Tsuruoka (2012) conducted a research on Amazon spending and earning trend and identified that buyers at all times are attracted by the quality of service that seeks to maximize their welfare at every single purchase. In particular, in most instances, buyers will seek to minimize the cost of obtaining the commodities they desire while optimizing the value to such goods. The reverse is true for the seller who always wishes to maximize the prices charged at minimal cost. The phenomenon above is best seen in the retail market and describes the rivalry between e-commerce-based businesses and the conventional brick and mortar enterprises. The researcher above concluded that, in many ways, e-commerce represents a much better platform for competing at the marketplace than its traditional rivalries. The system affords marketers a point of view that could not be accessed without the use of virtual computing. The ensuing literature review tries to look into the truthfulness of the assertion above. The discussion is based on authoritative and credible secondary information sources.
Krause (2013) did an experiment on retail pricing covering a basket of more than 200 commodities available both on e-commerce platforms and on the usual retail physical outlets. The study found that all things held constant, the permeation of e-commerce trading into new markets results in competitive prices suppressing market prices. There are several reasons fronted for such behavior. One such reason is the impact on competition of large multinational corporations that enjoy economies of scale and that have sufficient financial muscles to afford the markets discounted prices. In particular, customary brick and mortar businesses are confined to local markets denying them economies of scale, and where expansion is planned into new geographical markets, the cost of setting up premises becomes prohibitive. The study by Krause, however, finds out that firms employing virtual trading enjoy enhanced efficiency in many cases including when permeating new markets, becoming more efficient in marketing, using less inventory, and having higher financial returns on sales (Krause, 2013). Much of these advantages are derived from the nature of the internet itself, which is more interactive than traditional means and less prone to physical, language, and timing barriers.
Alibaba is identified by Deagon (2016) as one of the most successful online companies. Founded by Jack Mai in 1999, the firm has grown in bounds to become one of the most profitable firms globally and the largest online trading entity. A report on the retail giant addressing its June Quarter 2016 results showed that the firm continues to see double-digit growth rates even with its disputes and strained relations with the United States. According to the directors, much of the company's sales growth is associated with the online strategy that helps it penetrate developing markets in Africa and South America through strategic partnerships with online marketing firms. Specifically, the company delivered 61% revenue growth for the period, which was defined by significant global economic slowdown (Deagon, 2016). Seemingly, the slowdown had less impact on online firms.
Traditionally competing with e-commerce businesses is cost-ineffective. In this regard, Tsuruoka (2012) holds the belief that the internet offers a unique marketing platform from which information regarding commodities and their benefits can be accessed conveniently. The mere provision of data on benefits and products available as done online by the Brick and Mortar Retailers is insufficient to evoke the desire for consumers to purchase compared to the case for the e-commerce websites. To be specific, online companies enjoy the advantage of offering critical data and information on commodities on sale in ways that were previously impossible. Data ranging from product color, texture, prices, reviews, and the amount available can be provided along with information on the supplier as captured on their websites to support trust and strengthen customer loyalty. In contrast, dealing with conventional brick and mortar shopping halls limits the ability to easily compare prices and access crucial information such as that of the supplying firm and accompanied customer reviews.
Further, Premkumar and Kalpana (2012) also see the ability for the business to sell products and services to clients across the globe at any time of the day makes online trading particularly effective. Traditional Brick and Mortar models of doing business such as Wal-Mart are significantly limited in their scope as they still rely mostly on consumers visiting their outlets that are spread across the world to access commodities. The case means that trade volume significantly goes down during weekends, holidays, or night times when people are less active. Even so, it is imperative to note that the limitation concerns entirely to the brick and mortar aspect of Wal-Mart as the company has some facets of online trading, though limited. The limitation shadows the firm's ability to enhance customer satisfaction by making it possible and enjoyable for shoppers to make purchases at the click of computer buttons at any time of the day. In particular, the restriction means higher costs on the part of the buyer of having to physically bridge the geographical gap to access the particular retail outlets.
The situation above is limited for the brick and mortar-based firms whose promotion and informative campaigns are restricted to physical visual-attractive materials with inadequate and detached website material. Employing physical promotional materials such as reports, banners, posters, business cards, and fliers, among others, is costly and cumbersome with the scope of coverage for the items limited to the vicinity of the area of operation. Besides, much of the physical promotional material can be defaced easily, especially when left out in the open like in the case of fliers and posers, or when mishandled, for example, the use of reports. Such inadequacy is contained when using virtual platforms. Data will always be available on the said Webpage as long as it is still supported or hosted by the company.
According to Zuroni (2012), the usual brick and mortar business when used in the context of virtual connectivity where retail outlets are interlinked online with buyers' ability to make online purchases can offer a better experience. There is a significant section of buyers who prefer the physical experience of shopping in halls and stores. Some people prefer shopping in the company of friends, lovers, and even children as part of leisure. The claim often fronted for the behavior above is that it offers instant gratification as opposed to online trading where one might have to wait for hours, days, or weeks before products are delivered. In addition, the brick and mortar firms still have the edge over e-commerce in the ability to empower clients to try out things and test them. For instance, concerning boutiques, clients will enjoy the experience of trying out different clothing in terms of outfit, color, and texture before making a purchase. This ability is presently limited in the case of e-commerce trading.
Even so, as technology on Artificial Intelligence and 3-D shopping experience progress, much of these advantages alluded to the ordinary brick and mortar business will be eroded. 3-D experience will allow shoppers to get the feeling of physically accessing the shopping center, going through the counter, sampling the product shelves and comparing different product aspects on a level never seen before in online business. Already, Wal-Mart is working on a 3-D version of an online catalogue helping consumers to take a look of the commodity from different perspectives (Tsuruoka, 2012).
Overall, it cannot be denied the fact that e-commerce offers a whole new experience of retail trading that is much more effective than the brick and mortar aspects. The system allows companies to sell products and services to a global clientele base cost-effectively despite geographic, time, and language barriers. E-commerce enhances the marketing experience to a whole new level allowing marketers to easily communicate crucial messages to buyers to enable them to make more informed purchase decisions. The limitations addressed above of near-physical experience is also bound to be addressed in future as advances are made in the area of the 3-D shopping experience in the coming few years. Hence, businesses are expected to embrace more and more of e-commerce trading to survive and be successful in the future.
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