Ecommerce sales have soared in the last decade, jumping from about 4% to 15% of the U.S. retail market. This means a huge increase of nearly $1.4 trillion1. Yet, despite the shift to online shopping, physical stores are still going strong. Post-pandemic, we’ve seen a surprising trend: the comeback of brick-and-mortar shops.
As ecommerce grows, with sales making up over 19% of all retail sales worldwide in 20232, and expected to hit nearly a quarter by 2027, businesses face a big decision. Should they go for retail or ecommerce?
This article will look into the modern solutions for retail real estate and e-commerce real estate. We’ll discuss the changing world of omnichannel selling, the comeback of brick-and-mortar stores, and the power of online marketplaces.
Key Takeaways
- Ecommerce sales have surged in the past decade, now accounting for over 19% of global retail sales.
- Brick-and-mortar stores are making a comeback, even as ecommerce continues to grow.
- Omnichannel selling is a common approach for medium to larger retailers, adding complexity to business operations.
- Ecommerce businesses typically have lower startup costs compared to traditional retail establishments.
- Retail operations generally involve higher complexity compared to the streamlined operations of ecommerce businesses.
Understanding Retail vs. E-Commerce
Retail and e-commerce differ in how they sell products. Retail sales happen in physical stores, while e-commerce is online. Retail stores vary from small shops to big chains. E-commerce sales come from online marketplaces like Amazon and Etsy, or from company websites34.
Market Size and Growth
Even with the 2020 pandemic, both retail and e-commerce have grown a lot3. By 2024, US retail sales will hit $7.450 trillion, with most from physical stores3. E-commerce is growing faster, at 8.2% a year, compared to physical retail’s 1.8%3.
E-commerce was set to make $5.9 trillion by late 20234. From 2020 to 2021, online sales jumped 14.2%, and total retail sales went up 14% too3. Both options show big growth potential.
E-commerce has grown 16% a year since 2011, with a big leap in 20205. In 2021, e-commerce sales reached $871 billion5. It made up 11.8% of all retail sales in 20215. Without motor vehicle sales, e-commerce’s share rose to 17.2% in 2021534.
Key Considerations for Businesses
Choosing between ecommerce and retail businesses means looking at startup costs. Retail needs more money upfront for real estate and upkeep. Marketing for retail stores also costs more than online shops6.
Ecommerce has lower startup costs. You mainly spend on a website, an ecommerce platform, and marketing tools6. This is great for those with less money or testing the market first.
Operations Complexity
Retail stores need more work to run, no matter their size. They handle the store’s day-to-day, like hiring staff and upkeep6. Ecommerce, however, uses tools to automate tasks. This saves time for other ventures6.
Total Cost of Ownership
Running a business costs more than just starting it. It includes ongoing expenses like website upkeep and marketing6. Retail stores have extra costs like rent and insurance6. Ecommerce focuses on website upkeep and marketing6.
Omnichannel Selling
Selling across many channels is popular now. Omnichannel retail means selling through various platforms, from stores to online7. Ecommerce businesses often use different channels like social media to reach customers7.
Choosing between retail and ecommerce depends on startup costs, complexity, and ongoing expenses. It also depends on the ability to sell across channels678.
“Over two-thirds of commerce organizations (64%) now offer Apple Pay, reflecting the growing demand for seamless, omnichannel experiences.”7
| Social Media Management | Monthly Costs |
|---|---|
| Sprout Social | $199 to $399 per seat per month6 |
| Hootsuite | $99 to $249 per month6 |
Other strategies like influencer marketing and email marketing can help grow your business68.
Retail and E-Commerce Real Estate
The rise of e-commerce has changed how we shop, making it easier to buy things online. But, physical stores are still key in the shopping world9. Online grocery sales jumped from $6.5 billion to $8 billion from March 2020 to February 20219. This shows how e-commerce is growing fast. Yet, stores offer a shopping experience you can’t get online.
Stores give customers great service and direct interaction10. They’re made to draw people in and make shopping better10. This personal touch helps build loyalty and satisfaction, helping businesses do well9. Companies like Prologis, Target, Walmart, and Amazon are working towards being net carbon zero by 20409.
E-commerce is all about convenience, letting customers shop from anywhere9. For every $1 billion in online sales, 1.25 million square feet of warehouse space is needed9. This rise in online shopping means more demand for industrial real estate for logistics and fulfillment11. Retailers will need an extra 1 billion square feet of industrial space by 2025 for warehouses11.
Finding the right balance between physical stores and online shopping is crucial for businesses. Even with more people shopping online, there’s still a place for in-person shopping. Stores can succeed by offering a unique experience that goes hand in hand with their online presence.
