Online Shopping
A big change that has occurred in my household this year is the amount of shopping we do online – it has gone up a lot. It extends to food – a significant part of my daily calories now get delivered to our house. It isn’t just price driving that change; some of what we order online is very difficult to obtain locally. In fact, it was looking for items I wanted to add to my diet for health reasons that catalyzed this shift to online shopping at sites like Shoppok.
Since the rise of large internet-based e-commerce sites, the growth of online shopping has been exponential, with a huge increase in the number of consumers choosing to buy online rather than in-store. Many traditional retailers have also followed suit, with most shops now having a dedicated e-commerce website from which consumers can make online purchases, from high street brands to charities and even to party dresses such as the Jovani homecoming dress. Even brands which no longer exist on the high street are often available online. With new services online, shopping is better than purchasing in-store like when you buy baby boys cool clothes for your baby.
The internet is also home to many discount websites and third-party retailers who offer goods at reduced prices, meaning that you can find the same product for a fraction of its net value. This gives consumers a much broader access and ability to find random things that they might like such as this umbrella dryer from https://www.ltc.sg/product/umbrella-dryer-rain-eco-ii/.
What have been your experiences shopping online? Any thoughts about how it all plays out going forward?
We are only 6 and 20 miles from large shopping areas, but, between us and that shopping is a deep canyon. That and the process of going from store to store to find what you need, drives us on line.
Same boat as you Mike.
I still go grocery shopping once a week. (And I fill up water jugs too on that weekly supermarket run.) My wife still goes to Trader Joe’s and occasionally Costco. But a surprising amount of stuff comes from Amazon now. It started because I wanted to start eating oat groats, and I couldn’t find them locally. Then I expanded into vitamins, etc. Interestingly, now I found groats can be obtained cheaper than at Amazon through other online sources. So even if it started for Long Tail reasons, it is graduating to pricing.
Online purchases, excluding groceries, from ~5% or less 5 yeaers ago to ~75% in 2017. Xmas this year was (so far) 90% by volume AND value.
This has been a non linear rate of change — with increasingly greater volume & value percentages (y-y) each year.
According to my wife, who does 98% of our expenditures on purchases, the reason is ease (time / effort) & breadth of selections at no greater or lower cost, ease & simplicity with zero costs of any returns (whether her own or venders’ errors) without leaving our premises, & (my guess) online shopping at any time, day or night whenever the mood strikes — no prep time required to make pretty, no car use, no traffic congestion or travel time, no parking issues, no gas fill-ups to deal with as may be necessary, no forward “planning” or schedule arranging or re-arraranging.
This might make it possible to make more purchases than one would otherwise make / spend, but it it hasn’t been the case for us that i’ve been able to detect.
Bottom line is that it frees up a huge amount of time to spend on things you prefer to spend you’re time on & saves money to boot!
Oh, & my wife is a people person — loves to gab with everybody, including clerks, so she gets enough of this by grocery shopping & coffee klatches with her multitude of friends, & going to lunches with them & exercising group, etc.
The browsing instinct remains intact without the inconveniences.
Full disclosure: I own Amazon stock since 1999. For a technology guy it was a no brainer stock purchase — question was only how long online shopping would take to catch on…. not if.
i’m over a half hour away from the nearest shopping centers, so over most of the past 30 or 40 years i’ve shopped for most everything i need(other than food) using mail order catalogs…that’s still the case, i have yet to buy anything online, even though i’m online more than 80 hours a week…
Mike –
Was having this debate with a friend recently and wondering if you’ve seen anything on it beyond a simple google search. Amazon Prime has, IMO, materially changed consumer behavior WRT online shopping, such that expedited shipping is more important, and combining items into bulk shipments is less important. As a result, Prime has a deleterious impact for environmental considerations. The only meaningful study I’ve seen was a short thesis paper out of MIT that is dated and I don’t believe accounts for changing consumer behavior (e.g., compares the environmental impact of going out to purchase a single toy from a store rather than Amazon – from my observation/experience getting in a car to go to a store for a single item is less likely than doing the same via 1-click purchase online.)
Thoughts?
Environmentally, any purchase from online will be far more efficient in resource consumption than building & using individual private vehicles to drive to brick & mortar stores. When taken in the composite of all online purchases there’s no comparison at all.
Amazon Prime increased the number of items purchased online, & thus also however the number of addresses per delivery vehicle load to which the Prime purchases are delivered.
Now compare the consumption of time & resources by one delivery vehicle using a delivery route to deliver each Prime purchase (including empty return to the local distribution center) with the n private vehicles miles driven to make the same purchases at Brick & Mortar, even if each private vehicle made 2 or 3 or 4 purchases per trip.
Since each private vehicle has to dead-head for ~ half the miles driven x n purchases (or n/2 or n/3 or n/4) then those miles are wasted compared to a single delivery vehicle dead-heading even far further but applied to n/m purchases, where m = total number of purchase by Prime in a single loaded delivery vehicle.
