Great Debate: Is e-commerce killing brick and mortar?

Moderated by Lawrence Dignan | December 5, 2011 -- 07:00 GMT (23:00 PST)

Summary: Jason Perlow sees clicks killing bricks. David Gewirtz says the brick-and-mortar shopping spirit will remain alive and well.

Jason Perlow

Jason Perlow

Yes, clicks rule

or

No, bricks live

David Gewirtz

David Gewirtz

Best Argument: Yes, clicks rule

Closing Statements

It's merely a question of when

Jason Perlow

It's not a question of "will" retail Brick and Mortar die, but "when". For certain types of businesses, it will happen faster than others.

Only the biggest and most powerful and most efficient retailers -- such as Wal-Mart, Best Buy, Target, and Costco --
will survive the culling. So in the future there may not be as much choice for comparison shopping in Brick and Mortar, especially if these powerful chains, or companies like Amazon, end up owning much of the electronic shopping real estate as well, or end up controlling the channel for smaller distributors of specialty goods.

For durable goods with lots of reviews, which are not highly specialized and aren't as susceptible to the sensual experience in order to make a convincing buy, customers are going to move to online sales much sooner rather than later.

All of this depends how quickly the enabling technologies mature and how much they cost. Technology is certainly moving extremely fast in this area and it is difficult to predict when this retail transformation to a largely online-based model is going to occur.

For the middle class it will very likely happen a lot faster than for the working class, since they will easier be able to afford the enabling technology. But eventually, everyone will prefer to shop online.

Change is always in the air

David Gewirtz

There's no doubt that change is in the air. Change is always in the air. That means that some retailers will go out of business, some will flourish, and we'll even see new players enter the market.

The online commerce world is tapping into the needs of consumers, but it, too, is at risk. For example, while UPS and FedEx can shoulder much of the delivery burden, so too must the very beleaguered US Postal Service. While huge sellers like Amazon can shoulder increases in shipping costs, most small e-commerce vendors can't.

And there's the rub. Even in e-commerce, there's a shake-out. Free shipping programs like Amazon Prime effectively sideline many smaller sellers, or send them into the somewhat unreliable arms of "fulfilled by Amazon."

There are good and timeless reasons to shop retail, from the need for goods today, to the desire to handle, see, and touch a product, to the desire to validate that what you're buying is what is actually being represented as for sale, to validating quality personally, to the inability to reliably get packages, to the desire to not spend on shipping, to the difficulty in surviving the individual package shipping process, to the increasing problem of poorly packed products -- and so on.

Jason is right that clicks will grow. I, personally, buy far more online than in person. But I'm relatively affluent, and when I don't want to go into a store, my wife is willing to put up with the crowds and lines.

I do have to caution that most affluent and even moderately affluent people have no real picture of what the poor in America are dealing with. The more we integrate e-commerce into our daily lives, the more we leave those people behind.

If China can push many of its formerly impoverished citizens into the middle class, so can we. And once we do, they, too, can shop at retailers like WalMart and Target, buy from Amazon and Apple, and bring pepper spray to an Xbox sale.

It's the circle of life and it's a beautiful, beautiful thing.

Perlow wins

Lawrence Dignan

This debate was lopsided in Jason Perlow's favor. I went into the debate skeptical that e-commerce would trump physical retail, but Perlow almost convinced me. Jason is the winner hands down given his solid arguments for his side.

Brick-and-mortar shopping spirit will remain alive and wellIN PARTNERSHIP WITH Ricoh

David Gewirtz: No, e-commerce is not killing brick-and-mortar. Changing business models are hurting some retailers, while others are thriving.

This is not new. For more than a century, retailers have had to change with the times or lose their customer base. Whether it was the big fight in the early and mid-20th century against chain stores (there was actual legislation), or the cries in the later 20th century against so-called Big Box stores and WalMart, or the backlash against online music distribution and Amazon-like e-commerce, there's always been change and pushback by those threatened by change.

As long as there are pepper-sprayin' mamas willing to dive head first into crowds of WalMart shoppers in order to score cheap XBox 360s, the full-contact, hands-on, brick-and-mortar shopping spirit will remain alive and well.

 

Talkback

115 comments
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  • RE: Great Debate: Is e-commerce killing brick and mortar?

    For those who want things now instead of waiting for shipping, the bricks will always rule.
    dch48
    Reply Vote I'm for No, bricks live
    • RE: Great Debate: Is e-commerce killing brick and mortar?

      @dch48 I agree with that. If my fridge, TV or any other electronic equipment breaks - I have no time to wait 3-5 days for any shipment.
      Additionally, that are things that I want to see inspect, check the box and content, maybe check how it works and that can't be done online.
      Brick and mortal can win me over with sales, price drops, etc - everything they sell is made in china and the wholesale price is less than 50% of MSRP, I am sure. If the store can drop the price by 50-60% for Thanksgiving, they have a lot of room to play with.
      Fact - my husband's employer makes a product that is sold to Walmart for xx and Walmart sells that product 5x the wholesale price.
      Online stores will win as long as their selling price plus shipping and plus tax is lower than brick and mortal store - we all know that that is a very common thing and has nothing to do with "sales tax savings" like some of comments suggested. If I can buy something for $50 plus tax in local store or buy it online for $30 including shipping - sales tax has nothing to do with it. It is simple rip off by a local store.
      t2005
      Reply Vote I'm for No, bricks live
    • Agree!!

