Benefits of E Commerce to Organizations in the Retail Industry

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by Dimitris Tsapis

December 8, 2020

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Are physical stores a concept of the past? When looking at businesses across all industries, you may start to ponder on the possibility.

Take retail for example. Every step of the buying process has completely changed since the introduction of e commerce stores and CRM systems. 

Nowadays, retail stores know your name, remember your birthday, support your cause, and reward your loyalty.

While looking at this shift, you might be thinking of different ways to improve your business. After all, in 2020, a purely “offline” presence is borderline unacceptable. 

But where do you start? And what are the benefits of e commerce to organizations that decide to take the leap?

In this article, we will take a look at the most common challenges that physical retail stores face, and the benefits of creating an online store.


The problems of brick and mortar stores

A physical store is not necessarily an outdated concept. Most big brands have fleets of stores in several locations, in order to strengthen their brand’s presence. 

However, not having a digital presence has a lot of limitations. If not attended, these limitations can hurt a store’s revenue and reputation. And that is a problem. 

Brick and mortar merchants compete with online retailers in all aspects of their business. And every year, online sales grow even further, while store-based sales remain stagnant.

According to Statista, in 2020, e commerce made up for 16.1% of global retail sales, with analysts expecting annual growth of 2% for the upcoming years. 

This is a huge portion of the market, and one that retailers without web stores are missing out on. As such, a physical store without any type of online presence is sub-optimal. 

But sales numbers is not all there is to it. Let’s look at some of the most common problems that brick and mortar retailers are facing.

1. Unable to identify and reward loyal, repeat customers

When a customer walks into a physical store, the store owner knows nothing about them. There is no information on their purchase history or their shopping preferences. This doesn’t allow a company to implement a more personalised approach, which could lead to a better shopping experience. 

2. Limited to a certain geographic location

Nowadays, global sales are booming. When a store’s reach is limited to a city level, or even to a national level, brand exposure is limited. This is partially solved by creating multiple store locations but comes at a high cost when considering online counterparts.

3. Sales numbers are highly dependent on the salesperson

The qualifications and soft skills of the sales representative are very important. When the employees of a store are inexperienced or unwilling to provide top-tier service, your brand’s reputation suffers.

4. Stores are open only for a certain number of hours

Unlike online stores, physical stores are open only for a certain amount of hours each day. This limits their sales numbers and doesn’t allow store owners to make the most from their rented location.

Understanding e commerce and building a store

In case you are unfamiliar with the term, e commerce (or electronic commerce) is a business model that allows brands to sell their products online.

When it comes to retail, the market segment that is given emphasis is B2C (business to consumer). All strategies are built to support this particular category. 

Physical businesses that decide to move online, no matter their size, will usually have two options to do so.

1. Build a store using an e commerce builder

The store-owner can develop a store using e commerce software like Shopify. The platform even offers a free in-depth course on how to take your business online. 

When using this method, there is no need to manage the small technical aspects of the business. All you need to focus on is the design, operations, and digital marketing efforts. The latest includes:

  • Search engine optimisation
  • Paid advertising
  • Content development
  • Social media marketing

From all the options mentioned above, it might be smart to emphasize on Instagram and Email marketing, since both channels seem to perform best in the retail industry.

2. Build an online store from scratch

If you are able to hire a team with strong technical know-how, consider building an online store with plugins like Woocommerce or Magento. Without going in too much detail, this option offers the most design freedom while minimizing fixed costs. It does, however, require specialists that are able to deploy and customise your web store. As such, the upfront costs will be higher.

Benefits of E Commerce to Organizations in Retail

So, what are the main benefits of e commerce to sellers and merchants? Let’s break things down to better understand the advantages of selling online.

1. Collect sales data

Online stores are able to collect data from all customers that shop on their digital platforms. Based on the collected information, store owners can better understand the wishes and needs of each individual customer.

And this is not only a strong advantage for online stores. By collecting data based on previous purchase behaviour, as well as personal information, physical stores can also strengthen their relationships with existing customers. This happens through the implementation of Customer Relationship Management software (CRM).

Over the years, CRM systems have implemented different solutions to recognise their customer at the point of checkout - the cash register. This has allowed stores to build systems that increase repeat purchases and reward loyal customers.

2. Expand geographic reach

By bypassing the restrictions of physical borders, customers are able to reach their favourite store from the comfort of their own home. 

The same comfort applies to the store owner. Sending promotional material is just one click away when using digital marketing, as compared to the traditional methods that are not only very costly but also very limited.

3. Display reviews

When shopping online, customers can leave a review after making a purchase. This is a great way to build trust with your audience in a more natural way.

  • Shopify has a plethora of review plugins to increase the credibility of your web store. These include YotPo, Stamped, and Loox, among others.  
  • According to PeopleClaim, 7 out of 10 customers consult reviews or ratings before making a final purchase. 
  • On top of that, 88% of consumers trust reviews as much as personal recommendations.

4. Locate products fast and easy

Online stores allow their customers to filter their product search based on certain criteria. 

And, if people already know what they are looking for, all they need to do is type the product’s name in the search bar.

Finding a product instantly without going through the hassle of trying to locate it in a large store makes the sales process easier and the conversion faster.

5. Low Operational Costs

One of the most important benefits of e commerce to organizations is low operational costs. When building your presence online, you will not spend nearly as much money as you would for your physical location.