And that doesn’t even consider the resource inefficiencies of building & maintaining (water, sewage, heating, lighting, A/C, garbage disposal, or all the space consumed to display the merchandise with isles for consumers to do their touchy-freely exercise) each Brick & Mortar bldg or space consumed.
Not to mention parking lots space consumption that sit nearly unused from ~7 or 8 pm until ~ 10 am (> 14 hrs in every 24 or ~60% of the time). Nor does it consider that only ~ 2/3’s of the parking lot is used for parking with the other 1/3’d used for ingress & egress to & from a parking space.
So even for parking the efficiency is max 60% x 67% = <40% efficiently!
Think of all the asphalt & concrete consumed as well with the waste by-products they produce… & if you’re concerned at all with CO2 emissions, then parking lot consumption used to support Brick & Mortar purchases is as even greater environmentally inefficient use of resources relative to online purchases.
Incidentally, I think the introduction of tablet based computing & smart phones made a huge difference in online purchase volumes by making it far easier & more convenient to the non- laptop & desktop user to have the capability without being tied to an actual “computer” for general purposes.
I’ve noticed that most people I know make their online purchases from their smart phone or tablet if they’re not normally using a laptop for other purposes anyway. I think this applies to at least 60% or even 70% of today’s online consumers (my wag).
And as an aside I’ve also noticed that people who make repetitive purchases of the same items from the same online sources are now just using Alexis or google’s device in less than 10 or 15 seconds while loading or unloading a dishwasher or watching a football game, or munching on a snack.
It’s still in its infancy but it will become another major means for online purchases over the next 5 to 10 or fewer yeas.
Of course I have lived in Silicon Valley since 1964, so it’s been my observation that the tech savvy concentration of using tech devises here has become standard practice by the masses throughout the rest of the U.S. & globally in due course.
Just for instance, my daughter started her own female clothing business from absolute scratch in her spare bedroom, then living & dining room ~ dozen yeas ago or more. It grew very slowly & she was losing money on it hand over fist, but since she had grown up in Silicon Valley and her brother & I had been in tech she was aware of the then b2b sales by computers.
So she hired a programmer to set-up her own on-line sales website to her own gut feel specifications for displaying her merchandise & ease of hassle free use by her potential on-line consumers. She gained direct experience with results, consumer idiots using computers to buy things online, and went through three or four iterations over 18 months, making huge improvements to her sales each iteration. Even I was impressed by the professionalism of her web-site… it looked and behaved as if she was a major clothing retailer and was actually, honestly better than any other major retailers of women’s clothing out there, I kid you not.
Anyway the Great Recession hit and she had to fold her business — no investors willing to fund the next step to increase sales to make a profit.
So she moved lock stock & barrel to the Big Apple to find a job in women’s fashion (she had a finance degree from.UC Sant Barbara).
She found one eventually in a small start-up with 25 employees as their #2 (of 2) in their finance/accounting/payroll/authorizing expenditures department. But the little start-up had as then no on-line presence, and she showed the owner and primary designer (owner’s son) her website from her prior business. So they put her in charge with the designer to do their website at a far bigger scale (lots of money), part time while she spent her time taking over the ltttle accounting dept.
Ok, I’ll finish.
The company grew from 25 to 250 employees in18 months, with huge profits, almost all of which was exclusively from online sales & that group now had 30 employees all by itself. Most of the group were Harvard & Yale business school masters degreed grads with up to 3 year’s max prior experience, including many who had book-learning about on-line sales, but nothing in the realm of women’s fashion.
My daughters experience drove the directions & methods, with her conditions & requirements prevailing most of the time… her ideas & the designer’s were very close & quite different than the Harvard/Yale crowd’s approaches & “ideas”.
Anyway her experience coming up with her own home grown female fashion website & user experience (women aren’t men) plus having the funds to develop a far larger one with far more help & resources gave her a huge leg up in online sales.
She quit that company and joined another women’s fashion.company with national sales, but with nearly no online presence.as head of all things related to online business. She hired several people away from her prior company, plus some hand picked new grads (zero experience) from Europe. & from across the US, none from Harvard or Yale however. She quadrupled the company’s net profits in 18 months.
There’s more but I won’t bore you further. The point is that the Silicon Valley breeds people by osmosis to new & different with the skills to actually attempt to create the new and different, and very often with huge success and at least with more success rates than most.
Epologue
My daughter is back in Silicon Valley for the last year and parlayed her experience to a high level job with Apple online & in-store sales (which are highly integrated, hardly distinguishable behind the scenes) — she wanted to expand her experience from the fashion industry.
My guess is that (as her father, knowing her) she’ll soon be making new waves with Apple’s online sales on a global scale… or quit for a role where she does make a big difference in doing things differently than everybody else. She has the vision, though has to wait for somebody with enough of her vision to make it happen… no man’s. (or woman’s) an island.
Silicon Valley is one place on this globe where it’s more likely than not.
