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First, I will give you my hypothesis answer which is "Yes" it has. Of course, I have been wrong before and will be wrong again but this would be my position going into the discussion. Because of COVID19 we have learned the proper mix of "I need go to the store" with "I can wait to get it delivered". So, yes, my answer is an resounding "Yes".
I see this for three main reasons and in this posting I am going use Amazon as the proxy for e-commerce since it is so dominant in that space. A little background on how this idea started developing. I tweeted the following:
"A casualty of #Covid19 in the Supply chain is going to be #Amazon. With elongated delivery times, missed deliveries and massive counterfeiting, @amazon has become useless. #Bricksandclicks with in-store pick up, curbside car loading and local delivery has won the day.
— 10xLogisticsExperts (@Logisticsexpert) April 11, 2020"
The next morning I opened the Wall Street Journal to an article (Posted at midnight and my tweet was at 10:40pm) titled "Will We Forgive Amazon When This is Over" by Christopher Mims (@Mims, Christopher.mims@wsj.com) (May be Paywall). The theme is the same: At precisely the moment we needed Amazon the most, the model failed and it failed big. There are a couple of key areas where it failed and only one could really have been an "unknown unknown":
Merchandising and Inventory: This is the big "unknown unknown" and we cannot hold Amazon or anyone fully responsible for this as no one could have seen the massive whipsaw / bullwhip which occurred with certain products. We essentially had a "run on the bank" and ran out.
However, the "bricks" portion was able to respond much faster through limiting amount someone can buy, "senior hours" and other tactics (Not the least of which is just public shame if you are walking out with cases of toilet paper). Amazon just could not get ahead of this and still to this day are not ahead. They essentially have shut down all other "non essential" product lines yet I can still get all that stuff through either BOPIS (Buy on line pick up in store) or just in store at the bricks.
No Customer Loyalty: The big question for the e-commerce providers such as Amazon will be whether they invest a lot into their networks to support a crisis like this or do they chalk it up to a "once in a lifetime" crisis and assume everything goes back to normal. I think it will not go back to normal and the pure e-commerce players will lose customers and not gain them.
Take the Amazon Prime program for example. Many hundreds of thousands have paid for years into that program. Yes, you get free delivery but it also is somewhat of a loyalty program as well. As soon as the crisis hit, prime customers were thrown to the curb. By doing that, many prime customers are asking themselves "What am I paying for" and now that they have had the experience of "bricks and clicks", these customers may never come back. I would imagine Amazon will see a decrease in both Prime customers and customers overall.
The Technology Just Did Not Work: This led to a massively poor customer experience that did not have to be. In fact, prior to COVID19 most discussions I have been in have always started with, "If Amazon can do... (Kind of like, "If they can put a man on the moon why can't....)". This will no longer be the case. No one will want to replicate this. I think most give them a pass on the inventory issues but why is their website so screwed up? Why do I have to click 4 times before I find out either the product is out of stock, it is reserved for first responders or the delivery will be two months from now (Why would they even allow it to be displayed)?
The purchase experience has been awful. The great technology has gone haywire and their "hands off the steering wheel" AI systems failed at precisely the time they were needed. I found websites of other "off line" stores to be far more helpful, far more accurate and far more useful. Amazon is going to have reevaluate this entire problem. Their technology just does not appear to be much better.
Counterfeiting: One item the "bricks" stores have is brand reputation. Nothing makes it into a Home Depot, Lowes, Target, or Wal-Mart store without it being properly vetted to safety, service and functionality. The item has to perform as specified. Yes, there will be some warranty claims but not complete failure. The "E-Commerce" world, led by Amazon, has had this "endless aisle" approach and they purposefully do very little vetting. They claim they are a "platform" not a store (Although I think this is mostly "lawyer speak" so they can defend in lawsuits). This has led to massive counterfeits, items which are displayed but never fulfilled, , items which say they will be fulfilled but it may be 2 months from now etc.
What is worse is the e-commerce players want the "wisdom of the crowd" to sort through it all, figure it out with "star ratings" (Which are easily manipulated by the very people doing the counterfeiting) and then report them. The e-commerce people want the buyer to be their merchandiser as well and not pay us. Bad form.
For all these reasons, I believe pure e-commerce will lose business and it will take them a long time to get it back. The "old guard" businesses with store fronts, reputations and really good technology have won this round and a big round it was (and still is)!
Long term readers of mine will not be surprised by this as I wrote two posts a while ago about how the bricks and mortar should win because they can do everything Amazon can do and Amazon cannot do everything they do. I welcomed WalMart up from their long slumber (June 26, 2017) when they finally committed heavily to e-commerce. I then wrote a post on June 3, 2018 titled: Convinced Even More That Wal-Mart Should Be The Winner Against Amazon.
Written by Kate Silzer
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