Shifting from Brick-and-Mortar to E-Commerce Sales

While a number of brick-and-mortar stores are facing closure, Amazon and other e-commerce sites have experienced record sales. Rick Stein of the Urban Decision Group notes 30,000 store closures in the past five years.

In the first few months of 2020, 2,000 have closed with an additional 15,000 more expected by the end of the year. At the start of 2020, department stores occupied 30% of all mall space. Fifty percent of those stores anticipate closures by the end of 2021.

Can Brick-and-Mortar Stores Survive? 

Although some stores have reopened, many retailers aren’t able to survive business disruptions for extended periods of time. When asked about the possibility of closing permanently, there are varying tolerances for how long businesses can survive interruptions:

• 5.63% will survive less than one month
• 26.28% will survive 1-2 months
• 34.07% will survive 3-5 months
• 17.62% will survive more than 5 months
• 16.39% are not concerned

From mid-March to mid-April, Stein surveyed 500 retailers. According to his research, 40% of apparel retail may never re-open as well as one in five restaurants. Through this time of social distancing, consumer behavior and shopping methods have taken a drastic shift towards online purchases. People who never before made a purchase online have now become familiar with researching products before making a purchase, checking reviews, and enjoying the convenience of home delivery.



As retail stores began to re-open in May, the Wall Street Journal reports sales rose by 18%. While this number is encouraging, YOY sales for May were still down 63%. YOY sales for April were down 85%, showing a slight improvement for May.

E-commerce Trends

In 2019, e-commerce transactions accounted for 12% of all sales during the last quarter of the year. 8% of all grocery sales are online. There was a 65% growth in online grocery sales between March and May 2020, however, retailers continue to work through operational complications and costs to improve efficiencies for these services. Beginning in March 2020, many small retail stores turned to Shopify and other ecommerce sites to facilitate online sales. Shopify alone saw an increase of 62% in new online stores between March and April.

Even as businesses began to re-open, retail outlets struggled to fill store shelves with inventory, especially the most desired items. Apparel and electronics categories have traditionally fared well with online purchasing. With closures and out-of-stock conditions, one in four people reported shifting to online purchases for restaurant meals, hygiene products, health products, and cleaning products. Mastercard reported 22% of all retail purchases in April and May were e-commerce transactions.

Prior to March 2020, the concepts of “social distancing,” “contactless delivery,” or “safer at home” were foreign. In a relatively brief period of time, these terms became part of everyday vocabulary. Many businesses were forced to close while others drastically changed operations to remain open using new methods of conducting business. The new normal includes face masks, enhanced cleaning practices, and adjustments to sales processes and procedures.
Changes to Shopping Patterns

PPIQ (Path to Purchase IQ) cites a few reasons why some continue to make in-person purchases. These include: 33% making purchases based on needs for immediate consumption; 29% resorting to old habits and aversion to new methods of buying; and 26% preferring to view products prior to making a purchase.

Those who continue to shop in person are taking more time to carefully plan trips. Shoppers stock-up on purchases and take time to make lists to limit their total number of trips. Fifty percent of people are trying to make quicker trips to get in and out of retail stores as quickly as possible when only 13% had this goal prior to the pandemic. The crisis also expedited online grocery shopping to levels that otherwise wouldn’t have been achieved for another three to five years. The shift to online purchases for grocery has spread to other retail businesses and will likely continue post-COVID.
There is a greater need for businesses to find new and multiple ways to operate and sell their goods to address the varying needs and preferences consumers share. Omni-channel retailers offering both e-commerce and brick-and-mortar sales are likely to be the real winners in the future.
Opening an Online Store

There are a number of decisions and steps to take to begin selling products online. Here are a few things to consider when selling your goods directly to consumers:
1. Find a reliable technology platform to power transactions. These systems will help with inventory management as well as facilitating online ordering.
2. Integrate ordering with your website, but also consider selling through social media accounts and online sales sites like eBay.
3. Determine what policies, practices, and services you want to include. What is your return policy? Will you include any guarantees on satisfaction? What type of shipping or delivery services do you want to offer?
4. Develop a marketing and advertising plan to promote your products. Create posts for social media, consider boosting your content through ads, incorporate email marketing, and develop a strong SEO program.
5. Determine who and how you will pack and ship your orders. Plan for growth and consider outsourcing your fulfillment to a third party. Product Fulfillment Companies can take the hassles out of inventory management and processing your orders for delivery. This will allow you to focus more on building your brand and your business.

With changing times and much uncertainty in today’s business world, it’s more important than ever to be open to changes in your organization and operations. “We all must adapt and adjust to the current and frequently-changing environment in order to be successful. E-commerce fulfillment firms like PFS are making a number of adjustments to workflow and staffing as a result of the shift towards e-commerce orders,” said Jason Martin, Co-Founder of Product Fulfillment Solutions.