I forgot to mention that my daughter is a georgious blond who looks 10 years younger (ok, maybe only 8) than she is — which has made it more difficult when people generally presume georgeous blonds aren’t smart, and the younger they look, the less people think they have the extent & depth of experience she shows on her resume— though her resume is more than modest.
She’d have a better chance if she were a frumpy looking serious type Harvard grad who looked her age…. e.g. meeting people’s expectations, therefore more trustworthy I think is how it woks…. rather tthan a west coast blondie beach babe looking type.
Also just btw the 25 person start- in the Big Apple that grew to 250 in 18 months is now one of the largest high fashin companies on the globe, withe same designer & same sole owner… I think they now employ near 1000 people directly world wide. My daughter still knows the owner & her son the designer and still interacts with some of the people she worked with the online sales group. — but it’s still a sole proprietorship, family run business and they don’t pay outsiders the going rate — but just showing you worked there in a senior capacity is a ticket to a higher status & far higher salary.
We live about five minutes from a pretty good supermarket and maybe eight minutes from an organic supermarket, but we sometimes buy groceries on Amazon. The problem is that there are sometimes spot shortages that hit all of the local stores at once. One year it was impossible to buy cinnamon, not the fancy kind, just the usual stuff. This year it was impossible to buy molasses or red currant jelly. Another year there was a dearth of dried, powdered ginger. We try to do business locally, but when we fail, we usually wind up buying on Amazon.
There has been a trend towards aggregation. Every few years I need a batch of candle nuts and salam leaves for Indonesian cooking. They are not available locally. For years I would buy them online from an Indonesian deli in Los Angeles. Now I buy them on Amazon. Technically, I am buying them from another Indonesian groceries provider, but the order is fulfilled by Amazon.
This kind of aggregation seems to be ongoing. When we first started renting our lake cottage, we just used Google Adwords. Then we moved to VRBO. VRBO slowly changed the way the system worked to minimize transparency and customer contact. We started renting to people, but wound up providing a back end service for VRBO’s customers. Ben Thompson has written about this trend on Stratechery. I think there has been some pushback. I noticed that there are now several sites that work more like the old VRBO. We’ll see how they do.
A big reason for the rise of online shopping is that offline shopping has increasingly become a chore. There’s the driving and traffic, the horrid parking lot, the understaffed stores, the stocking problems and so on. Most stores don’t even sell clothing that fits the median sized American woman. The ones that do carry unattractive stuff hidden in the pariah’s section. Even men’s clothing can be a challenge. It’s a nuisance going from department store to department store looking for something as simple as a black leather belt with a simple metal buckle.
Stores used to know their customers better. Now the designers seem to put what they want on the racks and good luck putting together a wardrobe. If you were the type who liked to be at the front edge of fashion, there were stores that stocked an eclectic mix of fashion forward merchandise. If you wanted a stodgy look, ditto, an outdoorsy look, ditto, and so on. Now it is more like the old Soviet Union where one shops at Clothing Store #352 and find whatever the factories decided to put on the racks. Central planning can stifle a business. Amazon might be into central fulfillment, but just about anyone can sell anything there. Of course, if they are successful, Amazon will copy their product and undercut them on price, but that’s another story.
M Jed,
Much to my surprise, I am in agreement with Longtooth. I think delivery is actually good for the environment, and will get better as the logistics improves to allow more order consolidation and route optimization. Of course, part of me is wondering what is wrong with that answer given it is the answer Longtooth provided.
Kaleberg,
I’m not sure how much of what you observe is just that we have lost the ability to tailor our products to our needs. My wife used to do costuming for movies and tv back in the day, so when we buy an item of clothes she modifies it to fit if it is necessary. Most people would have taken that item of clothing to a tailor/dressmaker back in the day. Today that would cost more than the item of clothing. The job of tailor/dressmaker seems to have mostly gone by the wayside.
That said, it does seem that clothes are also less standard then they used to be. Customers have been taught that if they look, they can find something very precise and specific. But all that means is that the entire market for clothes has become one giant long tail, which is particularly hard for manufacturers to service given that different people require different sizes as well as well something that fits their own taste. Or at least that’s my amateur looking in from the outside view.
My household has also been increasingly using online grocery shopping as well. Better selection, transparent and increasingly more competitive pricing, and convenience all add up to a superior shopping experience. Several years ago when I first began using online services, I found the prices to be far too high compared to the brick and mortar stores in town. In the years since more and more competitors have entered the market, driving down costs. I also expect that, due to scales of economy, as more consumers begin using these services costs will continue to push down.
The online grocery shopping experience has not been without its flaws though. Several times I have received produce that was well past it’s prime, or products damaged in shipping. While customer service has always been apologetic and offered refunds, the hassle and need to replace the item negates the convenience of the online shopping experience. Despite these setbacks, I still find the service too advantageous to pass.
Ultimately, just as in the retail market, existing physical retailers will have to adapt to stay competitive with these businesses.
John Schmaltz,
We have yet to try ordering fresh produce.