Introduction
One of the most significant disruptions in traditional retail businesses over the past few decades has been the rise of e-commerce. With increased Internet use and technological innovations, e-commerce has become an expedient and available means of procuring and retailing goods and services. The proliferation of e-commerce in the market has impacted traditional retail businesses through increased competition, shifts in consumer behavior, and changes in supply chain logistics.
Competition
The emergence and continued expansion of e-commerce has transformed the retail sector, changing the competitive landscape. For example, by 2020, e-commerce accounted for 15.7 percent of all retail sales in the United States (US), a considerable increase from 4.2 percent in 2010, with online grocery accounting for 10 percent of total food sales and expected to reach 21.5 percent by 2025.1 The convenience and accessibility of e-commerce make it less time-consuming and have a global reach facilitated by the Internet, attracting many consumers. As a result, traditional retail businesses have declined in popularity, rendering them less competitive than e-commerce due to their growing unreliability with the fast-changing customer demands.
1. Brian An and Jamie Chung, “Who Bears the Brunt of Disruptive Innovation? The Effect of Grocery E-Commerce on Local Retail Competitors,” SSRN, (2023): 1, https://doi.org/10.2139/ssrn.4412867.
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The Shift in Consumer Behavior
The proliferation of mobile devices, increased Internet usage, and technological improvements have all shaped consumer behavior in buying goods and services. As more everyday activities, such as banking, education, business meetings, and social connection, are done online, consumers are becoming more tolerant of Internet shopping and forgoing the in-store experience’s physical interaction.2 Online shopping allows customers to search for and purchase things at their preferred place, from anywhere and at any moment, having proper convenience, personalized experiences, seamless transactions, and online deliveries. Consequently, e-commerce has eliminated the need to have direct contact with the store, denying traditional retail shops a significant segment of the market, especially the youth population, who find it easier to buy over the Internet.
2. Travis Tokar, Robert Jensen, and Brent D. Williams, “A Guide to the Seen Costs and UnseenBenefits of E-Commerce,” Business Horizons 64, no. 3 (2021): 324, https://doi.org/10.1016/j.bushor.2021.01.002.
Change in Supply Chain Logistics
Retailers are facing logistical issues due to the growth of e-commerce, especially regarding order fulfillment and last-mile shipping and delivery, with many firms being forced to transition to business-to-business (B2B) e-commerce supply chain system integration. Organizations have seen a major digitalization of information sharing between clients and suppliers during the past ten years, with online marketplaces and various digital transactions becoming widespread.3 E-commerce has been used considerably in efficient storage, inventory management, and fulfillment centers to meet customer expectations for speedy and dependable shipment, which takes traditional retail firms time to fast-track and deliver goods reliably. Thus, the entry of e-commerce and the integration of digital systems in procurement and ordering has evolved supply chain management, dramatically affecting traditional retail businesses that use routine strategies, which are unfavorable to consumers who need fast and reliable services.
3. Richard W. Monroe and Paul T. Barrett, “The Evolving B2B E-Commerce and Supply Chain Management: A Chronological Mémoire,” Journal of Business & Management 25, no. 1 (2019): 50, https://doi.org/ 10.6347/JBM.201903_25 (1).0003.
Conclusion
Traditional retail firms have been impacted by increased competition, shifts in consumer behavior, and changes in supply chain logistics in the sector. The increased use of the Internet, especially among younger generations, has advanced the capacity of e-commerce in wedging out retail businesses. As a result, e-commerce has changed industries, challenged traditional shopping, and created exciting possibilities for consumers over the last ten years.
Bibliography
An, Brian, and Jamie Chung. “Who Bears the Brunt of Disruptive Innovation? The Effect of Grocery E-Commerce on Local Retail Competitors.” SSRN, (2023): 1-45. https://doi.org/10.2139/ssrn.4412867.
Monroe, Richard W., and Paul T. Barrett. “The Evolving B2B E-Commerce and Supply Chain Management: A Chronological Mémoire.” Journal of Business & Management 25, no. 1 (2019): 1-102. https://doi.org/ 10.6347/JBM.201903_25 (1).0003.
Tokar, Travis, Robert Jensen, and Brent D. Williams. “A Guide to the Seen Costs and UnseenBenefits of E-Commerce.” Business Horizons 64, no. 3 (2021): 323–332. https://doi.org/10.1016/j.bushor.2021.01.002.