Is e-commerce in crisis?

The last few months have been a difficult time for high street traders. Big-name chains including Blockbuster and HMV have suffered high-profile financial trouble, and bricks-and-mortar retail sales have come under intense pressure from a combination of changing consumer habits and sluggish demand. However, you might not have noticed that there are some pundits warning of a crisis in e-commerce. So what’s the reality?

Although the inexorable rise of e-commerce has been trumpeted by retailers, industry groups and analysts alike, there are those who warn that the online retail model is itself flawed. Browsing around the internet, I found an intriguing article on the topic making a rather controversial argument. Writing for Wired.co.uk, Graham Cooke expresses concern about profit margins and conversion rates, which he warns are already low and trending in the wrong direction. He argues that the prevailing orthodoxy – which argues that the high street is steadily being usurped by online – is overly simplistic, and that there are structural problems facing e-commerce which need to be resolved.

However, his analysis isn’t totally negative and he goes on to outline what online retailers have to do in order to prosper. He says the remaining success stories on the high street have adapted to their customers’ needs by personalising the retail experience – and advises online retailers that they need to do likewise. He suggests that e-retailers are overly reliant on analytical data, but warns that this tells us little about what individual customers are looking for from the online shopping experience.

I also found another piece shedding a little more light on the topic. In an article for Guardian Media Network, Brian Hume and Lee Gill note that as online retailers often have a wealth of data about customers, this could be put to more effective use. They say that firms which develop a consumer-focused multichannel retail offering are most likely to prosper, and argue that in the coming e-commerce battle, it’s the most flexible e-retailers which really stand to gain.

It seems, then, that while talk of a full-blown e-commerce crisis might well be overblown, the survival of the smartest is the order of the day. It’s also worth remembering that the much-vaunted crisis of the high street needn’t necessarily be terminal. In fact, with services such as click-and-collect and the appearance of temporary pop-up shops, bricks-and-mortar and online retail are converging in intriguing new ways.

What do you think the future holds for e-commerce? Will it continue to usurp the traditional high street model? Get involved in the debate by posting a comment below.

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