Thursday, November 30, 2017

How does Online Shopping affect Physical Stores?

How does Online Shopping affect Physical Stores?
Hailey Johnson

As using technology in today’s society has become extremely prevalent, the use of online shopping compared to in-store shopping has increased more than ever. This means that certain retail stores could shut-down if their revenue is only covering their total variable costs. Already, it is easy to see how online shopping can have a negative effect on in-store shopping; however, from the consumer’s eyes, the opportunity cost of online shopping just may be less than taking the time to shop in-store.
While there are many benefits to in-store shopping such as getting your item immediately or asking for opinions from others, there are significant barriers to entry, which may include real-estate costs, staff, and more. This means it can be difficult for a brick and mortar retail location to stay in business if online stores become a prominent choice of consumers. In addition to that, there are fixed costs as well as variable costs that must be covered. While both retail models will have their own set of costs, the physical stores will most likely have more to deal with. This can include the space in which the business operates in, weekly payroll, and the sales commision for example (A Guide). If the in-store owners are not making enough profit due to their competitors however (which in this case are the online stores), they will most-likely shut-down. For example, according to Fox Business, “the children’s clothing retail said it will close hundreds of store locations by 2020 as part of a shift toward digital commerce” (Retail).
Based off of this research, there are many reasons why online shopping can affect brick and mortar retail operations negatively, even though online shopping has significant benefits. Though ultimately, because online shopping is so accessible in today’s society, this might cause for more shopping in the digital world, instead of the real world.











Works Cited

Barrabi, Thomas. “Retail Apocalypse: 21 Big Retailers Closing Stores in 2017.” Fox Business, Fox Business, 19 Sept. 2017, www.foxbusiness.com/features/2017/09/19/retail-apocalypse-20-big-retailers-closing-stores-in-2017.html.

Peavler, Rosemary. “A Guide to Fixed and Variable Costs Doing Business.” The Balance, The Balance, www.thebalance.com/a-guide-to-fixed-and-variable-costs-of-doing-business-393479.

S, Anamika. “Top 10 Benefits of Online Shopping That Make Your Life Easy.” ToughNickel, ToughNickel, 13 June 2017, toughnickel.com/frugal-living/Online-shopping-sites-benefits.

24 comments:

  1. I agree that online shopping has caused many stores to have to shut down. Online stores such as Amazon allow customers to purchase just about any item they can think of and have it be shipped right to their front door. Amazon also offers fast shipping and easy returns, which can be part of the reason why customers would choose Amazon over an actual store.

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  2. I do agree that as technology is advancing in today's world and is causing us humans to want to "stay in" and not go to stores and just buy our wanted products online. It saves time and as stated in the blog post "opportunity cost of online shopping just may be less than taking the time to shop in-store". Although there may be an opportunity cost to online shopping, there is also shipping and handling which makes the product or products you purchase cost more due to the more amount of money you are spending to have it be delivered. So staying in your homes ordering your wanted product may be inefficient as it could cost you more money. Although, I do agree that online shopping is growing in popularity and could cause issues for all types of stores.

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  3. I thought that this was really insightful but I think it would be interesting to see what kind of effect credit/debit card theft will increase. This has already been an issue but with an increase in online shopping it might become difficult for credit card companies to keep track of everyone if there is less and less in store shopping. I think that with an increase in online shopping there will be an increase in demand in credit fraud and ultimately bring the demand for online shopping back down to where it used to be.

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  4. Brick and mortar stores have been relevant for a very long time, and were the only source of purchasing products before online stores came into the market. The internet has taken over many sources of business and have been advancing the markets overall. While this may seem like a downfall for physical businesses, it is only opening doors to success. Online shopping allows there to be less expenses incurred to each business as they do not have to pay for a physical location. Additionally I am an online shopper myself, as it makes it much easier since you don't have to go out and all the products are right at your fingertips. If these stores take the earlier initiative to open online stores, they will set their business up for success.

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  5. I knew a bit about how online stores were hurting physical stores, but this post provided a deeper understanding of the subject. I found the graphic quite informative, it provided some shocking information. It seems like the battle between the online stores and the physical stores is quite one sided, because the online stores suit today's consumers much better than physical ones.

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  6. I find it interesting how nowadays people have become so accustomed to online shopping not only for clothes and gifts, but as well as groceries. Many say that it is so much easy to just order everything online because it takes less time, personally I think the majority of the time it is just due to pure laziness. And due to the preferences of consumers who rather get their shopping done online, i is causing businesses revenues to decrease because people aren't physically going into stores as much anymore.

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    Replies
    1. I agree that it is causing business revenues decrease, due to online goods generally being bought off a place like Amazon instead of a store's website, and that we just don't want to go out from being lazy.

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  7. I think you make an excellent point as to aspects consumers can never really see. I never thought of how much online shopping can affect physical store, most notably as you mentioned with space and payroll. I think this trend will only continue on and increase in impact as more and more people each day will turn to technological shopping over physically, given the abundance of available resources on line and ways to still obtain purchased items in quick fashion.

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  8. I like how you mentioned the various barriers to entry for a traditional shop, and I wonder if it would be just as difficult to start or transition to an online shop. While buying a URL isn't comparable to renting a location, creating an functioning and well-designed site definitely is expensive. Older online shopping sites such as Amazon often have the upper hand in pricing because they have such a large database for price matching. Furthermore, newer online websites may not be able to offer the popular free shipping and free return features.

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  9. I Think that it is very interesting how stores are primarily online now. However I think clothing will remain in retail as sizing items can be difficult if you cant try them on.

