Although e-commerce currently accounts for only about 8 percent of total retail sales, its growth and potential are uncontestable. According to research from Tompkins Supply Chain Consortium, for example, e-commerce sales are growing 10 percent year-over-year, or roughly 3x the rate of total retail sales. To better illustrate this trend, one need look no further than e-commerce behemoth Amazon, which between 2010 and 2016 quintupled sales from $16 billion to $80 billion.
Subsequently, over the past year, we’ve seen several major downsizings and bankruptcy filings from dozens of well-known brick and mortar brands, such as J.C. Penney, RadioShack, Macy’s and Sears, which each closed more than 100 stores. People are buying more online than in brick and mortar stores.
While adding an e-commerce channel has the potential to offset declining brick and mortar sales, it can only happen if the added channel satisfies basic supply chain and customer service requirements, including getting the right product to the right place at the right time and at the right cost. As retailers look to add or develop an online sales channels, fulfillment challenges inevitably spring up.