SOLVE magazine Issue 03 2021 | Page 28


Shop ’ til you drop … your phone

Tensions between consumer convenience and sustainable business practices are reshaping our shopping habits .

F rom market squares and local shops to mail-order catalogues , department stores and shopping malls , new technology continues to make it easier for consumers to access an increasingly diverse range of goods from retailers ’ online shelves . The latest and fastest growing trend in this evolution is fully mobile shopping on smartphones .

It comes at the same time the COVID-19 pandemic prevented many shopping trips . Researchers who study such trends say , however , the ecommerce shopping evolution , or revolution , was well underway before COVID-19 shut down high streets .
Professor Lisa Jack , from the University of Portsmouth ’ s Business School , sees smartphone ecommerce as simply a new way for people to continue to do what they ’ ve always done . “ It ’ s just that technology keeps allowing us to do it in a slightly different way . The internet has replaced mail order , for instance , and it ’ s brought back home delivery .”
Professor Jack says there are predictions that , by 2040 , about 95 per cent of sales will be facilitated by ecommerce , accelerating the financial burdens that bricks-and-mortar businesses face .
In the UK , for example , high street business council rates are 95 per cent higher than those paid by online-only stores for warehouses that tend to be in outer urban industrial areas .
Online-only stores also have a dedicated business model that includes consolidated stock handling and inventory control processes for purchases and returns . Companies such as Amazon also use highly efficient , automated warehouse systems .
Professor Jack says many bricks-and-mortar businesses have attempted to compete with online stores by adopting hybrid business models , but these are proving more costly than anticipated and are actually jeopardising business viability .
“ Simply bolting a website and online ordering onto an existing business is not as simple as many people think , particularly for larger businesses with multiple stores .”
Hybrid headaches Hybrid models include multiple purchase and return options , such as the popular ‘ order online , return instore ’. But many businesses often don ’ t have the necessary stock handling , inventory control or staff training in place to effectively manage instore returns .
In one recent project Professor Jack examined the proportion and costs of retail returns to businesses in Europe , the UK and the USA , and found many struggled to even identify costs related to returns .
Store-based purchases and returns traditionally run at eight to 10 per cent of sales , and returns are often incorporated as “ the cost of doing business ”, she explains . But add online ordering into the mix and these costs become substantial – and potentially fatal for a business .
“ Returns for ecommerce sales average about 20 per cent . For special promotion ‘ high days ’ such as Black Friday and holidays , for luxury items and clothing , returns can be anywhere between 35 and 70 per cent of sales . The rate of fraud is also on the
ISSUE 03 / 2021