It’s hard to believe, but eCommerce is almost 30 years old. This means businesses must pair grown-up, agile strategies with solid execution to maintain and gain competitive advantage.
The first documented online transactions where a customer placed an order, sent money to another human and received goods in exchange took place in 1994. Although Smithsonian Magazine reports dueling claims as to whether the first sale involved a CD or computer equipment.
No matter, the point is that eCommerce is getting old. From those few transactions decades ago, first quarter eCommerce sales accounted for 15.1% of all retail sales, its highest share since the pandemic-fueled second quarter of 2020, according to The Wall Street Journal.
In addition, eCommerce is no longer the province of digitally native businesses. Virtually every retailer has embraced, or tried to embrace, unichannel strategies where they sell everywhere (online, in store) and deliver everywhere (in store, direct to the customers’ homes or buy online pickup in store). While online sales growth is outpacing retail growth, the increase is no longer stratospheric enough to overcome poor strategy and lackluster execution.
In other words, as The WSJ’s Justin Lahart writes: “The picture that emerges is one where sales tend to grow each year, but at nothing like a viral pace, with different players duking it out for share and winning or losing depending upon how they execute. If that sounds a lot like the business of retail before the advent of online shopping, that is because it is.”
Strategies to take advantage of eCommerce abound.
For example, as The WSJ reports, formerly online retailers like Warby Parker (eyeglasses), Allbirds (sneakers), Parachute (bed linens) and others are opening retail stores, reducing the shopping center vacancy rate to 5.6%, its lowest in years. Leaders of these enterprises are using online sales data to place stores near their customer base, which also helps them decide how to build out their distribution network.
Walmart’s strategy is to offer a suite of online pickup and delivery services, as well as online advertising, which skyrocketed its U.S. e-commerce sales by 27% in the most recent quarter.
While online grocery sales are up overall, the volatility among segments requires strategies agile enough to react to and fulfill consumer demand. The latest data, reported by Supermarket News, show that some segments skyrocketed while others plunged – so VUCA (volatility, uncertainty, complexity, ambiguity) is going nowhere.
Like everything else, your company’s supply chain strategy will require optionality to succeed. I would love to discuss ways Tompkins Leadership and Tompkins Ventures can help.