If you have a way to maximize profit and to expand the customer base of your business, would you want to do it? The logical answer would be yes. Even though they’re still the majority, the brick-and-mortar businesses are facing a solid competition from online businesses.
Retail e commerce now accounts for 10.2% of all retail sales in Asia-Pacific and is predicted to rise to 20.4% of the total by 2019. Physical retail stores are in direct competition with notable ecommerce websites such as Lazada and Zalora. Taxi drivers around Asia have been protesting companies like Ola and Didi Kuadi for disrupting their market.
So in the midst of rising popularity of digital era, can physical stores survive and advance? What are some ways that traditional businesses can do to keep and grow their customers?
First things first, it’s not the end for physical retailers
At least in Asia, the outlook for the region’s consumer goods and retail sector has shown a positive side. According to PwC, the sales progression in Asia-Pacific will be the fastest in the world over the next five years, expected to amount to over US$10 trillion, almost half of the sales generated by the world’s largest economies.
The majority of population is still depending on physical stores for consumer goods especially in developing countries such as Indonesia, Philippines, India, and Thailand. Although e commerce is growing in the region, it’ll still take times for its infrastructure and connectivity to be optimized. By the time technology has matured, it won’t be surprising to find that many retailers and physical business have already incorporated digital channels into their businesses.
Don’t hate the apps, use them instead
Instead of shaking your heads and worrying about the fate of your brick and mortar business, take advantage of technology. The challenge however, is that there are many eCommerce websites and apps around, discoverability is a huge challenge. Being part of a marketplace or a sharing economy will solve that issue. The Generation Y is born with internet and social media at their disposal. It’ll be hard to find young adult who doesn’t have a Facebook or a phone.
However, in the same breath they want things fast and immediate. Most will head to a marketplace to discover, compare products, prices and reliability of the merchants. That’s why marketplaces and the sharing economy even work better these days; people can simply log on to the app on their phones to order food or a cab.
It is not a bad idea to partner with these disruptive companies. For instance, Hawker Today is a Singapore based that enabled anyone to get food from hawker centers delivered to their doorstep. The marketplace creates beneficial opportunities for traditional hawker centers to get more customers. Not only that, Hawker Today also recruits its own Gojek-style riders to deliver the food. Other companies such as Redmart and Happy Fresh partner with local sellers and grocery stores in listing items on their platform, creating opportunities beyond the traditional store and customer model.
It is more appropriate to say that digital technologies are transforming the traditional business rather than shutting their doors. The fusion of digital and physical aspect of a business brings new opportunities that didn’t exist before. Traditional businesses have the advantage of being the frontrunner in their industry and should incorporate digital experience that today’s consumers seek and expect. If it’s well executed, the mixing of on demand economy with traditional business will result in profitable growth that will benefit not only both businesses, but everything in between.