Two Goldman Sachs executives talk about the different measures of success in e-commerce, and why the marriage between bricks and mortar and online could be where the success lies, although it all depends on the vertical and the product.
We are seeing a permanent shift in the way that people shop. Retail sales globally are growing overall at a rate of 1-2% in bricks and mortar, however, e-commerce is growing at a rate of 14-15%. So the retail world is speeding up and slowing down at the same time and that’s creating a lot of turbulence, according to two Goldman Sachs executives.
Speaking on a firm podcast, Kim Posnett, head of internet investment banking, and Kathy Elsesser, head of the healthcare and consumer and retail investment banking divisions, spoke about how e-commerce and bricks and mortar should work together to create a successful retail formula.
“Until that retreating and advancing that’s happening concurrently settles to some sort of equilibrium, I think we’ll continue to see lots of changes and lots of shifts. We’re never going to be 100% bricks and mortar and we’re never going to be 100% e-commerce,” says the two.
Omnichannel is the way forward, according to Posnett and Elsesser, who says the answer changes across region and across vertical, and the way consumers choose to buy products in those regions and verticals.
The executives say that the key to success in e-commerce isn’t necessarily being 100% e-commerce or 100% offline. Rather, Posnett says it’s the marriage between the two.
“Success to me is what is best for that consumer in that particular vertical, for that particular product, and there’s different approaches from an e-commerce standpoint.”
“We’re finding, in a lot of the companies we’re spending time with, that the definition of success is actually quite different (for each). If you have a consumer that’s engaging with your brand that you built online first, and they’re spending hours a day engaging with your brand in different ways, whether its research, whether it’s sharing things with friends, posting things on social media, whatever – I think that’s very successful and that’s something that companies weren’t able to do five, ten, fifteen years ago.”
Success isn’t necessarily about profitability, according to Elesesser, with scalability, growth and wonderful customer service being other measures of success that carry weight.
“This whole concept of, to Kim’s early best point, omnichannel – what really matters is engaging the customer and selling product, regardless of the specific channel, because I’m not sure that we even have a great handle on that anymore.”