Is E-Commerce Killing Brick and Mortar?

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Table of Contents

Introduction
Importance of the Topic
Interaction of Two Types of Retail
The Competition
Conclusion
Reflective Letter
Reference

Introduction

The topic of the discussion presented in this paper is the relationship between e-commerce and brick and mortar stores. Since the development of the Internet made a massive leap at the beginning of the 2000s, many areas and fields have experienced benefits due to this phenomenon. The Internet has become a powerful and extremely useful resource for all types of operations and businesses. One of the branches that enjoyed the most advantages was retail that, due to the technological leap, was transformed into e-commerce.

Due to the ubiquitous coverage of the Internet in many of the developed and developing countries in the world, the goods sold online are available to an enormous number of consumers. As a result, the retailers offering their products via the e-shopping platforms have a much larger base of customers than the brick and mortar stores. Consequently, the question arises whether or not e-commerce is putting brick and mortar stores out of business.

Importance of the Topic

The subject of the relationship between the brick and mortar retail and e-commerce has been the focus of attention of many economists and financial analysts. Even though brick and mortar stores have been the dominant way of retail for centuries, the technological progress of the 21st century has made radical changes; and due to that impact, the habitual retail is facing is powerful competition for the preferences of the consumers.

Both types of retail have their own advantages and disadvantages. For instance, e-commerce provides consumers with an opportunity to shop without leaving homes and access goods that cannot be found in the brick and mortar stores of their region. At the same time, brick and mortar stores provide a hands-on experience allowing the customers to touch the products, try on clothes, turn the pages of the books, feel the texture, and the material none of these experiences can be fulfilled by the online stores fully.

Interaction of Two Types of Retail

The competition of the brick and mortar stores and e-commerce creates and maintains the value of the dual-channel. In their article called Bricks-and-mortar vs. clicks-and-mortar: An equilibrium analysis, Bernstein, Song, and Zheng (2008) point out that assuming that the latter is more efficient means encouraging the former to switch to the online retail and decrease the dual-channel value. As the majority of the consumers are willing to touch and try on the goods before buying them, the online e-shops are viewed as the extensions of the brick and mortar franchises (Bernstein et al., 2008).

That way, switching to online retail would not be likely to bring advantages to the businesses but benefit the consumers alone (Bernstein et al., 2008). Overall, the study by Bernstein et al. (2008) views the interaction between the two types of retail as a competition that should not necessarily be perceived as rivalry where there can be just one winner. Instead, the authors discuss the subject viewing the relationship of brick and mortar and clicks-and-mortar as an equilibrium maintained by two forces with different natures and directions (Bernstein et al., 2008).

This study was chosen as the source of information for the paper because it explores the subject of interaction between e-commerce and the traditional retail in-depth. In particular, the authors focus on the investigation of the nature of this relationship in terms of competition, advantages, and disadvantages of the two types of retail, and the benefits each of the practices may offer to the buyers and the businesses.

Discussing the positive and negative aspects of the two types of retail, it is important to specify that switching to e-commerce seems beneficial for the retailers as they would obtain an opportunity to optimize the operations, reduce the transaction costs and, in turn, increase their productivity. This tendency looks like an advantage for the retailers, who would be able to sell more and gain larger profits. However, in practice, the increase in productivity leads to the decrease in prices and, accordingly, does not generate a higher income.

That way, the beneficial party is not the retailer, but the buyer. Another issue is the process of switching to e-commerce that is not always available as some retailers fail to maintain well-functioning Internet channels of their own and need to collaborate with the Internet counterparts in order to launch their second channel successfully. Finally, one more influential trend that needs to be mentioned in this discussion is the Millennials becoming the major consumer sector of the present days.

This tendency signifies that the new set of shopping habits is about to start dominating the retail industry namely, the Millennials love for extremely easy and fast service, low maintenance operations, quick delivery, and, of course, online shopping. In other words, many of the brick and mortar stores may be forced to switch to e-commerce or start their e-shops in order to attract the Millennials and satisfy their consumer needs.

The Competition

Currently, the competition between the e-commerce platforms and the brick and mortar stores is growing as the latter are gaining more popularity due to the entrance of the Millennials and their maturation as the full-scale consumers. Brick and mortar stores used to be safe from threats as long as the older generations dominated in the consumer sector as for them it was more habitual to buy from the offline retailers.

Today, the tendency is that the consumers are going to prefer shopping through the Internet, and therefore, force the retailers to move online and undergo all the challenges and inconveniences related to it (the creation and maintenance of the Internet channels, the search for the Internet retailers to work with, the restructuring of the supply chain, reorganization of the operations, and loss of profits).

The questions worth asking within this discussion involve the ways of avoiding the loss of profits due to the shift to the e-commerce channels. Is there such way? How could a retailer move their business online without losing revenue? What is more beneficial moving online and expanding the customer base or adjusting the brick and mortar store to attract more Millennials? Finally, one more question concerns the dynamics of businesses that operate two channels simultaneously how do the channels have one another? Does the brick and mortar shop help to promote the website, or it is the other way around?

Conclusion

To sum up, the discussion presented above demonstrates that even though the relationship between the traditional retail and e-commerce is often perceived as tension and rivalry. However, the study by Bernstein et al. (2008) emphasizes that currently, an equilibrium exists due to competition between the two channels indicating that neither of these differing modes of retail is gaining complete ascendency over the other one.

At the same time, the shifting perspectives and preferences of the consumers the majority of whom soon will belong to the Millennial generation demand that more brick and mortar retailers move their businesses online (either partly or fully). Although the new consumer behavior is likely to result in the transformation of the equilibrium between online and offline modes of retail, this pattern may be addressed through careful planning and adjustments of the brick and mortar businesses to match the needs of the customers.

Reflective Letter

Working on my paper, I completed my first draft attempting to follow the instructions precisely, and as a result, I ended up with the work that resembled a research paper and was divided into sections answering the requirements exactly. The peer review indicated that this approach produced a negative effect on the structure of the paper making it too rough and fragmented. The advice of the peer was that I remove the division.

I preferred to leave the headings within the paper, but changed them by moving them around and rewriting, so the paper was sectioned in a more comprehensive way. Also, the peer review provided extensive feedback as to the sections I could add or issues to address. I found the review extremely helpful and valuable. It also helped me detect some mechanical errors and clarify a couple sentences. The adjustments I made to the paper involved the addition of a detailed presentation of the scholarly source I used and a discussion of its ideas, arguments, and goals. Moreover, I provided a clearer conclusion explaining my point of view as to the question in the title to make my argument more comprehensive for the reader.

I highly appreciated the fact that the reviewer pointed out the strong sides of my paper and offered a constructive and exhaustive critique of my initial draft section by section taking into consideration the citations and grammar. I checked the rules of the APA style, and I am confident about my approach to the in-text citations. Also, I carefully proofread my final paper and made sure that all the mechanical errors were corrected.

Overall, working on the paper was a highly useful experience during which I was to conduct an online search for a suitable source, read the study and some additional information about it to familiarize myself with the current trends and tendencies. Also, after turning in my first draft I was provided with the critique of a reader which was vital for me to see the weak sides of my work and approach and adjust the paper accordingly. In my opinion, this assignment had many objectives all of which were achieved successfully. I appreciate the experience a lot.

Reference

Bernstein, F., Song, J., & Zheng, X. (2008). Bricks-and-mortar vs. clicks-and-mortar: An equilibrium analysis. European Journal of Operational Research, 187(3), 671690. Web.

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