Online or Offline?

In 2018, everyone is still discussing the struggle between online and offline sales, and most are confident that soon online will completely replace offline, but is this so?

Let's look at the US market, which is usually the heart of any global changes.

What's in US?

America is generally considered a leading example in the development of trade and the introduction of new formats and technologies in retail. This is why many reports and forecasts are based on the country's indicators.

Against the backdrop of closing shopping malls in the United States, it seems that online victory wins this race, but as it turned out, this is not the case at all. Melina Cordeo, head of retail sales at CBRE in America, says that it is a mistake to think that online sales displace traditional ones, most online sales bring revenue to traditional brands.

This means that online sales for brands that usually operate offline are only an additional channel for increasing revenue, and not purely online sales in an online store.

Across the country (USA), about 1.1 million retail stores with annual sales of 3.9 trillion dollars are not going to leave offline retail, they account for about 85 -90% of retail trade.

Closing shopping malls are mainly built in the middle of the last century. So they only indicate the inability to quickly modernize to meet the modern requirements.

What's in Russia?

Now, despite the rapid development of e-commerce and technology, in Russia only 4% of respondents buy everyday goods constantly online, and 47% have never bought online, but plan to try. (Source " Nielsen») The conclusion is that most people still continue to make purchases in a traditional store.

It is also worth noting that 616 thousand square meters of retail space was commissioned in Russia in 2017, and about 440 thousand square meters are expected to be commissioned in 2018. And although the actual volume of new space is being reduced, this has not affected the development plans of major retailers. All of them have only one plan: expansion, expansion, expansion

Why are buyers offline?

In the survey of the American Retail Dive were surveyed about 1,400 customers. And the most important reason why a traditional store is needed is the ability to see, feel, and check a thing before buying. In other words, customers in an offline store value the ability to get in touch with their purchase and assess whether the product they purchase meets their expectations.

This is how loyalty and commitment to the brand is formed – the buyer has a feeling that now it is close and the degree of trust increases at times.

In online sales, there is no such value, and the buyer actually pays for waiting to own the product. And here the second reason works in favor of offline: buyers crave instant satisfaction of their needs, and putting the product in the online shopping cart and waiting for delivery can not provide this effect.

So which side is more interesting to take? Offline or online sales?

Many online stores are opened based on the fact that the cost of organizing all processes is much lower, but this is not always the case. Only the same figures can be calculated for logistics, customer returns, ad purchases, and keeping the site afloat as for a traditional store.

That is why in the past few years, both in the US and in Russia, most online stores open small points or corners in the offline environment, thereby increasing profits. While the clear line between online and offline sales is blurred. All this shows that companies that can combine offline and online sales really have a future.

For example, Amazon, the largest online retailer, has started to combine Whole Foods offline stores (460 locations in the United States) with online technologies: return of online purchases physically in the store, free delivery when ordering online from the nearest market, etc.

Many brands use technology to personalize the customer in an offline store, later transferring data to the online store. So, the clothing store "ModCloth" offers to pass tests and measurements, so that you can then receive more personalized offers for purchases in the app. In 2017, the growth of this store exceeded all expectations.

Combining efforts in offline and online trading, do not forget about the introduction of technologies that make it easier to purchase and personalize offers for buyers.

Speaking of Amazon, the giant is not the first time successfully combines online and offline technologies in retail, which is only the first store without sellers and cashiers.

A free app is installed on the customer's phone that already has bank card data linked to it. When you log in, data is read from the device, products that the customer puts in the basket are automatically recognized by the cameras and added to the virtual receipt, and payment is withdrawn when the customer leaves the store. Then, based on purchases, the app user can be informed about discounts, promotions, and the availability of favorite products in the store.

Such stores are likely to have a future, as 85% of respondents (Research by HRC Retail Advisory) prefer not to contact sellers and consultants in the store, find out the price yourself and pay for the purchase without the participation of a cashier.

What about cross-borders?

Cross-borders are the so-called trade, which has been developing at a furious pace over the past three years, especially in the clothing niche. At the same time, the share of orders from European and American stores is lower compared to Asian offers (the main ones are located in China). Approximately 4% of the total number of global purchases are made from foreign Internet websites, and by 2025, analysts predict an increase of up to 25%.

What is the difference between a cross-border and a regular online purchase?

In essence, cross-border is the same online purchase, but the difference is that it is made from foreign online stores, which oppresses domestic online sales. And here the state is already worried, because transactions go abroad, and local entrepreneurs must be supported. Here for several years, the buyer is scared, either by setting limits on foreign purchases, or by introducing a tax on a certain purchase amount, but no concrete measures have been taken yet, and the Russian Post is processing even more foreign parcels every day.

Who is aware - is armed! Foreign Internet giants are well aware that the countries where they send orders remain dissatisfied with the leaking money and therefore begin to open representative offices and warehouses on the territory of such countries, but not only for this reason. The notorious love of buyers to evaluate the product before buying also leaves them no choice. So the famous AliExpress has already opened a representative office in Russia and agreed with many Russian brands. The marketplaces of these brands on the AliExpress platform offer fast delivery, lower-than-market prices, and higher guarantees than in a conventional traditional store.

Conclusions

All this only proves the theory that online tightly combines its efforts with offline sales not only in traditional stores, but also in online brands.

As a result, we can say for sure that the vector of success for retail in the future will consist in a successful combination of online and offline trade, with the use of modern technologies.

Recognizing each customer and presenting them with a personalized offer is what all the world's brands are fighting for. And this is interesting not only for large retailers but also for small shops – people have become tired of large shopping malls.

Small stores will change towards apps with a showcase where the customer can see the availability and arrival of selected or new products.