The rollercoaster rise of online retail providers like Amazon or Alibaba shows a clear trend of customer behaviour. Customers seem to choose the convenience of an online store and the ability to choose from a worldwide assortment of products and services waiting to be shipped right to their doorstep over the traditional brick and mortar stores.
While the COVID-19 lockdown has restricted our commute, it did not restrict our desire to purchase. The online market was made for this and didn’t miss a chance to pull in new customers. In the UK, online sales increased by more than 100% in May according to Nielsen data.
What does this shift in consumer behaviour mean for the overall market? How will commerce look in the post-coronavirus world? One obvious prediction is the rise of e-commerce online businesses. According to Spocket the value of e-commerce businesses is expected to reach a trillion US dollars in 2021, showing a fast rate of growth. Furthermore according to Nasdaq, as much as 95% of commerce will be e-commerce by 2040.
The relative dominance of online businesses opens a great window of opportunity for people who would otherwise lack the facilities to get into business. Before the rise of e-commerce, the only way to start a business was acquiring a property, buying or creating a product, and either employing a seller or personally selling a product from behind a counter, hoping to attract as many as possible. Not only is this costly and often required a large sum of money to begin with, but it’s also a full-time commitment where the consequences of failures are great.
Things, however, have changed with the Internet revolution. Many online retail platforms provide the opportunity to sell a product for just a small monthly fee. Facebook and Google advertisement allows advertisers to reach thousands of specifically targeted people for only a couple of euros. The convenience of dropshipping means that a business owner can sell a product without the need of having it in stock personally. The seller can act simply as a middleman between the big warehouses and manufacturers and the individual consumer, providing an exciting platform and effective advertising, pulling in a profit without the need to invest money outside of advertising and minor business expenses. This gives rise to the possibility of running a profitable business while studying, working a full-time job, or even while running a different business in a different sector.
Naturally, this means that more and more people are launching their start-ups and competing in the e-commerce market. Shopify, the second-largest e-commerce provider after Amazon, gives people the platform to sell their products or services. In 2020 while many other stocks are crashing and only slowly recovering, Shopify stock skyrocketed to almost ten times the value it had in January 2019. The stock shows the success of the company and the company models the advance of online commerce. While a larger number of online retailers makes sense and can provide a larger variety of product for the customer, it also signals that the market may be oversaturated and in face of tough competition many of these small sellers might not survive for very long.
Opening an online store is now as easy as ever and virtually anyone with an internet connection who fulfils the legal requirements to own a company can start an online store. However, it takes more than a store to be an entrepreneur and only time will tell what the distribution of businesses will be like in the future.