Retail Industry – How it is Transforming into eCommerce

Retail Industry - How it is Transforming into eCommerce

You see it everywhere- from books to cars, from tourism to food, from financial products to jewelry. Lets see Retail Industry – How it is Transforming into eCommerce. What are we talking about? eCommerce, of course, or to put it more accurately the digitization of retail.

From the mid-1990s, when Amazon made its first sale of online books to just 25 years later, when the global eCommerce industry has grown to 24 million merchants. Together grossing sales in excess of $4.2 Trillion, online shopping has grown in leaps and bounds. The industry is poised for double-digit growth till 2024 when it is expected to cross the $6 Trillion mark.

As impressive as those numbers are, online retail still accounts for less than 20% of all retail worldwide. In the US, the world’s second-largest eCommerce market. Online sales for 2021 are expected to cross $840 Billion, but that number is just a third of China’s. In fact, China’s $2.77 Trillion mark will be over a Trillion dollars more than the next nine countries’ online sales combined. In the US, eCommerce adoption is rapid. So rapid that by some estimates, 95% of all retail sales in the US will be via online channels by 2040- up from just 18% in 2018!

Figure 2: A projected year on year eCommerce revenue till 2025 (Statista)

Figure 3: Online sales in China are more than the next nine countries combined (Oberlo)

Drivers of Digitization of Retail

Retail has always been about satisfying customer demand. However, to satisfy their purchase needs, customers needed to cross several hurdles- traveling to the store during open hours. Finding the product (and there was always a chance the product was out-of-stock), standing in line, having currency to pay for the product. Arranging for transportation to and from the store, and physically carrying the products to where they were needed. In case of returns, the whole process had to be repeated.

eCommerce works because it addresses each of those pain points. Shoppers can shop from anywhere, use credit cards or other forms of digital money, and have their orders fulfilled by someone else right to their doorsteps. With burgeoning online marketplaces with millions of sellers, shoppers never have to worry about stock-outs either. In addition, sophisticated algorithms even personalize recommendations of other products to buyers, something that not even the biggest brick-and-mortar retailers can do- in fact, in the case of physical stores, the bigger the store, the lesser the individual attention available.

eCommerce is a major advantage to retailers too. Without expensive real estate to pay for, retailers can focus on investing in economies of scale and order fulfillment in cost-effective ways. Furthermore, technological advances, including AI and Machine Learning. Allow online retailers to engage with potential buyers on an emotional level, with unique appeal for each customer. This is a major advantage, and retailers have been quick to catch on. No wonder then that of the top ten Online retailers in the US, six – Walmart, Target, Home Depot, Best Buy, Macy’s, and Lowe’s are major brick-and-mortar retail chains, while four- Amazon, eBay, Etsy, and Wayfair are pure online stores or marketplaces.

Unified Retail

Figure 4: Unified Commerce (or Unified Retail) goes beyond Omni-channel to create information blend to and from multiple channels, systems, product lines, and customer interaction avenues (Paldesk)

Retailers have been adopting digital tools for a long time. From digital inventory management software to ERP systems and CRM. Retailers embraced new digital technology almost as soon as it was available. However, online channels rarely exchanged data with retailers’ traditional sales channels, such as store inventory tracking systems. This most definitely has continued to be the case till this day, as periodic upgrades and a patchwork of specialized systems create siloed information. This is changing with the Unified Commerce (or Unified Retail) concept, where a single platform keeps track of transactions, inventories, and order fulfillment data across all channels, including eCommerce, M-commerce, and store retail. This allows stores to leverage Big Data and perform customer experience-centric improvements in their customer journeys.

The New Normal

In the maelstrom of the 2020 Pandemic, retailers suffered from a lack of footfall in their stores. On the other hand, online stores saw a boom. Sure, there were breakdowns in order fulfillment as the Pandemic spread, engulfing warehouses and distribution centers, but retailers quickly saw the advantages of having online stores. While those with existing online presence repaired the flaws in their backend processes. The result is an acceleration of retailers’ movement towards online-first strategy. With more money and effort put into the digital transformation of their sales processes than any other single process.

Emerging Technology
Figure 5: The technology drivers of digital transformation in Retail: Augmented Reality, IOT, Digital Money, and AI. respectively.

Big things are in store for online retail. On the customer end, Augmented Reality, IOT, and alternative payment methods like Bitcoin, all long considered game-changers in retail, are seeing increasing deployment. On the backend, things are changing too. Headless, API-driven integrations, Big Data-driven AI, and Machine Learning promise to increase flexibility, personalization, and customization capabilities of retailers.


The retail industry is changing drastically before us. Sellers have new avenues to become professional merchants with easy-to-use online store software like Shopify. The customers with smartphones and fast internet connections are waiting to find them. The transformation of retail into eCommerce is entering a very interesting phase. As some legacy retailers disappear, only to be replaced with better, more capable digital versions. While others transform to incorporate eCommerce channels to make their brands truly Omnichannel.

While most large retailers already have an established online presence, a recent survey of 2400 small and medium businesses found that 71% of those businesses did not sell online. On the other hand, that same survey revealed that of the 29% that did sell online, over 80% reported a moderate to significant improvement in their revenue. Therefore it’s clear that online retail will steadily impact every level of retail. As the first tentative steps into eCommerce are taken, and as larger, more established e-tailers continue to evolve their digital shopping outlets, professional service providers like Manipal Digital Systems can be invaluable partners, from setting up professional imaging services to providing full-spectrum digital marketing services so sellers can continue to focus on their businesses and grow.

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