Properties Perspectives

How E-commerce Helps and Hurts Brick-and-Mortar Retail

Learn how e-commerce has impacted physical retail locations

by CrowdStreet

Many would agree the rise of e-commerce has reshaped the retail landscape. It has provided consumers with the convenience of shopping anytime, anywhere, while also generally offering a wider range of products than what shoppers can find locally.4 However, the emergence of e-commerce has also affected traditional brick-and-mortar retail locations, both positively and negatively.4

How e-commerce helps physical retail locations

Webrooming: This refers to the practice of researching products online before buying them in a physical store1. With e-commerce, customers have the advantage of gathering detailed product information, checking customer reviews, and comparing prices. They might then visit physical stores to inspect the product quality, try out the item, and possibly make a purchase.

“Click-and-Collect” services: E-commerce has given rise to “Click-and-Collect” services where customers order products online and pick them up in a physical store2. This often saves shipping costs for consumers while also increasing foot traffic to brick-and-mortar stores, possibly leading to additional in-store purchases.

Showrooming: Some online retailers use physical stores as a "showroom" for their products1. In this model, customers visit the physical store to touch, feel, and try products before potentially purchasing them online. This may strengthen the relationship between online and offline channels, possibly improving customer experience.1

Brand awareness: A well-integrated e-commerce platform can enhance a retailer's brand presence, both online and offline.8 The increased visibility may drive customers to physical stores, particularly if the retailer hosts exclusive in-store events or offers4.

How e-commerce hurts physical retail locations

Reduced foot traffic: With the convenience and wide product range offered by e-commerce, fewer consumers are visiting physical stores for routine shopping. This has led to decreased foot traffic in many traditional retail stores5.

Retail space downsizing: As more business is conducted online, some retailers are reducing their physical footprint to cut costs. This trend is particularly noticeable in sectors like books, music, electronics, and apparel6.

Price competition: Online retailers often operate at lower costs than physical stores, enabling them to offer competitive pricing. This usually puts pressure on brick-and-mortar retailers to match these prices, often at the expense of their profit margins7.

While e-commerce has introduced certain challenges for brick-and-mortar retail, it also offers opportunities for synergy and growth. An integrated omnichannel strategy where online and offline channels complement each other may deliver a superior customer experience.8


1 https://www.wired.com/insights/2014/09/webrooming/
2 https://www2.deloitte.com/us/en/insights/industry/retail-distribution/future-of-retail-renaissance-apocalypse.html 
3 https://www.shopify.com/retail/showrooming-webrooming
4 https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/the-great-consumer-shift-ten-charts-that-show-how-us-shopping-behavior-is-changing
5 https://techcrunch.com/2020/05/12/us-e-commerce-sales-jump-49-in-april-led-by-online-grocery/
6 https://www.forbes.com/sites/pamdanziger/2019/04/10/retail-downsizing-will-accelerate-as-75000-stores-will-be-forced-to-close-by-2026/?sh=38928674339e
7 https://www.brookings.edu/research/are-online-prices-higher-because-of-pricing-algorithms/
8 https://www.colliers.com/en/news/how-e-commerce-supports-the-need-for-brick-and-mortar 


Market volatility or lack of liquidity could impair an investment’s profitability or result in losses. Factors such as high vacancy, oversupply of the product in the market, increase in interest rates for borrowing loans, bad credit quality of tenants occupying the property, general economic risks such as interest rates, availability of credit, inflation rates, economic uncertainty, changes in laws and general overall deterioration of the market in which the asset sits, all of which could lead to financial difficulties and impact net operating income and can depreciate the value of the property. These factors, in addition to others including increases in the costs in excess of the budgeted costs, the burdens of ownership of real property, environmental liabilities, contingent liabilities on disposition of assets acts of God, pandemics and other national, regional or local emergency conditions, terrorist attacks, and war may affect the level and volatility of asset prices and the liquidity of investment assets.

This article was written by an employee(s) of CrowdStreet and the contents of this publication are for informational purposes only. Neither this publication nor the financial professionals who authored it are rendering financial, legal, tax or other professional advice or opinions on specific facts or matters, nor does the distribution of this publication to any person constitute an offer, recommendation, or solicitation to buy or sell any security or investment product issued by CrowdStreet or otherwise. The views and statements expressed are based upon the opinions of CrowdStreet. All information is from sources believed to be reliable. This article is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any investor. All investing involves risk, including the possible loss of money you invest, and past performance does not guarantee future performance or success. All investors should consider such factors in consultation with a professional advisor of their choosing when deciding if an investment is appropriate. CrowdStreet assumes no liability in connection with the use of this publication.

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