For every $10 spend in the U.S doing online shopping, $4 is spend on Amazon.com, Inc. (NASDAQ:AMZN). This amounts to 43%. A record 80% of the total growth in online traffic is from Amazon sales.
Currently Amazon has 80 million Prime members which translate to 64% of the total U.S households. These statistics were revealed at the Internet Retailers Conference and Exhibition (IRCE) held in Chicago.
According to Internet Retail, Internet Retail, 2016 recorded faster online sales compared to three previous years. Online sales accounted for 11.7% of the total retail sales. Raise in online sales is expected to cause a drop in sales at the traditional brick-and-mortar stores. Traditional retails are concerned about the disruption and loss of business caused by online sales.
Many stores in several markets are closing down with leading retailers like Macy’s and Sears closing several of their stores. Can this situation entirely be blamed on online stores like Amazon? Apparently online retailers are part of the cause but not the only cause of the downfall of traditional retailers. The traditional retail market is currently overcrowded. The industry is currently littered with very many stores and malls. Specialized boutique stores have high chances of surviving in the highly turbulent market. However, to maximize of profitability and increase the chances of surviving in the industry, stores should maintain a vibrant online presence.
The IRCE offers a lot of lessons not only for online retailer but also for traditional retailers. The conference showcased some of the latest developments and technologies that are being applied in the retail industry. Some of these technologies include the use of Artificial Intelligence in promoting, managing and pricing inventory. An example is the Watson cognitive solution from IBM which leads retailers in three very important steps of launching an online product.
Many retailers are also adopting the concept of personalization so as to create unique experiences. The personalization is based on customers’ past history and experiences and needs. Additionally, many retailers are using Augmented Reality which allows businesses to overlay their products in form of digital data. Lastly retailers are heavily investing in content as a way of increasing of increasing their online audience.