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Retailing is undergoing a seismic shift with the rising dominance of e-commerce. Businesses need to be aware of the advantages and potential pitfalls of this new way of shopping.

Fashion Outlet

Around the world, e-commerce is changing the way people shop. In the major consumer markets of Europe, the USA and China, e-commerce is fast becoming the preferred shopping method for many people.

In the US, figures from 2016 show that online shopping accounted for $394.86 billion in sales, 11.7% of all sales. This represents almost 42% of all growth in 2016 and is a 15.6% increase on online sales in 2015.1 In China, e-commerce accounted for 26.1 trillion yuan of sales in 2016, a rise of 19.8%. On its own, China accounts for 39.2% of all global e-commerce sales and there is a lot of growth potential left in this market alone. Currently, China reports that 731 million people are online, 53.2% of the population. 63.8% of those people shop online, meaning there is the potential for significant levels of growth over the next few years.2

Flash Sales Drive Demand

The shift from in-shop retailing to online shopping has been stimulated by, amongst other things, flash sale event days, such as Black Friday in the USA. Black Friday, the day after Thanksgiving has been associated with the start of Christmas shopping for many decades but in recent years this has given way to an expansion of the idea and this has significantly benefited online retailers. In 2016, Black Friday accounted for $3.35 billion in sales.3 Its success has led to it being exported to other countries, such as South Africa, the UK, Romania, India and the Netherlands.

Sales during Black Friday are, however, dwarfed by China’s Alibaba Double Eleven festival. Only in its eighth year, Double Eleven generated 120.7 billion yuan in 2016, up 32% on the previous year.4 The success of Double Eleven stems from one of the main advantages of e-commerce – you can buy from anywhere, without leaving your home. In 2016, 37% of Double Eleven sales were to one of 235 foreign countries, with global brands dominating sales.

What Online Shoppers Need to Consider

The advantages for consumers are obvious: you can avoid pushy salespeople and shop anywhere and at any time – shopping now fits round our busy lives. Having access to global shopping opportunities allows the consumer to choose the lowest price, compare similar products and check stock availability without leaving their armchair. E-commerce allows people to save time, save money and have access to greater choice.5

The convenience of e-commerce is highlighted by the increasing dominance of the smart phone and tablet in online sales. In 2016, $1.21 billion of Black Friday’s sales were made on mobile devices, a 21.6% increase, and on Double Eleven, 81.87% of purchases were made using mobile devices.

Convenience does, however, have some disadvantages. Buying online means you cannot try before you buy, a major inconvenience when buying clothes and footwear. If a product doesn’t fit, then you have to return the product, which can be difficult, time-consuming and costly. Companies like Amazon are now trying to address this problem. Its online dressing room will allow customers to try clothes and only pay for the ones they keep.6 This is all part of a shift towards more interactive online shopping experiences, which allow the customer to ‘feel’ they in a real store.7

For businesses around the world, another disadvantage of e-commerce is the opportunity it offers for fraud and identity theft. Customers are rightly concerned that their financial details might be intercepted and cloned, and the anonymous nature of online selling means it is comparatively easy for unscrupulous sellers to either collect payments without providing the goods, or provide fake goods in place of genuine products. Companies need to find ways to promote the authenticity and quality of their genuine products. One way to do this is to promote the standards applicable to each product as a gesture of quality and authenticity.

Companies cannot avoid the increasingly importance of e-commerce as a sector of sales. The demands of modern life and the ease with which online retail works alongside our normal work patterns, means it is destined to continue to grow. Business must exploit this trend by finding ways to protect their customers and improve the shopping experience. At the same time, companies also need to protect their brands and stop counterfeit products being sold as genuine.

SGS Solution: Softline Services

SGS Softlines offers a range of services to help businesses manage the changing retail demands of e-commerce. As the world’s leading inspection, verification, testing and certification company, our team of committed professionals can help you safeguard quality and performance, whilst ensuring a product complies with relevant international, industrial and regulatory standards.

Our network of over 40 internationally accredited softline laboratories around the globe, provide a comprehensive range of physical, chemical and functional testing services for components, materials and finished products. Giving customers a fast and efficient service, and can helping businesses with even the tightest of turn-around-times successfully get their products to market.

SGS can also partner with companies using their own digital platforms, helping them set up a tailor-made quality system, which retailers can then fit into established models. This will help businesses successfully exploit the full potential of online retail.

Learn more about SGS’s Softline Services >

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For more information contact your local SGS representative, or our global team and visit Softlines and Accessories.

Chris Yeung
Assistant Key Account Manager, Softlines
SGS Hong Kong Limited
t: +852 2774 7404

References

1 Digital Commerce 360 - US E-Commerce Sales Grow 15.6% in 2016
2 ZDNET - China accounts for 40 Percent of Global Ecommerce Transactions
3 TechCrunch - Black Friday Online Sales to Hit a Record-Breaking $3 Billion, Over $1 Billion from Mobile
4 China Internet Watch - Tmall Double 11 (Singles’ Day) Insights 2016
5 Investopedia - Shopping Online: Convenience, Bargains And A Few Scams
6 Global News - Amazon Aims to Bring Online Dressing Room to your Home
7 The Business Journals - 3D Online Shopping Platform Has 100 Retailers and 50,000 Users in a Frenzy