The advantages of bricks and mortar in an online world
Foremski's Take: The technology for a full-featured online e-commerce platform is easily accessible and is becoming less expensive. Bricks and mortar retailers have something their online rivals cannot access easily or cheaply.
Online retailers have been thriving for many years, helped by sales tax exemptions in their early years, and then bolstered with their own advanced technologies of commerce. Traditional bricks & mortar retailers have struggled but times are changing.
A well capitalized online retailer, with a great user interface, and petabytes of customer data, can enter new markets, and new geographies very quickly. It still needs to build out a logistics infrastructure of warehouses, etc – but it won't need to scout for physical retail locations, build or rent stores, then equip and staff those locations. It's a lot of people to manage as opposed to managing software engineers and server farms.
So far so good for the online retailers but is their advantage becoming whittled away? There's a lot of advanced Cloud IT available and e-commerce technologies that can be bought as a service – and which are certainly comparable with the tech that the online retailers use to build their revenues.
Surely, it is the bricks and mortar retailers that now hold an advantage: it is difficult to challenge them by building rival stores but it is easy for them to challenge online retailers because of their access to advanced IT and implement it very quickly.
Jedidiah Yueh, Founder of Delphix (I used to work there) in his book "Disrupt or Die" makes the point that technology is no longer a key factor for a successful business because the tech is easily available to all. The differentiator is innovation – and tech is how that business process is automated and supported.
For bricks and mortar retailers, their most valuable asset is their bricks and mortar, or the physical infrastructure and human resources expertise to keep it all humming.
By adopting a micro-services IT approach and with heavy use of Cloud IT services, traditional retailers can bring in new tech at their own pace. And they have another advantage: they don't have to develop their own specialist commerce technologies or employ large numbers of expensive software engineers.
Traditional retailers can access advanced IT that is maintained by other people's software engineers, who are busy adding new capabilities and chasing down bugs.
I recently spoke with Toshiba Global Commerce Solutions, which is helping traditional retailers greatly expand their online channels and boost their e-commerce with flexible Cloud-based microservices and API-driven IT architecture. The ELERA platform integrates traditional store checkouts with online checkouts and payments systems.
A flexible IT architecture allows retailers to quickly test innovative ideas and either quickly fail or quickly scale up across their network.
Traditional retailers have built up a lot of trust in their communities and there are plenty of consumers who like to shop at a store and take a look at products in a physical way. Stores have become important retail showcases and they also are able to quickly supply same-day pickup for key items.
Stores are another way for retailers to provide human contact, essentially an ambassador which can greatly improve the customer experience and their loyalty. After all, it's easy to click away from a website – it's not easy to drive 10 miles to a rival store.
The online world needs bricks and mortar retailers – the commercial advantages are shifting. The writing is on the wall, imho.