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Category Archives: reason to own an internet business

The Death of Brick-and-Mortar Retail: Ecommerce Numbers Continue to Grow

Major changes are taking place in the retail industry – Brick and mortar retail stores are “crumbling” while ecommerce sales are booming for online retailers!

By: Catherine Perry

So far this year we have seen many big retailers close stores and even file for bankruptcy. One might call this the “death of brick-and-mortar retail”. In the July 14, 2017 “RIP Retail,” article on foxbusiness.com “19 retailers are cited to close hundreds of stores in 2017.” Such stores as JC Penney, Gymboree, Macy’s, Payless, Radio Shack, BeBe, BCBG, Rue 21, American Apparel, Sears and Kmart are hitting tough times and doing everything in their power to stay in business. Some of these retailers have been operating 50+ years. And, one analyst, Burt Flickinger, goes so far as to name this as a “retail ice age.”
So, it seems to be a time of shifting sands in the retail industry. Are we witnessing the beginning stages of the death of brick-and-mortar (BAM) retail?
Periodically, we like to revisit the statistics for the ecommerce industry and see how it is comparing to traditional BAM retail. Last year we published actual growth numbers in the following blog posts:
Let’s see what has happened this year for ecommerce. Has it continued to grow? Is it still outpacing BAM retail?

Latest Statistics

One of the most thorough reports containing quarterly ecommerce sales estimates is created by the U.S. Census Bureau News. The report dated May 16, 2017 contains the numbers for 1st quarter, 2017 and is the latest report available. Based on the information in this report, 1st quarter 2017 saw a 4.7% increase over 4th quarter 2016 in ecommerce sales with a total of $98.06 billion in sales for online retail. That, my friends, is just in one quarter, and a holiday season to boot! And, year over year, from 1st quarter 2016 to 1st quarter 2017, ecommerce gained 14.8% in sales! Compare this with a total retail sales growth of only 5.1% from 1st quarter 2016 to 1st quarter 2017. “E-commerce sales in the first quarter of 2017 accounted for 8.5 percent of total sales.”
We think these numbers are proof that ecommerce continues to grow as a consumer preference over purchasing from BAM retailers.
In the article “Why Consumers Prefer to Shop for Nearly All Products Online” on retaildive.com, the author states “Consumers have spoken, and they say they’re more likely to shop for almost all types of products online instead of in stores.” This assertion is based on Retail Dive’s Consumer Survey of  1,425 consumers regarding the types of product categories they prefer to shop for in stores rather than online; only household essentials like groceries took the lead for BAM.
This echoes the findings in a recent study by Deloitte Consulting that shows “digital devices influencing 56 cents of every dollar spent in physical stores,” meaning that research and comparison shopping are also involved in the shopping experience, not only the actual purchase.

Reasons for Growth

The reasons people are shopping online haven’t changed, they are only gaining momentum. The use of mobile devices, the convenience factor, customer service and social media continue to be primary reasons why people are shopping online. As this article states on techcrunch.com, “79% of American consumers say that cost is now a larger reason for shopping online than the convenience factor.” The ability to shop with online coupons and discount codes is a huge benefit for ecommerce purchasers.
But, note that ecommerce consumers say the convenience of using their mobile devices is still a huge reason for shopping online. Being able to shop anytime and anywhere, compare prices, see consumer reviews, return merchandise easily, and avoid crowds are paramount in the increasing numbers for ecommerce. This data from Invespcro.com you can see the increase in the use of mobile devices to shop at online stores:

And, let’s not forget that social media continues to be a major influencer in ecommerce. As users of social media grow, so does the power of advertising on that social media. Nielson has “reported that nearly 70% of adults who partake in social media buy products or services digitally.” That is a very big number!
This growth is across all demographics and genders. Yes, the millennials seem to be leading the charge, but even the baby boomers are jumping on the ecommerce bandwagon. We don’t know for sure if we’re seeing the beginning stages of the death of brick-and-mortar retail. But, one thing is certain, ecommerce is growing and there isn’t any slowing in the foreseeable future!

It’s an Exciting Time in Ecommerce

From the statistics and data we’ve discussed with you above you can see it’s an exciting time to be in the ecommerce industry. That’s why we encourage you to find out more about the ecommerce industry. If you’ve ever considered starting your own online business, it’s a great time to explore your options. At Pure-Ecommerce we offer our clients two ways to get started in the ecommerce industry through our ready-made internet business or by going the custom website design route. Want to learn more about our company and what we have to offer you, submit your inquiry today by going here – https://pure-ecommerce.com/internet-business-information. We’ll send you our complete information package to help you get started!

