E-commerce and traditional retail, a new friendship

Redazione di NewsFromThePlatform | March 2nd, 2017

The Italian digital market is taking off: the number of customers has increased to 21 million, and purchase frequency and average amount have increased too. 2017 could be the year that sees the highest e-commerce growth since 2010, reaching a value of 23.4 billion Euros – according to a report presented by Netcomm this week.

Italy is finally aligning itself to the international scenario, where a change of pace for the entire e-commerce industry has been evident in the last years. Digital consumption in the United States, for instance, is growing at twice the rate of offline consumption, and during the Black Friday days online consumers were 10 million more than the ones of brick-and-mortar stores (source: National Retail Federation). And that is not all: we are beginning to see the first effects of e-commerce on traditional retail channels: some US retail chains that have announced closures or have been strongly downsized (Macy’s and Limited among others).

How to manage this change? First and foremost, retail industry reconfiguration has to pass through a better regulation of e-commerce.

Come gestire questo cambiamento? La riconfigurazione dell’industria retail passa innanzitutto da una maggiore regolarizzazione dei canali online. When the internet went mainstream in the mid-1990s, online firms feared being held liable if their services were used in illegal ways—for instance, when subscribers posted copyrighted content or defamatory information. To shield firms against potentially ruinous suits, as well as to protect free speech online, the US Congress in 1996 added the famous “section 230” to the Communications Decency Act. Today, this law still shields online companies from liability for crimes committed by third parties using their platforms. Just think that Airbnb has long held that it is not responsible for the actions of hosts and guests. Uber has argued that it is just a technology firm and needn’t comply with many of the detailed regulations that apply to conventional transport businesses.

Although limiting liability online was intended to protect sites hosting digital content, that were at the time small and delicate, today it is the bone of contention, since online companies are no longer fragile startups but players that can change the entire industry. Incumbents are demanding that online rivals obey rules that constrain everyone else, and public opinion is pushing them to police themselves better. Governments are beginning to consider creating new rules that that restrict the sovereignty of the online companies.

However e-commerce continues to be far from the elimination of traditional retail. In fact, last December Amazon opened in Seattle its own store, where you don’t have to stand in a checkout line since your smartphone pay automatically for you, but also where consumers go to, physically, just like any other grocery store. In the fashion industry, more and more companies take their first steps online but then open brick-and-mortar shops to meet the needs of customers. Indeed, customers want to touch the products and get advice from a fashion stylist. In short, we must not forget that the whole digital revolution revolves around people’s needs: retail changes because consumers do, and consumers still need real-life experiences.

The winning path for retailers seems to be omnichannel solutions, i.e. the seamless combination of online and offline channels. Most retailers have already understood this: in Italy, for instance, where 88% retailers are using digital tools to support pre-sales or post-sales activities, 65% have an e-commerce site and 1 in 4 e-commerce companies provides the option to collect your item in-store. By the end of 2017, the integration between offline and online solutions is expected to improve Italian retail performace by 30%.

Omnichannel is the best competitive strategy for Italian and international brands that want to strengthen their digital commerce through their consolidated traditional network. Today, and increasingly in the future, online and offline experiences must become blend into one single brand ecosystem, capable of responding to the expectations of consumers – who get information about products on their smartphones, touch or try them on in store and ultimately buy them online.