While the internet has been great for consumers, one group of business owners have been drowning in its wake… namely the owners of brick-and-mortar stores.
To see the impact that the internet has had on brick-and-mortar stores, you have to look no further than last year’s bankruptcy of Borders bookstores, or the bankruptcy of Circuit City back in 2008. You can see how dangerously close Best Buy (BBY) is to following suit as well, and you start to see just how hard the internet is hitting some of the biggest brick and mortar operations, not to mention the impact on smaller “mom and pop” joints.
The reason is simple, it easier to sit and home and buy goods than it is to go out and shop for them. Add on top of that the additional inventory and lower prices, and it is almost impossible for traditional retailers to compete. The game got even tougher when smartphones and tablets hit the market. This turned stores like Best Buy into showrooms where consumers could go and check out products like televisions, and then while still inside Best Buy search out the best deal, either online or at a nearby store.
It has been impossible for brick and mortar stores to compete, but they have always had one big advantage to online shopping… some customers just want their products now. After spending a few hours deciding which television you are going to buy, sometimes you decide you don’t want to have to wait three to five days for that TV to arrive at your front door, so you will go ahead and just buy it from a store.
This has been the one advantage brick and mortar stores have, but now the game is changing once again as more internet sites are moving toward same-day delivery. Now consumers get the best of both worlds… lower prices and goods that show up at their door on the same day. How can brick and mortar stores compete against this? They can’t.
Amazon (AMZN) has been offering same day delivery since 2009 in 10 U.S. cities. Google (GOOG) is currently testing same day delivery in California, and Wal-Mart (WMT) has teamed up with UPS (UPS) to offer same day delivery for certain goods to its online shoppers.
This has been tough for brick and mortar retailers to battle, and now eBay (EBAY) is taking things to a whole new level, with a new service called eBay Now, which promises that items ordered online will show up at your door within an hour.
It is pretty crazy to think about that. The company is hiring couriers to deliver customer purchases within the hour.