New technologies give rise to new behaviors, customs, and eventually, cultures; the life of human beings pre-industrial revolution bearing little more than passing resemblance to lifestyles of today. Due to the rapidity of progress in recent years, habits and trends often baffle and perplex the businesses that once led them, and who now must adapt or fade away.
Perhaps the largest paradigm shift has been the move from retail to e-tail, which could be described as an alteration of the buying process as opposed to merely what is bought. With any such reorganization, there will be pros and cons, winners and losers, and opportunities both lost and discovered.
In 2015, for the first time, consumers were found to be making more purchases online than in store. With much of the data suggesting that this trend will continue, there are some serious consequences to consider.
A new type of criminal and a new economic drain
A move toward digital marketplaces naturally presents opportunities to cybercriminals. Troubling data from Couponbox suggests that phishing scams and fake apps are among the most common types of cybercrime. But the total losses to the US economy resulting from such activities extend beyond trouble caused to the consumer. Comparisons have been drawn between the total cost of cyber crime – between a few and $100 billion – and that of all car accidents – $99 billion – with the argument that such is a tolerable cost against the benefits. This may be the case, but it is certainly not a position to be reached without thought.
The digital marketplace favors brands, and perhaps caution
Writing for the Chicago Tribune, consumer psychologist Philip Graves explains that, online, familiar brands are likely to outperform new or less recognizable products. The reason being, of course, that consumers are wary of having to organize the return of unwanted purchases via post – which is more likely to occur when the product is unfamiliar. In theory, this means that business owners can leverage their channels accordingly: promoting branded items and those people are likely to buy more than once online, and promoting their new or more daring products as in-store purchases. However, as malls and business premises close and more and more consumers choose the online option, the digital marketplace may present problems for small or unique businesses, with consumers being unwilling to take the risk.
The convenience economy could take a hit
Though the main demographics of companies such as Starbucks are workers, shoppers also factor in. Contemporarily, many products and services exist to cater for time-poor, cash-rich individuals – those who want a taste of luxury on the move, but who do not have the time to prepare complex iced coffees or artisanal baked goods. If consumers continue to shop online as opposed to in person, the businesses that rely on heavy footfall through malls, main streets, and physical spaces may find their models in need of reevaluation.
On balance, the trend toward online buying seems too early to diagnose as either worrisome or beneficial – it is certainly both in some respects. The test, ultimately, will fall to individuals and businesses: whether they adapt and prosper or become obsolete.
Image credit: CC by gdsteam