      @dch48
      I do the majority of my comparison shopping at brick and mortar stores - then shop online and compare all for the best price, best warranty, AND the best return policy (some stores have gotten really bad).

      This is from a person who does the majority of my shopping online (outside fo food staples)........

      Once I find what, it is all about the money.
      rhonin
      Reply Vote I'm for No, bricks live
  • There is a need for both.

    If I'm buying something like a CPU or motherboard, then I'm making my selection based on reviews, benchmarks, the manufacturer's reputation etc and online is fine. But for things like shoes or clothing I want to actually see the item first and try it on.

    Even with things like computer components there is room for both. A great example is Mircocenter. If you are fortunate enough to live near one you know that on many items they equal or beat the top online stores.

    But....lets not forget the sales tax boogy man. Right now, If I go to my local Microcenter, I'm gong to have to pay sales tax. But if I order online, I don't (usually) pay sales tax but do often (but not always) pay shipping charges. If certain politicians win out and we have to start paying sales tax online too, then online stores are going to be faced with both shipping costs and sales tax too. This may change the overall balance.
    cornpie
    Reply Vote I'm for No, bricks live
    • RE: Great Debate: Is e-commerce killing brick and mortar?

      @cornpie Just to be clear...the only reason politicians are pushing to force online retailers to collect tax is because consumers have been using online shopping to avoid sales tax--something they can't do at a brick and mortar shop. And by "avoid" I mean consumers are not paying sales tax directly to their State as they are required to do for any qualifying untaxed purchases made online. Consumers like to spin this as "saving on taxes."<br><br>To put it plainly, they've been evading taxes for years whether they like to believe it or not. Much the same as digital piracy it's illegal...it just doesn't feel like it.<br><br>Of course at the moment this doesn't apply to folks living here in NH or AK, MT, OR and DE where there is no sales tax.<br><br>While I have no evidence to support it, I suspect a significant portion of the online price advantage is attributable to the fact that the online retailers aren't burdened by tax administration outside their home States. Once tax administration is required across the board we'll likely see the "tax savings" evaporate as well as some of the difference in sticker prices.
      josephmartins
      Reply Vote I'm for No, bricks live
      • RE: Great Debate: Is e-commerce killing brick and mortar?

        @josephmartins The thing that's absolutely wrong about efforts to collect sales tax is that states want to collect it for the state where the consumer lives, not the state where the goods are shipped from. Sales tax is supposed to support the infrastructure behind the transaction; police and fire, building and health inspection etc. None of that happens in the customer's home. It's all required where the store/warehouse facility is located. The only thing requiring government infrastructure support in the customer's state is transportation/delivery, and UPS, Fedex etc. already pay taxes to do business.

        Collect sales tax in the store/warehouse's state, absolutely. Collect sales tax in the customer's state, H*** NO.
        ellett
        Reply Vote I'm Undecided
      • RE: Great Debate: Is e-commerce killing brick and mortar?

        @josephmartins ANY avoidance of tax is honorable. The "sin" is sending more of our national treasury to DC. Just because "they" write laws to mandate their extortion, does not make it right. Fight taxation of internet commerce at every front and take advantage of not having those scoundrels shaking us down every time we purchase something.
        Scott HB
        Reply Vote I'm Undecided
      • RE: Great Debate: Is e-commerce killing brick and mortar?

        @Scott HB Sales tax is a state tax, not a federal tax. It doesn't go to DC.
        ellett
        Reply Vote I'm Undecided
      • RE: Great Debate: Is e-commerce killing brick and mortar?

        @josephmartins Personlly I am for anything that avoids any tax. Politians take far too much of our money for their benefit. I always look online first and see what the prices are. I am willing to wait a few days. Food and clothing are two things though I really think we need Brick and Morter for.
        nbkz81f
        Reply Vote I'm for No, bricks live
      • Interstate sales tax is a nightmare.

        @josephmartins Sales tax varies from state to state, to county, to city, even between neighborhoods is some cases. Washington State's Department of Revenue publishes a quarterly newsletter that summarizes the tax rates for all the counties and cities in the state - the table runs to three pages of 2-column text! If I buy from Costco.com, which is based in my home state, they'll charge me sales tax for their own city. But if I buy from an out-of-state retailer and WA insists on collecting their tax, that retailer in CA or NY or FL or wherever is expected to charge me the correct tax for my specific address? For every state and county? Constantly updated? And any error opens the retailer to a tax fraud prosecution? Just how complicated do we need to make this?
        kidtree
        Reply Vote I'm for No, bricks live