Tuesday, August 3, 2021
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Online Shopping Vs. Traditional Shopping

As technology has entered every facet of our lives, how we shop for things is no different. As wireless cellular internet and the prevalence of mobile devices has exploded, the shopping process has fundamentally been transformed. Retail, overall as an industry has hugely benefited from new-age technologies

Ecommerce platforms leverage the latest in analytics and data-driven (big data) insights to chart consumer journeys for lead conversions, cross-selling, and up-selling opportunities. This is intuitive for most people, that technology companies naturally use technology to the fullest as that is their area of expertise.

However, what most people fail to realize is that traditional brick and mortar stores haven’t been sitting on their laurels either. They have also found imaginative ways to employ different technologies to evolve and grow their businesses. Modern stores are using location-based technologies such as geofencing and beacon to prompt them about potential customers and offer them personalized content amongst other technologies.

So, as the line between the two models fades, what will be the shape of retail be in the days ahead. Let’s take a deeper look.

Impact of Ecommerce on Global Retail Sales

When looking at the break down of the total global retail sales, online shopping or e-commerce has, from 2016 onwards, regularly cut into the share of traditional brick and mortar shopping by approximately 2% each year. Steadily, pulling share away. Total global online sales have nearly doubled from 8.6% in 2016 to 16.1% in 2020. This growth is also reliably projected to continue for the next 4 to 5 years. Does this suggest that the balance is tipping in favor of online shopping? Is traditional shopping eventually going to wither away?

The fact of the matter is, that even at this projected growth rate, online shopping will only reach 22% global sales market share by 2023. Traditional in-shopping still dominates as this survey shows that a large number of consumers still prefer to shop in a physical store. While online shopping stores offer convenience of a different nature — and therefore has its place, it is not capable of replacing or even mimicking the experience offered by physical stores and malls. Consumers can hold and try a product before buying it.

But furthermore, being in a store or a mega shopping mall is a far more immersive experience with even a social component than sitting behind a screen.

Amazon, arguably the world’s largest online shopping store receives on average 2.5 billion visits per month. By contrast, the Dubai mall attracts some 80 million customers per year.

Technology in Retail — Personalization

The writing is on the wall and it is being echoed by marketing/technology experts repeatedly; there can be no retail — online or in a physical location, without technology anymore.

Since we have established the importance of technology to retail, let’s look at which format, online or in-store is benefitting more from technology.

Retailers have come to learn the value of personalization when it comes to offering the ultimate shopping experience and converting sales. To this end, they have turned to a range of technologies to offer tailored offerings, often processed in real-time.

Traditional shopping is using face recognition software with instore cameras to process and assess emotional and behavioral states in real-time to increase sales. This enables them to offer consumers the right product, at the right place, at the right time.

As mentioned earlier, location-based marketing is an extremely powerful tool in the arsenal of brick and mortar stores. Even though still in its formative years, there have been use-cases where a consumer who walked into a store but was unable to complete a purchase was follow up by the store at a later, more convenient time to complete the sale.

On the other hand, e-commerce platforms essentially exist everywhere in the digital realm. You visit a site; they will track you by storing cookies on your device and you are likely to be offered an affiliate product purchase link. You frequent any social media website or app; they will purchase your user data and target you with ads. You download an app; they will listen to you and record your data (technology also used by brick and mortar stores) and send you push-notifications. This omnichannel approach to marketing and advertising, employed hugely successfully by companies like Amazon and AliExpress is partly why leading online shopping stores are so successful.

Pros & Cons of Each

         Online Shopping

  • Offers more convenience (shopping anytime, anywhere)
    • Real-world user reviews better than instore salespersons
    • Users have access to global online marketplaces from any location (as long as delivery charges are reasonable)
  • It’s easier to locate a preselected product online (search engines)
  • Online product comparisons are easy

Traditional Shopping

  • You can get an available product immediately (no delivery wait-time)
    • Can hold, feel and try a product before buying
    • Unpremeditated sales are higher in stores
  • Returning a product can be easier in most cases

Hybrid Model (Online + Traditional)

Another shopping model that has already widespread by now, but is not so easily quantifiable, is one where both online shopping/research and in-store experience are used in tandem in the consumer buying journey. This hybrid model is very interesting and mostly propelled by smartphones and mobile devices. Consumers will often begin their research on a product they intent to buy online and then finish the purchase in a brick and mortar store. The opposite is also true where a consumer will come across a product in a physical store which piques her interest, but the eventual sale, after due consideration is completed online.

This means that retailers have to come out of the “online vs. instore” retail mindset, considering both as distinctly different and therefore requiring a specialized strategy for selling. Marketers need to think of the consumer buying journey as a sale opportunity which could originate and finish on either format. Therefore, each format could effectively augment the other with the end goal of keeping the sale under one brand/business umbrella.




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