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  10. It is very interesting to know that so many people shop online on regular days and on black Friday that no one goes to malls to shop. Online shopping is very accessible that no one wants to go to malls and wait in long lines during black Friday. A way to make sure that stores don’t get closed should be that there should be more sales in the stores than online. This way many people will go to stores to shop and the malls will not shut down or go out of business. Having more sales in the store will also increase the consumers spending, which will help the economy grow.

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  11. Unfortunately it does appear that online business is driving people away from the physicallities in life. Online shopping may be more convienient and sometimes cheaper although being able to walk into a storefront is something that cannot be taken away by technology. Looking at Blockbuster for example, Netflix may have killed it but the nostalgia surrounding the act of walking into a store, looking at movies, talking to the clerk, and renting a VCR or CD is something that online services cannot replace.

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  12. Yes stores have closed down due to other stores going online. This is due to that the now closed stores didn't take the opportunity to go online and start shipping items. Some people do not have the luxury to travel across the world to pick up a handmade item that only exists is a distant place. This world is an online world if stores do not convert they will slowly perish.

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  13. Even though some may say that online stores are not good and beneficial to society, I feel a different way. The online stores make it much easier for consumers to purchase things that they may not actually go out to buy. Also, I think you tend to spend more money online, because you don't actually have to go out, and get tired quickly. This means that online stores like Etsy, Amazon and Ebay have a very high increase in business.You made some great points, and the content was very easy to understand.

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  14. This is a very interesting topic that I've never really thought about before. If we as a society could replace movie stores like Blockbuster with Netflix, what's stopping us from doing the same thing with stores? Additionally, most people are home bodies and would rather get new clothes from the comfort of their homes than go out to the mall and search for them in the stores. The only benefit of actually going out to the store would be having the opportunity to try the clothing item on before purchasing it; however, most online stores easily allow customers to return or exchange items that don't fit.

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  15. It's interesting to see how online shopping gets more popular year after year, and most don't think about its extreme affect on in-store shopping. Most would agree that online shopping is much easier than going to a traditional store. However, I believe that the benefits definitely outweigh the costs for companies. Yes, there may be a decline in physical shoppers coming into their stores, but the sales made for the company online are major and important to their success.

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  16. I can see why online shopping has become relevant since it is just more convenient for users. They don't have to go through the trouble of driving out to the store, sitting in traffic, and burning gas money. They can shopping in the comfort of their home and have all of the products you need at your fingertips. However there can still be some flaws in the online shopping process. For example, you don't have the luxury of trying on the clothing (if that is what your into) and the product might look different in person rather than how it looks online. These factors could be few reasons why shopping in person is still relevant.

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  17. I think that its crazy how now a days a lot of people don't go to the store.On one hand it's more convenient because you don't have to waste time going to the store when you can just have someone to deliver it to you. This is very interesting because it's something you don't think can be come a problem with the actual store.This is also something I don't see slowing down because more and more people will get accustomed to shopping online.

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  18. I agree that increased online shopping could have a negative externalities on stores. However, this also could have positive externalities by allowing the store to hire less employees. There would still be a source of revenue online, yet some of the overhead and in-store costs could be eliminated. In addition, online retailers don’t have geographic constraints and they can allow many customers from all over the world to buy their products, increasing revenue. However, this might hurt different businesses in shopping centers such as restaurants that rely on shoppers coming in to buy their food for breakfast/lunch/dinner in-between shopping. In addition, people who work in stores may be laid off as the need for in-store service decreases. For example, many movie stores were put out of business as they couldn’t compete with online resources, such as Netflix.

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  19. I agree with you that people are starting to do more online shopping rather than physically going into the stores. It is interesting how you say that some stores may actually shut down because people have become accustomed to online shopping. I also think that it is like this now because people are lazy, and don’t want to have to physically drive to the stores to get what they want or need, since it is right on their phone or computer, they can just click a few buttons and their item will arrive in about 5 days. Especially around this time of year, there isn’t always a free weekend where people can just go to the store to shop for gifts, and especially during Black Friday time, how Cyber Monday has now become very popular. When I went Black Friday shopping, there weren’t a lot of people there, because they could just get the deals online 3 days later. Good topic!

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  20. Great points here. But with a boost in online sales, the warehouses and distribution centers along with parcel services like UPS & FedEx would need more people to keep moving packages to the consumers. Also, as the online shopping presence grows, the websites may need more IT staff to keep the site online and to prevent server crashes from too much traffic.

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  21. Although the popularity of the iPhone X is not very shocking, I was surprised that they had a supply shortage. Because there is such high demand for the iPhone X, Apple will most likely continue to increase prices in later products. In addition, I believe that less people are buying the iPhone 8/8+ because they are either saving up in hopes of purchasing the iPhone X or just don’t want one. Overall, you did a good job relating the iPhone X to the economy. Seeing as how they are making a large profit, a good percentage of that will go back into the economic flow.

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  22. I agree with your stance on the future of online shopping and I think that this topic is really relevant since it's the holiday shopping season. When I went black Friday shopping a week ago, even though I went at a less popular time (10:00 a.m.), I noticed how many less people there were compared to the past years when I went. However, in the mail I received deals that were only valid in store. This way, the stores were able to get more consumers into their brick and mortar store instead of online shopping.

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  23. I agree that online shopping is going to have tremendous effects on the future of physical stores selling goods in the future. As most people nowadays are busier than ever, and are more inclined to pursue more efficient uses of their time then dropping everything and driving to a store, online shopping is sure to, in my view succeed greatly as it continues to grow. While I doubt that online giants like Amazon or eBay will put out most stores in the long-run, I do believe that existing stores are going to have to formulate creative ways to compete with convenience services like the two previous companies mentioned.

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