Retail

Why brick-and-mortar will drive e-commerce by turning stores into distribution centres

Brenton Gill /

bricks-and-mortar e-commerce

Radaro co-founder and managing director Brenton Gill. Source: Supplied.

As e-commerce continues to thrive, and with online sales consistently on the rise, it’s no surprise opinions are divided when it comes to clicks versus bricks and the supposed death of brick-and-mortar retail.

According to Australia Post, the number of online purchases jumped by 20.2% last calendar year and unsurprisingly, online shopping reached a 9% share of traditional retail.

But what people need to know is brick-and-mortar won’t be going anywhere anytime soon. So much so that it will actually start to drive e-commerce.

On the face of today’s e-commerce landscape, having a physical store presence might seem outdated, but with the right approach, it can be made into a competitive advantage. As stores close down or downsize in the face of competition against pure e-commerce giants, it is important to recognise the benefits of having a retail store footprint.

When brands pick up and dispatch to online customers from the local store, it enables an accelerated fulfilment experience for the buyer, which is allowing brick-and-mortar retailers to curb the power of pure e-commerce players such as Amazon.

Localised distribution centres

It’s becoming increasingly evident that major retailers are recognising distribution is the key to successful e-commerce. As a result of this, retailers are using their physical stores as localised distribution centres.

There are many benefits to becoming a localised distribution centre, with customer loyalty being at the forefront. Customer experience is a result of cumulative interactions between a customer and a business, and order fulfilment is the most crucial of these interactions.

The perfect ecosystem for customer retention is created when you factor in the different variables of customer service, shopping experience, brand love and order fulfilment. Get this right, and you can stay in the game.

Brands that adapt to customer expectations through delivery expectation can utilise existing infrastructure to maintain control and agility for meeting their customers’ needs — on top of brand loyalty and maintaining their share of customer spend. Adapting internal processes to innovate for tomorrow’s retail world is giving brick-and-mortar a chance to take back power for themselves.

Wesfarmers, Woolworths and Tipple are all notable examples of Australian brands switching to this model. Wesfarmers and Woolworths are increasing their focus on customer convenient delivery while e-commerce platforms such as Tipple are accelerating localised pick up and delivery. In the US, Walmart is focusing on supermarket delivery models, including driverless vehicle delivery.

Increasing last-mile offering is the key to success

Current trends show that any segment with a substantial share of the customer wallet is looking to take greater control over the customer to reduce reliance on third-party networks. Uberfied and aggregated markets are evidence of this, as brands look to be ahead of the curve by ensuring they retain customer loyalty.

It is imperative that brick-and-mortar retailers increase their last-mile offering in order to remove the retail middle man. Not only does this allow brands to cut the cost of paying a distribution network, but it also limits the amount of control they hand over to a third-party operator. With distribution networks pocketing anywhere from 15-40% of an order, that’s money worth fighting for.

There’s no doubt brick-and-mortar still has a place in the retail sector but will only survive if it helps to drive e-commerce, rather than compete with it.

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Brenton Gill

Brenton is the co-founder and managing director at Radaro.

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