5 Benefits of Starting a Drop Ship Ecommerce Business

By: Catherine Perry

If you’re interested in starting an ecommerce business, you need to know about drop shipping. You may be asking yourself, “What is Drop Shipping?”. Well, drop shipping happens when your online store provides a product and doesn’t actually warehouse the inventory and ship it yourself. Instead, you use a third-party vendor for the order fulfillment.
With drop shipping, a customer purchases the product from you and then you, in turn, order it from the drop ship vendor and they ship the product directly to the customer. Because it is efficient and profitable, drop shipping is a great business model for small ecommerce businesses.
Here is a scenario as an example. In this example, you have an ecommerce business that sells mirrors. Let’s say your business is new and you don’t have years of sales history as a basis for estimating how much product inventory to keep on stock. If you get an order for 10 of a particular mirror and you only have 5 in stock, then you have to let your customer know that 5 mirrors are on back order. Then, you order the additional 5 mirrors from the manufacturer and you have to keep up with when the mirrors are coming in to you. Once you receive the mirrors, then you ship them. This takes a lot of time and, as we know, time is money! After a while, you find yourself very busy with the warehousing and shipping aspect of your business.
Now, let’s consider how this scenario works with a drop ship model. You don’t need to be concerned about stocking the mirrors yourself because your vendor is responsible for having the product and shipping to your customer. When you receive the order for the 10 mirrors from the customer, then you order from the vendor. The vendor, in turn, ships them directly to your customer. Your time is spent doing other things–like working on your sales and getting more customers!

The elimination of keeping inventory has many benefits. Here are five benefits of the drop shipping model that we think you should consider when starting an ecommerce business.

Benefit #1: Minimal Initial Investment and Risk

When you use the drop ship method you have minimal initial investment and risk because you don’t have to warehouse inventory. The third-party vendor manages that aspect of the supply chain. You don’t spend the money or bear the risk of actually holding inventory and you don’t have to invest in the space required for storing inventory. Do drop ship vendors charge a fee for shipping their products to your customers? Yes, most do, but is is minimal compared to caring bulky and expensive inventory. When choosing to work with drop ship vendors this greatly reduces the overhead costs of starting and running an ecommerce business. Overhead costs for running a small, successful ecommerce business using drop shipping can be just a few hundred dollars a month.

 

Benefit #2: Positive Cash Flow

The drop ship business model gives you a positive cash flow cycle from the start because you are paid directly by the customers when they order. A customer pays you when he/she purchases a product from your website so you have immediate payment. Then, when you order from the vendor, you pay them the wholesale amount. The result is positive cash flow for you!

 

Related Article: 5 Benefits of Owning a Home-Based Internet Business

 

Benefit #3: Good Margins and Positive Profit 

You mark up the wholesale prices from the vendor when you price your products, which results in the ability to have good margins and positive profit. There are many different ways to arrive at your markup, and you should definitely do your research on this, but average margins on drop ship products can be 25-50%. If you price the items right and have the shipping costs covered, then you have profit.

 

Benefit #4: Increased Ability to Scale 

Your relationship with third-party drop ship vendors means you have the benefit of their inventory levels. If you have an unanticipated increased demand of a product, then you can handle it quickly through drop shipping as you have an increased ability to scale. Your vendor, who is supplying the product for you, has promised to fulfill orders on your behalf and should have plenty of products in inventory.

 

Benefit #5: Work from Anywhere 

With a drop ship ecommerce business, you can work from anywhere because you aren’t tied to stocking and shipping inventory yourself. By relying on the vendor to hold inventory and fulfill the orders, you can base your ecommerce business at any location. Because of this, you can feel the freedom of running your business from wherever you happen to be!

 

 

RELATED ARTICLE: Owning an Internet Business Allows You to Work from Anywhere
Hopefully, we have shown you that the drop ship business model provides you with some great benefits for an ecommerce business. Here at Pure-Ecommerce, we use drop ship vendors for all of the ready-made and custom websites we offer.  Please download our FREE Drop Shipping eBook to learn more about this exciting way of working!

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