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Decoding : Online Retail

, October 31, 2012, 8 Comments

On a lazy Sunday afternoon, I was listening to some world music I had discovered recently on Spotify. A few moments after fighting the urge, I received an email confirmation from Amazon.com that my CD would be delivered in 1-2 business days from the order date.

Behind the click of a button, I had saved days of physically locating a rare CD that some local winery in New Zealand was promoting. Thanks to the world of Online Retail!

What is Online Retail?

The first article of this two part series on Online Retail

In simple words, it is the ability to buy a particular product from a seller with or without intermediaries on the internet and delivered to your doorstep without physically visiting a store.

In 1990, when Tim Berners Lee opened the world wide web to the rest of the world, we knew what was coming. Even if most of us had no access to the internet let alone a computer back in those days, there was a common thing that we all hoped for with the introduction of internet – to feel like the world is at your feet.

A decade ago, people were still figuring out if online retail was even an option. Sites like Amazon and Ebay sprung into the scene during the dotcom boom of the 90s in the US in hopes of a prosperous future for Online Retail.

What was mere talk and speculation in those days is now a reality. Amazon.com is one of the first few online retail sites that did exactly what every living person on Planet Earth wanted – To get what you want, when you want and where you want.

In Amazon’s case, they went one step further. They decided to get everything under one roof making it easier to customers to buy anything they want to their doorstep.

How it works
Online retailers set up websites that they use as a medium or a platform to sell their goods and services. Most online retailers are available 24/7. Payments are predominantly made by credit cards.

Other payment options include cheques, cash on delivery, using intermediary sites like paypal for electronic payments, debit cards. Customers can choose to have their orders delivered to their doorsteps, offices, specific postbox locations or any company stipulated drop-off locations.

Online retailers have flexible return policies that allow customers to return a product or replace them making online retail fun, safe and hassle free.

The Current Situation
While online retailers are struggling to expand elsewhere like they have in the US, the current market situation in the US is highly favourable for online retail. In August and September 2011, PwC conducted 7005 online interviews across three continents and the findings for 1000 respondents for US are as follows:

  • Currently, 67% of consumers in the US shop online
  • Online retail is expected to have a 10% CAGR by 2015
  • 72% of the US sample consider themselves accomplished online shoppers.

Below is a representation of an Online Retail Forecast projection by Forrester Research that clearly explains the current situation and what we can expect in the future.

In the US, Amazon leads online retail today with Ebay close behind. The rest make up for meagre amounts of the online retail space and are not even worth a mention.

Amazon has played aggressive in its acquisitions and in studying consumer behaviour during the past decade. Much of Amazon’s success relies on third-party vendors or small businesses who use Amazon as a medium to sell their goods along with the “Fulfillment by Amazon.com” services.

Leading department stores are now offering their products to customers on the internet besides their physical locations after much pressure created by online retailers in taking up market share.

Walmart now offers free delivery on orders $25 or more, in-store pickup option with much of its competitors like Sears, K-Mart and Fred Meyers replicating the same. Safeway, a leading supermarket chain now analyses consumer buying behaviour to the point where they are able to send personalized emails predicting the shopping list for the upcoming month.

Target, another supermarket chain, has been extremely successful in analysing consumer behaviour to the point where in a very bizarre case they were even able to predict the pregnancy of a consumer before she even knew it.

One thing that is evident with the increase in online retail sales is that people are starting to realise that they do not have to put in any extra effort besides paying for a product or service. Consumers are more aware that it is now possible to get everything they could want at their doorstep or in some cases on their laptops, tablets, tv screens without having to move a muscle.

The second article of this two part series on Online Retail






About author
Divya Ramamoorthy is a graduate from Madras university and a post-graduate (MBA) from Jain Group of Institutions- Bangalore, India, based in San Francisco Bay Area, United States. Divya area of expertise revolves around creating careers, identifying talents, recruiting and assisting people . she is also currently enrolled in a certificate program in human resources with the University of California, Santa Cruz. ...more ...more

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  1. […] My article on Online Retail was published today on Market Express. Here’s the link […]