On-line shopping

Some of the changes in the way Americans live are blatantly obvious but still not fully integrated into the way markets are perceived. Oddly, before the tremendous expansion of suburbs and retail malls, many Americans used to do much of their shopping via catalogs, making Montgomery Ward and Sears tremendously successful retailers.

As more and more Americans started having access to real stores and the means to get there easily we saw the mail catalog business decline, until it became a very small segment of the total picture and some of the great catalog sellers of the past, discontinued it completely.

So we have seen the golden age of brick and mortar but since the mid 1990s, we have started to see the start of a new phase of what is essentially catalog sales, the on-line retailer. Taking a cue from large chains that get great volume discounts, the on-line retailer, once it grabs enough market, can match and beat the store prices because of the efficiencies related to large computerized storage facilities.

To some extent, the whole cost of the physical retail operations of these large chains, such as Walmart can be avoided and while it is replace by shipping in some cases, the competitive world of shipping has in many cases made that cost insignificant. Further, the shopper, saves the cost of going to a mall and for many the aggravation associated with that experience. It also provides the shopper to do his/her shopping when it is convenient, not when the store is open and, you don't have to worry as much about availability of inventory or sizes since the central inventories of the on-line shops are much larger than that of any individual store.

Now, we still have a great majority of Americans who do their shopping in person, but the trend to on-line is clear. Some hurdles related to payment method and fear of identity theft will slow the move, but every person who start to use on-line is generally permanently hooked into doing at least some of their shopping this way.

We have a number of pure on-line retailers, such as Amazon and E-Bay but we are now seeing the more agile brick and mortar companies enter this space in a bigger and bigger way. However, the winner among the retailers is yet to be determined but the increase in on-line shopping is not in doubt.