The end is near? Why are the industry Maestros predicting the end of e-commerce?
“E-commerce platforms may become history.” Hon Hai Group Chairman Terry Gou made this shocking statement during a CCTV interview in 2017.
Terry Gou is not the first person to sing prophecies of doom for e-commerce. Back in 2016, Alibaba founder Jack Ma predicted that e-commerce will soon be eliminated. Can it be true then, that e-commerce, with its rapid growth and reputation as the hottest, most desirable industry in the 21st century, will come to an end so soon?
In interpreting the words of Terry Gou and Jack Ma, these two industry heavyweights are sharing the same vision on the future of e-commerce, which is heading towards the direction of New Retail development. In this New Retail they’re talking about, the ultimate goal is to have retail, manufacturing, and even logistics industry integrate online and offline shopping, in a seamless effort to put the consumer at the heart of the business.
At the top of the supply chain, the manufacturing industry makes use of digitised information to create customised and personalised products for consumers. The retail industry then combines omnichannel and membership management to surround customers in a 360 degrees shopping experience.
This implies that e-commerce will not become obsolete. It will merge with offline and evolve into New Retail. What will truly become obsolete is the old way of thinking that online and offline are clearly divided into two, and e-commerce merchants can do purely online business only.
In facing this intimidating age of New Retail, how should businesses respond?
New Retail is a big proposition. Over 90% of business establishments in most countries including Malaysia are small and medium-sized enterprises. The ideas of New Logistics, New Manufacturing etc are difficult to comprehend. While acknowledging the approaching trend, what’s the next step for businesses?
For all retail brands, the concrete action is to merge “online + offline” as soon as possible, and build their omnichannel.
Imagine for a moment; a brand has its own official webstore, APP, and physical store, and these channels are interconnected. Member information and buying history can freely circulate across channels. It is equivalent to fully grasping your shoppers’ consumer behavior.
In addition to greatly improving customer satisfaction, you can also have a clearer picture of your brand’s members’ profile. Through data analysis, you can formulate marketing activities, perform continuous testing and review of results, and run continuous optimization to increase business revenue.
This kind of operation is not difficult to understand, and most people would agree with the idea. What’s the reason then, for the very low number of businesses that can achieve integration of Online + Offline? Because deep down in the heart of brand owners there is a fear: “It sounds good, but it is not easy to execute.”
Such concerns are common and understandable, but this will hinder the possibility of brand development.
Let the data speak for itself. OMO sales growth is beyond imagination!
91APP provides a set of solutions to help retail brands minimize the cost of executing Online Merge Offline (OMO) while maximising its effectiveness. With 91APP system, retail brands can create their very own webstore and branded APP in as short as 6 weeks. For brands that have physical stores, utilising 91APP’s “In-store Portal” tool can help to synchronize their data across online + offline quickly.
Once online and offline are merged, all members’ information, purchase history, customer behaviour across webstore, app and physical store can be digitized, allowing brand owners to better understand and serve their members. This ultimately cultivates a stable and long-term customer relationship.
Our client Norns started with the sale of Japanese gift items. Through the initiative of OMO, it managed to consolidate their online and offline members, and successfully raise a large number of fans. These Norns fans shop at Norns more than 10 times per year. This hardcore fan group by itself has elevated Norns monthly revenue to a record level.
91APP has many clients just like Norns, who achieved a revenue leap through OMO integration. Some of them are online native brands that ventured into offline retail, such as the popular women’s shoes brand amai, which initiated OMO in 2016 and hit 10 times its GMV growth in the same year.
Other client examples are traditionally physical retail brands making an entrance into e-commerce, such as Taiwan’s long-established women fashion label SO NICE. Its second-generation successor carried out the OMO upgrade drastically, and this successfully doubled the group’s revenue.
The data speaks for itself. Online Merge Offline has great growth potential. Once ignited, the revenue performance it brings is beyond imagination.
OMO in the next five years; unlimited potential
The Department of Statistics reported the overall GMV of Taiwan retail industry has exceeded 3,852 billion TWD in 2019, while the e-commerce share has also increased to a new high of 207 billion TWD (5.3%).
Did you notice that? Taiwan’s online retail is indeed growing strongly, but offline retail still accounts for more than 90% of total retail. In other words, most of the spending happened offline. If you focus solely on e-commerce, you are competing with the rest in this mere 5% of the retail market. On the other hand, if you concentrate only on physical stores, you will feel your market share being carved up by e-commerce. The best solution is to run both e-commerce + retail business in the form of New Retail.
More brands are paying attention to this trend and are planning to upgrade their ecosystem. In the next 3-5 years, New Retail will dramatically change the market rules. Brands that continue to focus only on a single sales channel may barely survive this change.