to make a purchase. Strategies such as making the products exclusive to a particular retail chain or exclusive to online (or offline) sales only are counter-productive and inhibit brand growth.

Remember also that some category needs require immediate solution. When you run out of a cooking sauce or ingredients, when you need a new light bulb, or when you need to buy a business shirt urgently because you accidentally spilled coffee before an important presentation — none of us would want to order them online. It’s true that in markets such as China and Indonesia, you can order products online and get them delivered on the same day. However, not every country has the abundance of workforce and driving to the nearest store or supermarket is probably faster than same-day delivery.

So, yes, by all means continue to invest in online channels and take a closer look at the profitability of each physical distribution point, as e-commerce is likely to continue growing over time. However, keep in mind that despite the high Internet penetration, most consumers still choose to buy their products through physical stores. Don’t divest away from the traditional channels, because of the hype of campaigns such as Black Friday.

Remember, your consumers still expect to find your products at the stores.

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