IU Expert: Online Retailers Losing Competitive Edge Over Traditional Stores This Holiday Season

Released: 12/4/2013 3:00 PM EST
Source Newsroom: Indiana University
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Newswise — BLOOMINGTON, Ind. -- With all of the talk about the growing success of Cyber Monday sales, an Indiana University retailing expert suggests that traditional retailers are closing the gap with online retailers such as Amazon.com.

"An interesting phenomenon is that brick-and-mortar retailers have learned how to play the game," said John Talbott, associate director of the Center for Education and Research in Retailing in Indiana University's Kelley School of Business. "Traditional retailers like Kohl's, Macy's, Best Buy and Dick's Sporting Goods are now playing the e-commerce game very well. It is likely that a big reason behind the huge numbers this past Monday was the purchasing done at the websites of these traditional brick-and-mortar players.

"The reality is the Internet is now as much a part of how these retailers interface with their consumers as their stores. In all the cases listed above, e-commerce is by far the biggest 'location,' if you will, for all of these players," he added. "These stores are essentially now using 'showrooming' techniques to display goods to consumers and are indifferent about whether the consumers buy in their stores or on their website."

While much of the talk about the success of Cyber Monday has focused on Amazon.com, Talbott noted that investors weren't as thrilled as the media -- the company's stock price fell by almost 2 percent in trading on Tuesday.

"Why the big numbers and no respect from Wall Street? All the big sales were largely attributable to extraordinary promotions on Cyber Monday," Talbott said. "Amazon has skinny margins on a normal day. What happens when they dial down the price meter as they did on Monday?

"And, think about this: Amazon is rapidly building warehouses to put goods closer to consumers so they can fly goods to their customers in under half an hour. Even Jeff Bezos admits that this is still years in the future, and he knows he is an optimist," he said.

"On the other hand, major brick-and-mortar retailers, which also include Walmart and Target, have warehouses in the form of their stores in close proximity to their customers and are rapidly building capability to deliver from these locations."

Talbott said inventories are being shared between stores and e-commerce divisions, resulting in better asset efficiency and higher levels of customer service.

"Cyber Monday perhaps is turning into Cyborg Monday with traditional bricks and mortar joined at the hip with their own websites to create a competitive monster," he said.


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