  • The most advanced plans e commerce software solutions cost just shy of $300 a month. This is much cheaper than the rent of a physical location and gives you a number of additional benefits. For example, you can receive up to 74% discount on shipping rates.
  • Since most operations fully automated, you don’t need to pay salaries for managers or sales assistants. This, of course, depends on the size and type of web store you are looking to build.
  • Store owners also avoid the costs of legal permits, which can get quite costly.

6. Increased exposure

Brick and mortar stores depend mainly on branding and local advertisement. On the other hand, online stores benefit from multiple traffic sources, which are also cheaper and more efficient. Two of the most popular options include:

  • Search Engine Marketing (SEM): This mainly includes paid and organic traffic from Google but could expand to other search engines as well (Yahoo, Bing, etc.).
  • Referral traffic: This includes influencers and third parties that promote your products to their audience.

Traffic from both of the above source can be analysed with data analytics software, like Google Analytics. By understanding the data of each traffic source, marketers collect insights from the traffic and adjust their strategy accordingly.

7. Answer questions on autopilot

The good think about an online presence is the automation that comes with it. When clients want to know more about your brand’s history and purpose, or have a very particular request, they will first visit the brand’s web store. The store owner can choose what information to display, and will usually provide in-depth information.

  • Most website contain some sort of “knowledge base” or extended FAQ section that can answer customer questions without involving customer support.
  • The “About Us” page contains information on the company’s vision, mission, and values, as well as an overview of physical store locations.

8. Online stores are always open

Customers are able to place orders on their favourite online stores at all times. This increases the number of sales made on a daily basis.

While delivery times and customer service are still operating on particular timeframes, online availability is one of the major benefits of e commerce to organizations.

Summing up

When it comes to brick and mortar vs online stores, one option is not better than the other. E commerce is a great way to enhance the presence of your physical store. Both work best when used as complementary to one another. 

In this article we explored the different benefits of web-based retail. So, if you are still wondering what are the advantages of e-commerce over traditional retail, here is a quick summary of the benefits we discussed:

  1. Collect sales data
  2. Expanded geographical reach
  3. Display reviews
  4. Locate products fast and easy
  5. Low operational costs
  6. Increased exposure
  7. Answer questions on autopilot
  8. Online stores are always open

While taking your store online may seem like a challenge, it is one of the best ways to increase conversions and brand awareness in retail companies. As such, make sure you research the topic even further, and make 2020 the year your company goes digital.

Frequently Asked Questions

Wanna dig a little deeper into the topic? If so, take a look at the questions and answers below.

Do retail stores need mobile website solutions?

By next year, more than half of all web-based sales will occur on mobile devices. And while most e commerce platforms offer a responsive design - one that automatically adjusts depending on the size of your screen - it doesn’t mean that they provide a pleasant experience. To this day, desktop conversions perform a lot better. This is because mobile-based websites are generally slower, in a world where every second matters. The answer to this issue is “lighter” pages that offer the same experience at a much higher speed. Consider exploring Progressive Web Applications (PWA) and Accelerated Mobile Pages (AMP) to learn more.

What is managed ecommerce?

Managed ecommerce refers to stores that are built with software that manages the front and back-end of your business. In this article, we briefly mentioned Shopify as a great option to consider. 

What are the advantages of e commerce for business?

There are many advantages for businesses that decide to implement an e commerce model. This article explored many of the strong points related to the creation of a web store. To sum it up in one sentence, e commerce offers an increased level of automation and information, while lowering operational cost and expanding geographical limits.

E commerce is also a great solution during times where physical stores are forced to shut down temporarily. We experienced this in the second quarter of 2020, when COVID-19 forced most merchants to halt their operations.

How can ecommerce help a business that has a low investment capital?

Online stores can be very beneficial for retail stores that are very careful with the allocation of their budget. When considering the application of e commerce business model, remember the following:

  • Digital marketing consists of different channels, most of which are cheaper, compared to traditional retail. By choosing one particular channel and emphasizing on it, brands can build a reputation without allocating too much money.
  • Apart from digital marketing, e commerce stores are also a lot cheap when it comes to their operating costs. Store owners don’t need to pay high salaries and rent every month. Expenses are mostly limited to the software tools they use to build and manage their platform.

What are the benefits of ecommerce and CRM for brick-and-mortar retailers?

Physical stores are rather limited when it comes to their ability to gather and utilize customer data (information about their buyers). Their inability to leverage data in such way creates a challenge in the promotional world we are in today. It is not possible to create highly personalized promotional campaigns, or get a better (albeit gradual) understanding of what the customer really wants. Thanks to CRM tools for ecommerce stores, this issue can be resolved and sales numbers can grow as well. While they do have a steep learning curve, these tools offer a plethora of information that can lead to more targetter marketing spending and higher conversions. 

What are some online store benefits for physical store owners?

  • Increased customer reach.
  • Less dependency on printed media and the local population.
  • Ability to get more feedback and reviews from customers.
  • Promoting products on social media platforms and search engines.
  • Building relationships with industry-relevant partners for cross-promotional purposes.
  • Building a strong community that performs repeat purchases, thus growing your revenue.

Which e commerce benefits to organizations may change in the short term future?

Online stores are currently booming, especially due to the Covid-induced lockdowns. However, the increased trend of online shopping will most likely taper down as soon as things return to normal. The spike in ecommerce transactions will thus decrease a bit, but still remain higher than previous years since people now have a better understanding of the convenience linked to online shopping.

Make sure you check out article on future retail trends to better understand how these might affect online shopping.

Ready to transform your retail business?

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