Published by Rebecca Berryman – 96535162
With the advent of the internet (online purchases now make up approximately 7% of all purchases, whereas in 1999 they made up just 0.6% of all purchases) (Yadoo, 2015) and the increase in the number of channels in which items can be purchased, the question is: are we actually purchasing more overall or are we just purchasing the same amount but through different channels?
In considering this question it is important to not only consider whether or not total sales have increased but also whether or not the volume of products sold has increased. The change in channels may result in a decrease in price and an increase in volume but the same dollar amount actually being purchased. For example if an item was previously stocked through a retail outlet then the manufacturer would take their cut, the wholesaler would take their cut and the retailer would also take their cut. If the product was then sold on line by the wholesaler, then the retailer would not take their cut, thereby making the product cheaper. However, the increase in volume data may not be that easy to obtain compared to the increase in sales dollars.
Are overall sales currently increasing or decreasing?
Worldwide sales are currently increasing and they are projected to continue to increase, so that by 2018 they are projected to hit USD$28.3 trillion. Likewise ecommerce and internet sales are also expected to increase and at a greater pace than other sales taking the market share of ecommerce and internet sales to 8.8% or $2.5 trillion by 2018 (emarketer, 2014). In 2016 the Centre for Retail Research also found that the online retail sector was the main driver for growth across the European and North American retail sector. With the growth of internet sales being far greater that the overall sales growth. (Centre for Retail Research, 2016)
There are also many businesses that are proposing that the increase in sales is a direct result of an increase in marketing and purchasing channels and they are willing to help you (for a price) to increase your sales by using another channel such as the internet. Please see the video below for an example of how Ebutor believes that they can increase your sales through increased internet sales.
Why would the increase in channels increase sales overall?
As outlined in the video expanding reach and convenience are the two main reasons for sales to increase as a result of ecommerce sales. The increase in channels means that a product can be marketed and sold to many more people globally. (Flynn, 2015) Therefore as individuals have a much greater choice, they are much more likely to find what they are looking for and make a purchase. A study conducted by Simon-Kucher & Partners also found that consumers shopped online for the convenience (Thau, 2013). The convenience of online shopping creates more opportunities for sales that may not have otherwise occurred thereby increasing sales overall. For example a consumer may not have had time to shop during normal trading hours but instead is able to make a purchase at 2am, when it suits them. If they were not able to make the purchase then, they may have forgone the purchase altogether. Another reason why people shop online is because consumers believe that it is cheaper (Miller, 2012) as it is a more direct channel i.e. often it is the wholesaler marketing directly to the consumer. Therefore, those consumers may not be willing to make that purchase if the price had of been higher, thereby increasing the volume of sales.
It is clear that the increase in channels has increased the dollar value of sales overall. The quantity of the increase though may not be apparent due to the increase in efficiency of the internet by cutting out the middle players (Kokemuller), thus making the products cheaper.
Centre for Retail Research. (2016). Online Retailing: Britain, Europe, US and Canada 2016. Retrieved May 8, 2016, from Centre for Retail Research: http://www.retailresearch.org/onlineretailing.php, [accessed 8th May 2016]
Ebutor Electronic Distribution, https://www.youtube.com/watch?v=VWaqoUvzN20, [accessed 14th May 2016]
emarketer. (2014, December 23). Retail Sales Worldwide Will Top $22 Trillion This Year Ecommerce eclipses $1.3 trillion, led by China and US. Retrieved May 8, 2016, from emarketer: http://www.emarketer.com/Article/Retail-Sales-Worldwide-Will-Top-22-Trillion-This-Year/1011765, [accessed 8th May 2016]
Flynn, S. (2015). Technology in Global Markets. Research Starters: Business (Online Edition).
Kokemuller, N, The Advantages of Eliminating the Middleman, Demand Media, http://yourbusiness.azcentral.com/advantages-eliminating-middleman-13463.html, [Accessed 14th May 2016]
Miller, G. (2012, February 14). 8 Reasons Consumers Like To Shop Online – Cater To Them For Online Retail Success. Retrieved May 8, 2016, from Upstream Commerce: http://upstreamcommerce.com/blog/2012/02/14/8-reasons-consumer-likes-shop-online
Verhoef, P, S. N. (2007). Multichannel customer management: Understanding the research-shopper phenomenon. International Journal of Research in Marketing, 129-148.
Thau, B. (2013, October 8th). New Study Reveals Why Consumers Really Shop Online (Surprise: It Isn’t Low Prices). Retrieved May 8, 2016, from Forbes: http://www.forbes.com/sites/barbarathau/2013/10/08/why-consumers-really-shop-online/#6220cc444ab5
Yadoo, J. (2015, May 16). E-Commerce sales are surging – Call it the Amazon Effect. Retrieved May 8, 2016, from Boomarang Markets: http://www.bloomberg.com/news/articles/2015-05-15/e-commerce-sales-are-surging
ST – Life augmented, Supply Chain, http://www2.st.com/content/st_com/en/about/customer-satifaction/five-areas-of-excellence/supply-chain.html [accessed 9th May 2016]