4 reasons why e-commerce is not yet ready to displace offline retail
Amidst much clamour of declining interest in retail by shoppers in Singapore and empty shopping centres, caused by the spectacular rise of e-commerce in recent years, some common myths need to be dispelled about the impending doom of ‘brick and mortar’ shops in the retail sector.
There may be reasonable grounds to believe that at the moment, the Singapore retail space is oversupplied with more shopping space in supply than in demand.
Domestic consumer spending is likely to remain weak amidst uncertain economic prospects, according to a report, casting a dark cloud of uncertainty over the future of the retail sector in Singapore.
Not to mention, the growing uncertain geopolitical climate and economic doldrums affecting large parts of the Western world and the slowing Chinese economy.
Does that mean the end of retail in Singapore?
The general economy only makes up part of the reason for a bleak retail sector. The emergence of electronic retailers like Lazada, Qoo10, Zalora, Redmart and many more have also affected retailers in Singapore.
Soon, they will also have to compete against Chinese behemoth Alibaba and Amazon in the landscape.
Will retailers be able to withstand the competition?
It is doubtful that e-commerce will replace physical brick and mortar stores in their entirety for the foreseeable future.
Rather, they will continue to complement each other as e-commerce shapes up and traditional retail sector ‘trims down’.
Here are 4 reasons why we believe e-commerce will not drive traditional retail out of business for a long time to come:
1. Faster delivery time
One of the headaches with e-commerce is delivery. Even in a country as compact and as well connected as Singapore, delivery is rarely free.
The time it takes to deliver your order, you could have made multiple trips to your nearest convenience store, shopping centre or department store to buy whatever you need.
Things are worse in bigger countries. They have to factor in inclement weather, political uncertainty and a slew of other factors that do not often affect Singapore.
Their packages could be arriving wet or damaged on top of just being delayed.
2. Lack of sufficiently developed consumer protection in e-commerce
In many developing countries as well as developed countries, including Singapore, the rights and privileges afforded to consumers in the physical world is not always reflected in electronic commercial activities.
What happens if you are not satisfied with the product delivered? What happens if the vendor refuses to accept your returned good?
What happens if the good is of substandard quality? What laws regulate these transactions and who is going to enforce them?
While some of these issues are addressed, none of these issues are adequately addressed for you to resolve disputes in highly problematic cases.
3. The physical act of shopping can not be replaced by e-commerce
There are plenty of reasons why one may want to physically visit a retail shop.
The idea of walking into a shop, being able to try out as many items of clothing and not commit to the purchase is something that has been deeply ingrained in shopping habits.
What about buying perfume? Wouldn't you want to be able to smell the fragrance before you decide to buy it?
E-commerce platforms are unable to make up for the lack of smell, touch or taste that physical presence in a location can help you provide.
On top of that, personal attention that can be provided by an attendant is still considered superior to the Artificial Intelligence assisted electronic attendants in the e-commerce space that are still in the nascent stage of their development process.
They won’t be able to provide these features for the foreseeable future either. In short, as a consumer, you are best served by physically purchasing what you need at a shop.
Another element that is missing from e-commerce is social – women, especially, like to gather with their girlfriends to go out on a day of shopping.
They want to make sure that it is the perfect fit and get that stamp of approval from their peers before buying an outfit. This is something that cannot be achieved through e-commerce just yet.
4. Threat of hacking and data breach is always real
As with most other interactions over the internet, payment and debit/credit card data can be intercepted and/or hacked.
There is a risk that your personal information including debit or credit card particulars could be stored, misused or lost by the payment processor in question.
Security of personal information can hardly be guaranteed within a single country and it becomes even more troublesome if the deals take place across international boundaries, where it is often not clear which jurisdiction laws take precedence over others.
So, while e-commerce will continue to chip away at traditional ‘brick and mortar’ retail businesses, there are still many aspects of physical retail that e-commerce can not replace.