The rise of online shopping
Author: Ivo Knorr
November 20, 2020
When was the last time you ordered something online? Chances are, it’s not even that long ago. Online shopping has become very normal over the years. In 2018, over 500 million packages have been transported in The Netherlands. What makes online shopping so attractive? Will physical stores become obsolete? More and more physical stores are starting to disappear throughout the Netherlands. However, several studies suggest that people still prefer to shop in person. There are several reasons why a person might prefer in person shopping over online shopping, or the other way around.
A big advantage of online shopping is of course how easy and convenient it is. You can just sit at your computer or laptop at home, click a few buttons, and your package will arrive the next day. There is almost no physical action needed. There is also a bigger variety of products. The advantage of online shopping is that they are not limited by physical space.
Despite the many advantages of shopping online, the online portion of the retail market is still very small compared to the physical retail market. In 2019 in the US, online retail purchases only represented 16% of the retail market (Digital commerce 360, 2020). This is of course because there are also plenty of advantages to shopping in person. For example, if you shop for clothes online, you have no idea what exactly you’re getting. When you actually go to a clothing store, however, you can try the piece of clothing and see if it fits. A big reason a lot of people go shopping is also the social aspect. They go to meet friends, family, maybe go to a restaurant after, etc.
Now with the covid pandemic going on however, physical retailers are doing worse than ever and face many challenges. They have to deal with massive insecurities about their business. They do not know how long they are going to have less customers. Even staying open at all is not a given, and if they can stay open, they face problems of revenue loss and potential bankruptcy.
While on the one hand the pandemic has affected physical retailers negatively, online retailers on the other hand have benefited greatly from the pandemic. Consumers in the US are expected to spend 198.73 billion dollars this November alone. Compared to November 2019’s 138.65 billion dollars that’s a massive 43.4% increase. (Digital Commerce 360, 2020). According to a survey by UNCTAD (United Nations Conference on Trade and Development, 2020), this growth of the online retail market is here to stay after the covid pandemic as well. Because of the limitations on physical retailing at this time, companies will adapt to this new market and move their business online or to a hybrid form. These investments will stay after the pandemic, even if physical retailing becomes more profitable again.
No matter how long this will last, it is clear that the covid pandemic has forever changed the landscape of the retail industry.
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