It may be surprising to people who rarely leave their house and do all their shopping online, but there is a world out there and it has shops made of bricks and mortar.
And it’s still bigger than the online retail world. This may be the real shock for readers of this website, but from a conventional perspective, the new story is that online retailers are not only catching up with their real-world counterparts, but in some instances, surpassing them.
Amazon is significantly larger than Walmart in the online world. In fact, in what may come as another shock to some people at least, Amazon is now said by Business Insider to be bigger than all brick and mortar stores put together.
In the real world, however, Walmart is still bigger. But with Amazon’s purchase of Whole Foods Market and its 40 per cent reduction of prices, the balance is likely to change there as well.
Real-world stores still have their strengths and advantages so it’s unlikely they’ll disappear any time soon.
Most people would probably accept that buying clothes online is not quite as sensible as buying in an actual shop, perhaps after trying it on, or at least have a close look at it.
And Starbucks, the coffee seller, recently decided to shut down its online store to concentrate on mobile apps. Currently, 30 per cent of Starbucks’ orders in the US are paid for with mobile payments, according to Business Insider.
The growth of online retail has accelerated the growth of the logistics sector and some areas of the industrial real estate market.
But there’s a feeling that the market is still developing and has a long way to go.
It may also be worth keeping an eye on China, which has become an online retail giant, not just because it has the world’s largest population, but also because it has a good manufacturing and logistics base.
While many may deride its products, the reality is that going online ordering basic, functional items from China is much the same as ordering from anywhere else – half the time, people might not even know the product is coming from China.
China is one of the so-called BRICS countries – for Brazil, Russia, India, China and South Africa. And together, they are said to account for almost half of all online global retail sales, according to The Economic Times, of India.
Alibaba is probably the best known online e-commerce company outside Europe and North America, but Alibaba.com is a business-to-business website where you have to buy large quantities, not just single items.
Another example may be better.
LF Plaza – usually written as Lfplaza – is a luxury fashion retailer in China, or Hong Kong to be exact.
It was only established five years ago and it’s already done $38 million of business.
The company is now using Oracle Netsuite’s OneWorld application to manage its business.
NetSuite OneWorld powers end-to-end processes for LF Plaza’s sales of goods from more than 100 brands to a network of over 600 wholesale clients and about 40 regional multi-brand boutiques across Hong Kong, mainland China, Taiwan, Japan, South Korea, Singapore, Malaysia, Indonesia, Thailand and Vietnam.
Jack Tsao, LF Plaza CEO, says: “NetSuite forms the core backbone on which we’ve rapidly grown our business. We’ve been able to scale dramatically without adding too many staff. We’re very glad we started early with NetSuite as it gave us room to grow.”