Will Retail Giants Change the Face of eCommerce?
Retail giants like Tesco and Asda are moving up a gear in their ecommerce operations. Should independent online retailers be worried?
Posted by Killian McAleese, 24th August 2011
We heard last week that retailer Tesco is rolling out an 'Amazon-style site' in January which, according to cheif executive Philip Clarke, will facilite the giant's move into non-food offerings such as clothing in their ecommerce operation. Should such online expansion, which for many other large retailers is becoming a primary means of survival in these tough times, be a concern for independent online retailers?
What History Says
Think about the model of your old-fashioned grocery shop, from the post-war years and to the current domination of retail giants. We had a plethora of local shops with friendly faces, first-name terms, delivery to your granny's kitchen shelf, and one of these on practically every street corner in every village in every county.
Then came a process whereby local business people began to be inspired by the modus operandi of their larger American counterparts, and the slow ousting of many of these grocery shops from their esteemed local positons began, and has never stopped since. The steady growth, amalgamation, the odd supermarket war, and ousting of various regional players was ever more securely combined with the desire for more choice, more parking, more bargains, and eventually the slick harnessing of data pertaining to it.
Sure, the odd innovative, organic, specialist Halal, Asian, vegetarian supermarket, or corner shop is a hit in every town, but times have changed and our supermarket situation is fundamentally different and indeed unrecognisable to the one familiar to earlier generations. And the giants have have never looked back.
But what's going on online? Ecommerce, as we all know, changes these rules considerably.
Laggards as some of them might well be, could the resources that supermarket giants have at their disposal amount eventually to a serious threat to independent, online retailers, as growing chains once did to locally owned businesses?
The internet, of course, doesn't know the boundaries and geographical limits of a single supermarket store. It's one of the beautiful aspects of online retail: the ability to sell with such a long arm (provided, of course, that your systems are capable of it). But while that means a much greater market to sell to, it doesn't mean a limitless one, nor does it guarantee a longer arm or a louder online voice than competitors, especially those with more capital.
This is where the problems may arise for independents. Could we see a similar pattern to that which occurred on the streets and corners, over the course of a couple of decades?
Possibly, but of course a supermarket giant can't exactly erect a massive online site in the same way they could an outlet or city centre superstore. Yes, a site can be an online hub which is often compared to a city, a train station or airport. But whatever happens, it still looks like that option will also be available to independents, if they stay smart.
But staying smart, and indeed smarter, while already of massive importance, will only become a stronger differentiator as time passes. That means smarter staff, smarter marketing, smarter systems.
The resources of supermarket giants are indeed something that should be a concern for independent online retailers, but a clever approach from the independent will, for the forseeable, be able to challenge them for plenty of their market share.
Or should we be more worried?
Is the eCommerce Bubble Bursting? 18th August 2011
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