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E-commerce: A comparison with Traditional Retail

By Julie  Čolan

I've been thinking a bit of late as to why I think Amazon is a great place to sell on-line and to grow an e-commerce business and kept finding myself comparing the opportunity to sell online with that of using "real" high street shops. I think there are a few interesting parallels which neatly explain the role Amazon plays in the market place.

So 10 years ago or so when I had my first experience with e-commerce (essentially I sold a few bits and bobs on eBay) there only really seemed to be two models that you could adopt and that was to either develop you own online store or to sell on eBay.

Having your own online store is appealing and, I think, should be the end goal for all really ambitious "e-commercers" but, just as on the high street, it's a pretty expensive undertaking. Obviously you don't have to buy the bricks and mortar but, as with physical retail, the expense comes in getting footfall (or "traffic" for online sellers). A shop on Oxford Street will cost a small fortune to rent and, similarly, a shop that appears on page 1 of Google (the modern day commercial real estate) for a relevant search will require significant investment. This just isn't viable for most start-ups and so you're own online shop is likely to end up in a back-street, two streets away from Darlington High Street (in virtual terms and with all respect to Darlington!). Modern platforms such as Shopify do help to some extent but, whichever way you look at it, getting onto Google page 1 is going to cost!

So the second option was obviously eBay. eBay was great and still is in many respects. It as a much lower barrier to entry and effectively lets (almost) anyone sell (almost) anything online. For me, eBay is the e-commerce equivalent of having a market stall. Much cheaper than brick or mortar and with plenty of footfall BUT with lots of competition and, more importantly, less buyer confidence - certainly for many types of product (you just know that those "Addeedas" trainers with the fourth stripe are going to catch somebody out!). Don't get me wrong, I still sell on eBay and will continue to do so - it just does have some downsides.

The above kind of explains why I got so excited when I realised that I could sell on Amazon as an independent retailer. I had assumed (like many people still do) that Amazon was a "closed shop" with only a selected number of retailers allowed on board and only in areas where they didn't compete directly with Amazon. In truth, becoming an Amazon seller is easy, although maintaining that status is much more difficult than on eBay because Amazon is so much more of a controlled environment (not a 4-striped trainer in sight!), this is great news as it means buyer confidence is high - consumers trust the Amazon platform. So my "real world" comparison for Amazon is having a concession in a high street department store like John Lewis. You haven't had to invest in the prime real estate but you get all the benefit of massive "footfall" in an environment in which customers feel confident to make purchases. It still does have huge competition but then the opportunity is so immense that I think it will outweigh the downside for some years yet.

Just my thoughts, I'd like to hear what YOU think....