Editor’s note: This article was first published in April 2014, and its forecast that Inditex could make more than 40% of its sales online by 2020 can now be checked: Inditex reported roughly a third of its 2020 sales online. J.C. Penney, described as losing money, filed for bankruptcy in 2020.
Retail is going through a dramatic change. Every business owner knows their company needs a presence on the internet and on social media to give it visibility. What the experts did not expect was for e-commerce to grow as fast as it is doing, according to the Business Insider Intelligence report. Retail in 2014 has reached sales never seen before, and certainly unexpected.
If this growth continues, physical stores for many everyday products could become obsolete or simply turn into a complement to online sales, with a much smaller impact on revenue.
According to these experts, as consumer habits change, people are abandoning retail in physical stores and moving to digital shopping. And this shift is happening faster than they could have predicted.
We’re not only talking about tech products, but also clothing and accessories stores, and the purchase of all kinds of services, such as travel agencies and financial services.
(Read: The most profitable businesses of the future and the industries that will create jobs)
Travel is already booked almost entirely online, so online travel agencies, by closing offices and focusing more on their online presence, have struck gold and increased their profitability. The same is true of insurance companies and price-comparison sites.
Failing to push e-commerce is among the reasons why the J.C. Penney chain is in the red while its rivals keep growing. Inditex (Zara) is one of the companies that is increasing its online sales considerably, to the point where by 2020 it could make more than 40% of its revenue online. Some think that estimate falls short and that it could be more than 50% of its revenue.
In Spain, too, there has been an astonishing increase in e-commerce: online clothing and accessories stores are starting to become very profitable businesses, and some companies selling organic products exclusively online are already reaching considerable sales volumes.
In the not-too-distant future, we’ll probably do our supermarket shopping online and rarely set foot in a physical clothing store. Shopping centers will probably be on our computers, where thanks to virtual reality we’ll feel as if we were in a department store.
Some people think this change in the way we buy goods and services is a great step forward, while others see it as the “Armageddon” of employment, a job destroyer in which dozens of workers can be replaced by a handful of employees with tech profiles.
As one of our readers said the other day, there will come a time when we’re so technologically efficient that cars will build themselves without any human involvement. The problem is that people wouldn’t have the money to buy those cars.
There’s no doubt a big debate could be had about the benefits and drawbacks of technology and its economic impact. The point is that if the future of business is e-commerce, you need to be part of the future.
Featured image: Julius177, CC BY-SA 4.0, via Wikimedia Commons.
