Before you jump out of your seat, yelling at your computer that there is no "problem" with e-commerce....hear me out. I get it, you're wondering, "how could there be a problem when consumers spent more than $517 billion online last year?" (up 15% from the year prior) And you're thinking, "Aren't industry experts predicted that we'll spend an additional $40+ billion on top of that in 2019?" Don't @ me - I've seen the numbers too. The problem I'm referring to is the inherent lack of brand loyalty and trust in the retail environment (online, offline, other).
Loyalty has become such an unsolvable problem that it's capping business growth. Return rates are at an all-time high (increasing by 95% in the last five years) - costing U.S. businesses billions of dollar each year. Brands are needing to expand operations elsewhere in order to attract new clients (given retention with existing customers is so limited). Very few brands can actually survive the move abroad only to be swallowed up by operating costs before ever "making it" in a new market.
What we have here is a tale of two commerces. One where brands need to ultimately give up the keys to the customer in order to maintain some sense of loyalty and get just a taste of the $560+ billion that we're spending this year. The other story calls for one of change and innovation. Building an e-commerce/marketing engine that allows for smart, agile strategies that allow brands to have the staying power they need before the ground is pulled out from them (again).
Will only the strong survive? Maybe, maybe not. In either case, the Davids will need to learn from the Goliaths and vice versa in order to unite against the problems facing the industry.
Andy Dunn, the founder of Bonobos and current SVP of digital consumer brands at Walmart, wrote about the challenges of e-commerce profitability back in 2013 when he offered a simple summary, “E-commerce is great. Only three problems: no IPOs, no M&A, no EBITDA.”