The e-commerce party... is everyone on the guest list?

E-COMMERCE is now a staple avenue for shoppers in most countries and for many categories. The size of the global ecommerce industry is expected to top US$2 trillion this year, according to eMarketer.com. The pace of growth is a scorching 24 per cent year-on-year. Asia is at the forefront of these leaps, accounting for about 50 per cent of the ecommerce market. So, does everyone stand to gain in this non-stop party? On the face of it, it seems so.

Shoppers are clearly celebrating the convenience, choices and promotions. Shopping anytime is a boon for them. As payment systems and delivery mechanisms start to gain simplicity and maturity, buying anything online is a no-brainer now. It's not just millennials or Gen Z customers - everyone is picking up the habit. From simple product-list formats, the sites are enhancing the utility to include selection advice, user reports, self-sorting (bestsellers), choice guides, online chats and so on. No-questions-asked product return policies are the new standard in most countries. Worries over delayed or damaged deliveries are minimised by smart deliverers who are sharpening the practices continuously. Amidst all these, the original advantage of better prices remains intact for most categories.

Brand marketers are celebrating too. They have found the perfect channel to sell their products or services, without the hassle of physical space, distributor tie-ups, inventory management at multiple locations, expensive point-of-sale advertising or retail and logistics infrastructure. There are now companies using online as their only channel of sales and distribution. Banks have new access routes to consumers. Digitalisation has saved them a lot of sales and distribution dollars.

E-commerce has also in some sense levelled the playing field. A small brand owner or manufacturer is able to reach consumers with practically the same effort and costs as a large player. This has created new nimble competition for some established companies and created new business opportunities and with it, entrepreneurial jobs.

Main beneficiaries

The information technology companies are having a big bonanza writing new programmes and systems for e-commerce enablement. Many plug- and-play platforms are now available for companies to start their business instantly. Large brand owners spend millions of dollars to make their portals vibrant, convenient, unique and evolving. As ease of buying is a critical factor in repeat buying, there is a technology race to secure competitive advantages in this. Artificial intelligence and intuitive algorithms are driving this mission. New analytics tools ensure that the companies have to keep the technology 'oven' in a permanent hot mode. All of this is music to the ears of agile technology companies. End-to-end enabling systems are now available not just for the big players, but even for small companies selling via the Internet.

There is more to cheer on the technology front. Drones and droids (automated pedestrian-like wagons that use the footpath) are likely to become mainstream modes of delivery in the coming years. Similarly, virtual and augmented reality gadgets will be used by every shopper to get a replica of the physical store feel. Thus, the technology industry is joining the party as well. Payment gateways and logistics players are riding a new wave with the explosion in e-shopping.

Venture capitalists and private equity players are seeing interesting times too. There are opportunities to invest in a whole spectrum of related sectors and scale options from a few hundred thousands to millions of dollars, depending on their appetite. Funds such as SoftBank of Japan have a huge pool earmarked only for e-commerce and Internet-related companies.

As we complete the guest list for this colossal party, one key question arises: Are there no losers in this game, who may have to sit out the carnival?

Manhattan's Fifth Avenue was the aspirational place for anyone trying to sell upmarket stylish products. You need a showroom of a certain size and a posh decor to be counted and visited. Most companies accepted this white elephant as an inevitable ploy to lure wealthy shoppers. For the first time, stores are closing down in Fifth Avenue. Prestige brand Ralph Lauren announced the closure of its flagship Polo store recently. With physical shoppers gradually decreasing (still very large), companies are questioning their Fifth Avenue strategy. With this, the rentals are on the decline. Very soon, real estate prices there will head south. Orchard Road in Singapore is showing signs of such a twist as foot traffic falls.

Skill sets are evolving too. Companies now seek young digital marketers who are device-savvy and Internet-savvy and reflect the ethos of a youthful business. Old-fashioned marketers are still chugging along, but their number is bound to reduce. You do not need a large distribution organisation and expert if you are going the digital track significantly. Similarly, traditional advertising is giving way to online advertising and morphing further to social media advertising. The different principles of these media call for new skills.

Paradigm shift

Online brand presence is a different phenomenon. The resultant changes in brand and marketing management will edge out flat-footed old managers. With the advent of digital-only marketers, even the job market could shrink as organisational models undergo paradigm shifts. It is now possible to outsource virtually everything and run e-commerce ventures with a lean crew.

Not all investors are likely to end up on the winning side. As we saw in the dotcom boom and bust, success in ecommerce is not assured. In fact, many are still chasing volume and memberships rather than worrying about bottom lines. At some point sooner rather than later, investors are going to look for returns. That's when the reality will strike. There will be some industry consolidation and with it, erosion of shareholder value. It is already happening.

For many retail banks, this is a double-edged sword. While digital footprint gives them larger retail access, fintech and peer-to-peer operators are causing some disquiet among banks. This is because you have alternate source (peers) of funding or parking your surplus through online products. Disintermediation in the bread-and-butter banking and financial services could worry them as it gathers pace.

There is a bunch of customers who resist e-commerce for the reason that they do not want their buying data and patterns to be pried into and used. What could potentially be beneficial in directing relevant products and services to a consumer is also seen as an intrusion into privacy. As this is a small cohort, no war cries have been heard so far. But strong consumer activism is never to be ruled out.

You win some and lose some - except that what you could lose in e-commerce comes stealthily as an aftershock. When ecommerce starts to contribute more than the 8 per cent to 9 per cent of retail sales it does now, further repercussions will unravel. Smart shoppers who claim a special instinctive competence could lose their primacy, for instance, as predictors are talking about a family shopping assistant (a machine, not a person) for each family who plans, shops and pays for all standard goods and services with a timed regularity! And they would perhaps argue that the assistant will do it better than we can!