Last week, a delivery truck pulled up in my driveway. As the rear door rolled up, I saw the truck was full of Amazon parcels, including one for me. Between the four of us that live in our house, we have at least one online purchase delivered each week. When compared to the total retail spending we do, perhaps that’s not all that significant, but it’s a heck of a lot more than we used to spend.
We are a microcosm of a much bigger behavioral trend. A recent Mediapost article by Jack Loechner reported that online retail grew by 15.6% last year and represents 11.7% of total retail sales. An IRI report shows similar trends in consumer packaged goods. In 2015, ecommerce represented just 1.5% of all consumer packaged good sales, but they project that to climb to 10% in 2022. In fueling that increase, Amazon is not only leading the pack, but also dominating it to an awe-inspiring extent. Between 2010 and last year, Amazon’s sales in North America quintupled -- from $16 billion to $80 billion. Hence all those packages in the back of the afore-mentioned truck.
Now, maybe all this still represents “small potatoes” in the total world of retail, but I think we’re getting close to an inflection point. We are fundamentally changing how we think of shopping -- and once we let that demon out of the box (or bubble-wrapped envelope) there is no stuffing it back.
In the nascent days of online shopping, way back in 2001, an academic study looked at the experience of shopping online. The authors, Childers, Carr, Peck and Carson, divided the experience into two aspects: hedonic and utilitarian. I’ll deal with both in that order.
First of all, the hedonic side of shopping: the touchy, feely joy of buying stuff. It’s mainly the hedonic aspects that purportedly hold up the shaky foundations of all those bricks-and-mortar stores. And I wonder: Is that a generational thing? People of my generation and older still seem to like a little retail therapy now and again. But for my daughters, the act of physically shopping is generally a pain in the ass. If they can get what they want online, they’ll do so in the click of a OneClick button. They’ll visit a mall only if they have to.
In an article early this year in The Atlantic, Derek Thompson detailed the decimation of traditional retail. Mall visits declined 50% between 2010 and 2013, according to the real-estate research firm Cushman and Wakefield, and they've kept falling every year since. Retailers are declaring bankruptcy at alarming rates. Thompson points the finger at online shopping, but adds a little more context. Maybe the reason bricks and mortar retail is bleeding so badly is that it represents an experience that is no longer appealing. A quote from that article raises an interesting point: “ ‘What experience will reliably deliver the most popular Instagram post?’—really drive the behavior of people ages 13 and up. This is a big deal for malls, says Barbara Byrne Denham, a senior economist at Reis, a real-estate analytics firm.”
Malls were designed to provide an experiencem to the point of ludicrous overkill in megamalls like Canada’s West Edmonton Mall or Minnesota’s Mall of America. But increasingly, those aren’t the experiences we’re looking for. We’re still hedonistic, but our hedonism has developed a different flavor. Things like travel and dining out with friends are booming, especially with younger generations. As Denham points out, our social barometers are not determined so much by what we have as by what we’re doing and the people we’re doing it with. Social proof of such things is just one quick post away.
Now let’s deal with the utilitarian aspects of shopping. According to a recent Harris Poll, the three most popular categories for online shopping are:
1 – Clothing and Shoes
2 – Beauty and Personal Care Products
3 – Food Items
Personally, when I look at the things I’ve recently ordered online, they include:
-- A barbecue
-- Storage shelves
-- Water filters for my refrigerator
-- A pair of sports headphones
-- Cycling accessories
I ordered these things online because either:
-- They were heavy and I didn’t want the hassle of dragging them home from the store; and/or,
-- They probably wouldn’t have what I was looking for at any stores in my area.
But even if we look beyond these two very good reasons to buy online, e-tail is just that much easier. It’s generally cheaper, faster and more convenient. We have a long, long tail of things to look for, the advantage of objective reviews to help filter our buying, and an average shopping trip duration of just a few minutes -- start to finish -- as opposed to a few hours or half a day. Finally, we don’t have to contend with assholes in the parking lot.
Online already wins on almost every aspect, and the delta of “surprise and delight” is just going to keep getting bigger. Mobile devices untether buying from the desktop, so we can do it any place, any time. Voice commands can save our tender fingertips from unnecessary typing and clicking. Storefronts continue to get better as online retailers run bushels of UX tests to continually tweak the buying journey.
What’s that you say? “There are just some things that you have to see and touch before you buy”? Perhaps, although I personally remain unconvinced about the need for tactile feedback when shopping. People are buying cars online -- and if ever there was a candidate for hedonism, it’s an automobile.
But let’s say you’re right. I already wrote about how Amazon is changing the brick-and-mortar retail game. But Derek Thompson casts his crystal-ball gazing even further into the future when he speculates on what autonomous vehicles might do for retail: “Once autonomous vehicles are cheap, safe, and plentiful, retail and logistics companies could buy up millions, seeing that cars can be stores and streets are the ultimate real estate. In fact, self-driving cars could make shopping space nearly obsolete in some areas.”
Maybe you should buy some shares in Amazon, if you haven’t already. P.S. You can buy them online.