Brick and Mortar VS Ecommerce – is there a winner?

The following is a guest post from Laura DiBiase over at Perfect Gym Software.

Not to make this about me, but shopping is my tried and true cure-all solution.

Sad? Go to the mall.

Happy? Celebrate with an outfit.

Bored? Peep Instagram to check for flash sales.

Procrastinating work projects? Skim through my dozens of online shopping accounts to see what catches my eye.

The current evolution of the consumer market from Brick and Mortar (B&M) business to E-Commerce has been great for people like me.

Brick and Mortar locations have been incentivized to enhance the in-person experience just to keep up.

Similarly, online shopping has become so advanced and user-friendly that I can find and order anything without stress (excluding ridiculously expensive shipping fees).

In order for modern retail to thrive in this new market environment, it must adapt to offer online shopping options; however, the argument that E-Commerce will end brick and mortar stores is extremely unlikely.

Take a look at how online and in-store retail are playing off each other to transform the consumer shopping experience.

How Leading Corporations Have Transitioned to E-Commerce

The necessity of migrating to E-Commerce has been evidenced by big-name corporations. Top retailers like Walmart, Target, and IKEA have all benefited from E-Commerce revenue in the last decade.

This, in turn, has ultimately contributed to their steadily growing annual profit margins over the last several years.

In fact, E-Commerce has been so successful for these companies that they have recently initiated business plans centred around their online market.

For IKEA, new strategies prioritizing digital marketing and streamlining e-commerce processes are the primary objective of their 2018 investments.

This move to encourage customers to move to their digital interfaces makes sense.

Why?

They were missing out.

IKEA traditionally utilized the outlet model for retail stores: remote and limited locations but unbeatably low prices for the high quality.

Conversely, Walmart has approached its digital success with caution and is actively seeking to reduce it.

Due to the high costs associated with shipping, Walmart recently started charging higher prices to buy certain products online to try to push customers back to their in-store locations.

Walmart also championed the strategy that many other retailers adopted of allowing customers to view if their desired product was stocked locally, and if not, Walmart will ship the product to a nearby store for free for the customer to pick up in person.

This also could be a fail-safe tactic for Walmart to avoid closing down as many brick and mortar locations as many other large companies, like Toys R Us and Macy’s, have had to in recent years. It also works an incentive for the customer to buy more products in-person.

Instead of modifying its online presence, Target has devoted significant funding to remodelling many (600) of its brick and mortar stores to improve the overall customer experience, thus hoping to lure customers back to the traditional shopping experience.

Widespread Transition to E-Commerce

In the spirit of “sink or swim”, the transition to E-Commerce has trickled down to companies of all profit margins and across all industries.

For these companies to survive, it is imperative that they pair with a reliable shipping partner to ensure streamlined and no-hassle experiences for their customer bases.

Many mid-level retailers have expanded their audience base dramatically by offering shipping services worldwide. Since digital technology is affordable and simple enough to implement, even a significant number of small businesses have taken the leap to offer retail sales online.

The range of ecommerce platforms to build a stand-alone online store, plus marketplaces like eBay, Amazon and Etsy, has also helped ease this transition to retailers of all makes and sizes.

Limitations on the E-Commerce Revolution

Although digital retail is clearly making strong enough waves to be considered an inevitable progression of the industry, studies indicate that brick and mortar locations are far from being replaced.

While online shopping caters to convenience and accessibility, it does not replace the in-person experience of trying on or sampling items before purchase.

Furthermore, consumers are less likely to take a risk on buying certain items online to avoid the hassle of returning deliveries through snail mail.

To continue to draw in customers, brick and mortar stores have learned to play to their strengths by holding in-store exclusive sales or client appreciation events. The physical act of shopping can still be considered a leisure or recreational activity that many consumers prefer to online channels.

Outliers to E-Commerce

An interesting faction of the retail world that has managed to maintain high-profit margins without an online presence are the budget-driven stores.

Low-cost retailers like Dollar Tree, Marshalls, and TJ Maxx have essentially nonexistent E-commerce revenue but have still experienced increased foot traffic in the last several years. However, their unaffected status is the likely exception, not the rule due to their constantly irregular inventory compared to the stores.

The E-Commerce model is virtually impossible for these stores since they do not utilize standardized stocking protocols; their merchandise is acquired from numerous rotating vendors that change daily.

E-Commerce Transforms the Fitness Industry

One industry that has been uniquely impacted by the E-Commerce Revolution is the fitness industry.

With the health/fitness industry exploding in popularity over the last several years, the crossover from gyms providing services to goods seems to be a natural progression.  

Most gyms traditionally assume the definition of a Brick and Mortar enterprise in which clients can make retail purchases in person from the front desk, like protein supplements, beverages, and gym branded gear.

To improve point of sales revenue, many gyms have expanded their in-house shops to include products from partnering brands or even create their own retail items.

Boutique Fitness Clubs Lead Transition to Retail  

For example, the overwhelmingly popular boutique fitness club SoulCycle is a prime example of how introducing retail items can dramatically expand a business’s brand and popularity.

Soulcycle transformed the experience of spin classes to a top-to-bottom lifestyle brand when they introduced their own high-end apparel line. In 2017, SoulCycle dropped fourteen different merchandise releases, which they sold both in-house and online, causing revenue growth from merchandise to exceed revenue growth from membership fees in all of 2016.  

SoulCycle’s ability to maintain both a digital and in-store retail presence has made them a model within the fitness industry, one that excels in both spheres.

Fitness Brands Capitalize off E-Commerce Wave

On a similar wavelength, the fitness industry especially has taken a massive stake in the strictly E-Commerce market. Major fitness apparel and nutrition brands, like Gymshark, Sweetlegs, and Women’s Best have soared in both profit and popularity.

Gymshark alone tripled its annual profit reaching $52 million in sales and expanding its customer base to 131 countries. Similarly, Women’s Best, in only three years, has become on the leading female supplement providers internationally.

Given the nature of their products, the success of these online empires brings to light how virtually any product has the potential to sell well online with proper marketing.

Skin-tight leggings, sports bras, or spandex are traditionally considered products that fit everybody differently and need to be tried on before purchase

Similarly, why would an audience opt to buy fitness supplements online at high shipping costs instead of going to a local nutrition shop?

Recognizing these inherent pitfalls in their market, all three companies use an army of prominent fitness influencers, like Tammy Hembrow, Nikki Blacketter, and Whitney Simmons, and corresponding social media campaigns to endorse their products.

All three companies are certified Instagram masters that use the platform to create genuine worldwide communities of supporters.

In fact, Women’s Best has created different Instagram accounts for every region and category of their products, like beauty, nutrition, recipes, etc.

The general anthem of their campaigns echoes the sentiments of “look good, feel good” mixed with Beyonce’s Single Ladies music video level of girl power. Their success speaks to how necessary and powerful social media is in fitness related marketing.

The Future of Brick and Mortar and E-Commerce

Regardless of industry, the online shopping revolution shows no sign of decline any time soon.

While E-Commerce’s presence is undeniably diverting a degree of consumer traffic away from brick and mortar stores, retailers are accordingly adjusting to survive in the new climate of the market.

On the consumer end, avid shoppers (me) are living their best lives as new trends and technology have made shopping the ultimate user experience.