The way we’ve come to understand the role of ecommerce in the broader consumer/retail economy has evolved pretty remarkably over the last ten years. In many ways, the rise of ecommerce resembles the proliferation of consumer mobile devices, a trend best described by Hemmingway: “gradually, then suddenly.”
Somewhere in the late 2000s, we went from a slow, gradual adoption of the internet to a tipping point, where we accelerated rapidly to 3+ billion people online today. A big part of that is due to the maturation and commoditization of mobile technology. More people got online to access a certain bundle of goods there: information, services and products. As those things improved in quality, it drew more people online. A virtuous cycle that happened gradually, and then suddenly. We’ve moved into the “suddenly” part now, as another billion (!!) come online in the next year or two, which is part of why Google and Facebook are investing so much money in welcoming those new users to the internet.
Ecommerce has grown tremendously, but its growth has so far been gradual. As a percentage of overall retail sales here in the U.S., it’s still in single digits – but growing at a steady clip. Yet this growth pattern drastically understates its potential. Ecommerce is quickly approaching its own “suddenly” function. And I think the day is getting closer when we’re going to see a major shakeout in retail between those companies that are prepared, and who “get it,” and those that do not.
I’ve given some thought here about what that shakeout might look like.