“The shopping experience is the defining obstacle between a successful and a failed business venture.”
Conclusion
When deciding to expand into e-commerce, businesses must think about their size and scope. They should look for an e-commerce platform with strong payment processing, easy shipping integration, and good inventory management. Also, they need customer management, analytics, marketing tools, product management, mobile friendliness, and security measures to fight cyber threats12.
Businesses can choose to focus on physical stores, go fully online, or use both. It’s key to know the features and security of the platform they pick. This knowledge is vital for success in today’s fast-changing retail world13.
E-commerce has changed how people shop, making fewer people visit physical stores. This has led to more empty spaces in malls and shopping centers12. But, it also opens new chances for those in commercial real estate. By updating old retail spots and using new tech, they can grow with e-commerce and stay strong despite challenges14.
Choosing between retail, e-commerce, or both depends on what a business wants to achieve. By looking at their size, the features of the e-commerce platform, and the security they offer, businesses can make a smart choice. This choice should help them succeed in the ever-changing retail world131412.,,
FAQ
What is the primary difference between retail and ecommerce?
Retail sales happen in stores you can visit in person. Ecommerce sales happen online. This means you can buy things over the internet.
How has the market size and growth of retail and ecommerce changed over time?
Ecommerce sales have grown a lot in the last ten years. They went from about 4% to 15% of all U.S. retail sales. This is a huge increase of nearly $1.4 trillion. Even with the pandemic’s impact, both retail and ecommerce have kept growing. Ecommerce sales went up by 14.2% from 2020 to 2021. Total retail sales also saw a 14% increase.
What are the key considerations for businesses when choosing between retail and ecommerce?
When picking between retail and ecommerce, businesses should think about costs and how hard it is to run. Retail needs more money for stores and upkeep. Ecommerce is cheaper to start but can cost more to keep running. Many businesses now sell in both places, which is called omnichannel selling.
What are the benefits of physical retail stores compared to ecommerce?
Stores let customers touch and see products in person. They also offer great customer service. Ecommerce is great for shopping anytime and offers easy access to products.
What key features should businesses look for in an ecommerce platform?
Businesses should want ecommerce platforms with payment and shipping tools. They should also have inventory and customer management, analytics, marketing tools, and product management. The platform should work well on phones and be safe. Choosing between retail, ecommerce, or both depends on what the business wants to achieve.
Source Links
- https://www.bigcommerce.com/articles/ecommerce/ecommerce-vs-retail/ – Ecommerce vs. Retail: The Real Differences for Businesses and Customers
- https://www.bigcommerce.com/articles/ecommerce/ – Ecommerce: The History and Future of Online Shopping
- https://www.emarketer.com/insights/future-retail-trends-industry-forecast/ – Retail and ecommerce industry overview
- https://www.forbes.com/advisor/business/what-is-ecommerce/ – What Is E-Commerce? Definition, Types & Getting Started
- https://www.cbre.com/insights/articles/omnichannel-what-is-the-share-of-e-commerce-in-overall-retail-sales – What Is the Share of E-commerce in Overall Retail Sales?
- https://www.forbes.com/advisor/business/ecommerce-strategy/ – E-Commerce Strategy: The Ultimate Guide
- https://www.salesforce.com/blog/ecommerce-strategy/ – Keys To a Winning Ecommerce Strategy (Hint: Put Your Customers First)
- https://www.helpscout.com/blog/ecommerce-customer-service/ – 7 Best Practices for Effective Ecommerce Customer Service – Help Scout
- https://www.vhb.com/viewpoints/whitepapers/ecommerce-growth-and-industrial-space-demand/ – VHB Viewpoints | E-commerce Growth and the Industrial Real Estate Boom | VHB
- https://www.e-architect.com/articles/differences-between-retail-and-commercial-real-estate – Differences between retail and commercial real estate – e-architect
- https://www.huronconsultinggroup.com/insights/evolution-of-commercial-real-estate – Revisiting Retail: The Evolution of Commercial Real Estate – Huron
- https://privatecapitalinvestors.com/the-impact-of-e-commerce-on-commercial-real-estate/ – The Impact of E-Commerce on Commercial Real Estate | Private Capital Investors
- https://retailminded.com/the-future-of-retail-real-estate-adapting-to-e-commerce-trends/ – The Future Of Retail Real Estate: Adapting To E-Commerce Trends – Retail Minded
- https://investingincre.com/2023/12/21/e-commerce-impacted-commercial-real-estate/ – How E-Commerce Has Impacted Commercial Real Estate – Arizona Commercial Real Estate | ICRE