Do Online Sales Take Away From Stores?

An article in the San Jose Mercury News brings up a point we often wonder about. Are online sales less desirable for retailers than transactions in stores?

According to a Forrester study, Internet sales are forecast to grow 17% this year, hitting $204 billion. It is a large increase, but slightly down from the 21% gain, and $175-billion total retailers collected in 2007.

The article has conflicting views on that matter. One person interviewed says that retailers prefer business done in their stores, while another says it doesn’t matter. Retailers just want you to shop with them, and they don’t care which channel you choose.

Many retailers, like Macy’s, have said that that their online divisions are the fastest-growing segments of their company, and that customers that shop both in stores and online spend more money. But are retailers making a mistake focusing their efforts online when they already spend so much capital on their physical stores?

4 Responses to “Do Online Sales Take Away From Stores?”

  1. 1 Nancy Hamel April 8, 2008 at 10:37 am

    Yes – I would say that online sales are definitely taking away sales from physical stores – but retailers would be suicidal not to increase their efforts to offer online sales. A recent Business Journal survey showed that the majority of consumers prefer shopping online to dealing with a sales person in a store, or a sales person on the phone. Even items that people intend to buy in-store can be looked up online to ensure you know exactly where to get exactly what you want. Plenty of people will still go into stores to try things on, or touch and feel the products they want to buy, but if that isn’t an issue online is the way to go. Many of the online retailers are offering great sale prices and free shipping, too, so it is a win-win for the consumer (even if you have to return something that doesn’t fit properly or isn’t what you expected). Macy’s is smart to focus their efforts on growing this aspect of their business.

  2. 2 Dale Davis April 9, 2008 at 10:03 am

    There are finite dollars to be spent from household income to purchase retail products. If the money is spent via internet purchases then the online stores have taken away from the bricks & sticks locale. However, retail sales overall have increased as a portion of household income, meaning that internet sales has given an opportunity for a small percentage of buyers to go shopping; that otherwise would not. IN the big picture, internet sales do compete with store locations; while increasing demand for goods overall.

  3. 3 Elbrus COnsulting April 10, 2008 at 11:23 am

    Online sales are more desirable, that’s a given. I know someone at Wal-mart cooperate and they would prefer if all customers would buy online. Benefits for reatilers to sell online as follows:

    – Items aren’t stole off the shelves online.
    – The item is only handled after someone buys it.
    – You can carry much more online than you can in a finite space in the store.
    – you can test an item online before “Stocking” it in a store.
    – warehousing space is much cheaper per square foot and efficient for the internet shipped goods than the small warehouse of a retail store.
    – I could go on & on here.

    Elbrus Consulting

  4. 4 DrunknMunky April 28, 2008 at 3:11 pm

    I don’t think online retailers hurt stores too much. Mnay of the online sellers offer products not availabe at retail locations anyways.

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