SHANGHAI • With growth in e-commerce sales tapering off after a decade of explosive expansion, experts say the move by Internet companies to combine their digital capabilities with brick-and-mortar businesses is a natural progression.
"Multi-channel sales, through both online and offline avenues, can definitely boost revenues faster," said Ms Quincy Zhou, a Beijing- based research director at iResearch Consulting. A huge part of retail consumption hinges on the shopping experience, and having physical stores can also solve the problems of warehousing, especially in the rural areas, she added.
But Shanghai-based business strategy professor Chen Weiru said these e-commerce players are not likely to opt for a big chain of physical stores. "Rather, it will be in the form of a limited number of stores to showcase their products, something like the Apple stores or Sony stores."
In fact, that seems to be the strategy American online retailer Amazon is adopting. It opened its first physical store in Seattle last November, and is set to add at least two more in two other major cities in the US this year. Other than selling books, it also acts as a showroom for its e-book devices.
Dr Chen predicts that brick-and-mortar businesses would start to offer online ordering and delivery services to broaden their appeal and compete head-on with e-commerce players.
"In the next two years, any business would have to have both the online and offline elements to survive," he added. Agreeing, Ms Zhou said she observes a trend of all companies becoming digital. "It's getting harder to label them as purely online or offline players."
Experts also noted that not everyone can enjoy a seamless integration of their online and offline offerings.
"Capabilities in the online and offline worlds are vastly different, and sometimes contradictory. So, the winner would be one who could do a good job integrating the two," said Dr Chen.
Chong Koh Ping