Amazon’s market share is undeniable when it comes to e-commerce. The retailer has continued to thrive and grow in recent years, with an incredible 50% of market share in the e-commerce space in the US.
However, there have been plenty of rumblings about the competition, and the goliath market share could be under threat as more giant retailers start to push the e-commerce side of their business.
Retailers such as Walmart and Target were making moves long before the pandemic hit, but COVID-19 has undeniably played a huge part in progressing some of their growth strategies, and in this guide, we’re exploring how these brick and mortar retailers might actually have an advantage over Amazon.
Target is a great example of one of the Amazon competitors to experience mammoth growth in the last couple of years.
It would be easy to chalk this up to the fact that the pandemic has led to more people shopping online, but the growth has been driven by more than just peoples’ decision to shop from the comfort of their own home.
Target is one of the chains to put a lot of effort into building their market share, and as you can see from the chart below, it’s certainly having an impact.
Target has its own loyalty schemes, the opportunity to collect from store, and is now starting to replicate the Amazon model by allowing third-party sellers on their platform.
Of course, there are pros and cons to both brick and mortar stores and e-commerce, but stores like Walmart and Target are finding it easy to leverage some of their advantages and turn them into massive growth:
75% of Target orders in Q1 were fulfilled in-store.
There are almost 2,000 Target stores around the US, and many families visit weekly. The pandemic has proven that people still like to visit stores given the choice.
It seems likely that people will always look to shop in-person. 62% of buyers surveyed in 2017 said they like to “To see, touch, feel and try out items”.
With e-commerce, that isn’t possible, but the fact that people are going to the store anyway means that they can collect the items on their next visit. Many shoppers choose this method, which makes sense when you consider our next step…
This is a massive benefit for the consumer.
Let’s say you buy an item of clothing on Amazon. It arrives, and it’s the wrong size. Shipping it back can involve some time and effort, and even a specific trip.
On the other hand, if you buy an item of clothing from Target, pick it up on your next visit, and realise that it doesn’t fit, you can return it to the same store with very little hassle.
You could even open an item in the parking lot, realize it isn’t for you, and need to return it all in the same trip. This is something Target’s “Plus” program allows you to do. No more repackaging things to send back.
Both e-commerce and traditional brick and mortar retailers have the opportunity to upsell to their customers. In person, it’s much easier to make promotions a part of the shopping experience, and to convince customers that they need to buy additional items.
You don’t even have to be a pushy seller. Impulse spending grew during the pandemic, and just by providing an excellent selection of products and prices, Target and other brick and mortar retailers may be able to boost sales.
Check out the most common impulse purchases and you’ll probably notice that these are the sorts of items that are often on promotional rails in stores like Walmart and Target.
Brick and mortar retailers can offer something that Amazon can’t in terms of the experience of shopping.
Let’s take clothing as an example.
Amazon is a big retailer when it comes to selling clothes. Around 10% of clothes bought in North America come from Amazon.
However, plenty of people would still rather visit a store to buy clothes. They can look at, and even feel the products, and potentially try them on before they purchase. These sorts of shopping experiences are something that plenty of people enjoy far more than shopping online.
There are plenty of examples of people meeting up for a day of shopping in a mall. I doubt the same people would meet up to look at clothes on Amazon.
Where giant chains like Target and Walmart can cash in is by offering “Omnichannel” retail. The best of both online shopping and visiting the store for a memorable experience and interaction with other people.
By marrying the experience of shopping in-person with the convenience of shopping online, retailers can increase their market share.
Need an item for the home, and not worried about how it looks? You can order online and receive the item quickly. For example, if you needed some new rechargeable batteries, this would be the perfect way to get them without having to venture to a store. Likewise, if you want to buy the latest Xbox game, it really doesn’t matter if you get it in person or have it arrive through the letterbox.
Want to go to a store and explore the new electronic items? Watch the TVs on a display? Try on some clothes?
These are the areas of a shopping experience that Amazon cannot provide.
Target, Walmart, and other brick and mortar retailers are able to offer the omnichannel experience.
73% of shoppers use more than one channel during the buying process, and stores with physical locations can fit the bill for both in-person and online shoppers.
Online retailers have their own advantages. Running a store can be extremely expensive and lead to lower profit margins, for instance.
However, the fact that even Amazon is opening more physical locations shows that omnichannel retail is the future, and that brick and mortar retailers have it all to play for.