Sposato 1

Luke Sposato

Instructor: Malcom Campbell

UWRT 1104

April 20, 2019

E-Commerce is becoming a dominant force in Consumer Spending

Rapid technological growth is changing where we shop and how we purchase our

products. Upgrades and enhancements to mobile phones and computers seem to occur every

day. Consumer spending is a big factor in the economy and finding easier ways to purchase

through e-commerce can stimulate economic growthbe a key growth factor. Amazon, which is a

probably the bestgood example of e-commerce, has become thea dominant force thanks to their

innovation with online sales and an expanded use of technology, including artificial intelligence

or AI. Companies such as Target and Walmart have had to change how they operate and are

putting more of their resources to the online market as compared to in- person retail located in

actual buildings. One of the biggest questions facing the future of e-commerce is whether it will

continue to grow or reach a ceiling. Additionally, wWill traditional retail stores soon become be

outdated or odd and e-commerce will be the normwith the rising growth of e-commerce?

While many brick-and-mortar stores are closing or are going bankrupt, e-commerce is

expanding rapidly (Orendorff, 2019). . JC Penny, for example, closed 138 stores in 2017

(Rocheleau). Many traditional brick-and-mortar stores, however, account for a large portion of

online sales (Orendorff, 2019). It is understood that the retail companies that are surviving the

changing economy are adapting to whether the consumer wants an “experience” or just a
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“transaction” (Orendorff, 2019). The benefits of both are why some traditional retailers are

closing some stores and why some e-commerce companies are opening stores. This is why

Amazon bought Whole Foods because the grocery business is huge with $675 billion spent per

year in the United States. Whole Food is an established upscale grocery store giving Amazon

direct marketing access that can be used to expand e-commerce. Amazon realizes they have to

have physical stores to sell groceries especially given many items must be sold fresh. (Keyess,

2018). There is still a human aspect to the transaction whether it is online or in a store, but efforts

are being made to make e-commerce more of an experience (Orendorff, 2019).

E-commerce will likely continue to rapidly grow because of the ease and comfort of

online purchasing. Many consumers prefer to make purchases in the security of their home rather

than driving in traffic, find parking, and loading and unloading. It can be much easier and less

time consuming to shop on Amazon and have things delivered to the front door, especially if you

do not need them right away. E-commerce is not just for large companies but is also occurring at

the Many local or regional level. retailers, WeDeliver was a Chicago based company that

focused on same-day delivery through the use of an apphowever, are now delivering within the

same day. E-commerce can help small companies get a start because they do not need to lease or

buy an actual location (Spors). These local companies can respond more quickly given they are

based where people live. WeDeliver, for example, is a Chicago based company that focuses on

same- day or same-hour delivery through the use of an app that connects retailers and delivery

companies. E-commerce can help small companies get a start because they do not need to lease

or buy an actual location (Spors).

Smartphones and mobile devices such as an iPad have also made e-commerce or mobile -

commerce (m-commerce) unbelievably easy. Mobility allows the consumer to shop whenever or

wherever there is WiFiWIFI or adata connection to data. You can be almost anywhere and have

access to virtually any item at any time. The web does not have a closing time like a regular

store. Because of technological advancement, smartphones are nearly as powerful as some

computers. The mobile phone providers like AT&T and Verizon have built massive networks so

that the speed at which information can be received and sent also make mobility and e-commerce

more successful. Data shows that in 2018, mobile e-commerce totaled $137 billion and year-to-

year growth from 2017 is 38.6% (Keyes, 2018). By 2020, it is estimated that 40% of e-

commerce will be made on mobile devices (Thimothy, 2017).

E-commerce is also very active in the entertainment and service industries. It is much

better to use a subscription- based companyies such as Netflix over a company like Blockbuster

RedBox where you haved to drive to pick up and return and purchase or rent a DVD video tape.

Netflix has a massive digital library of videos that does not have to be stocked and do not break.

The customer does not have to worry about returning a video that is available through

subscription service. In addition, the video can be viewed without having to purchase another

device like a DVD player. Netflix can be viewed through many platforms, such as a gaming

system or a Roku. Ever since the industrial revolution, we have always found easier ways to do

and make things

Banking is another area that has being transformed by e-commerce. Bank customers do

not have to go to the bank or an ATM to deposit a check since they can use an app like Venmo.

Venmo allows you to easily send money to with a small number of steps on the app. Money is
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sent using email addresses that connect directly to banks. These apps even allowlet you send

money to a friend so you to leave home without having to do not have to worry about having

cash or even a credit card. Financial companies like Robinhood have developed also apps that

can be used to you buy and sell stock from a mobile device.

E-commerce will grow because it more easily captures an international market. There are

mostly no physical boundaries in the virtual world. In fact, countries like China will likely

become the leader or biggest market for e-commerce (Orendorff, 2019). China and India have

much larger populations than the United States and the potential buying power is enormous.

Porter Eisman, who is the author of Six Billion Shoppers: The Companies Winning the Global E-

Commerce Boom, is very optimistic about the e-commerce potential in India. He says that e-

commerce “will help unleash the buying power of those at the bottom of the pyramid, thereby; it

is certainly good news for the Indian economy.” (Porter)

E-commerce will also see growth because it fits very well with other social media

platforms and branding (Orendorff, 2019). This is especially the case with younger people who

are growing up with mobile devices. Companies such as Instagram and YouTube are able to

leverage their platforms that have millions of subscribers and users to generate advertising and

sales. Many celebrities who have major amounts of followers are paid to use their influence to

sell things (Orendorff, 2019). Kylie Jenner, for example, has become extremely wealthy from

her makeup company that she promotes heavily to her over 100 million followers on Instagram

(source). This type of marketing cannot be done in the same way at a traditional store.

Consumers are still looking for value, however, and the impact of social media influences will

likely be limited or change in the future (Orendorff, 2019).

Another one of the big reasons for the growth of e-commerce is the rise of Artificial

Intelligence or AI, which shapes the way people interact with our mobile devices and computers.

In some ways, AI tries to make computers learn and respond like humans. There has been a lot of

controversy surrounding AI. Some very smart people, like Elon Musk, believe if not manage or

regulated AI can be used to take away freedoms or have too much control. Artificial Intelligence

is also potentially a problem because it can take jobs away from people leading to

unemployment. There are is a lot of discussion in the media on how much the government

should regulate AI because of this issue. Despite the controversy, there is no denying AI will

continue to have a major impact in the world of e-commerce. UUnderstanding how AI works

with e-commerce is important to why it will likely continue to grow and expand (Naveen, 2018).

The four ways Artificial Intelligence is impacting e-commerce are: chatbots, predictive

sales, recommendation engines, and warehouse automation (Naveen, 2018). Chatbots are found

on the home page of e-commerce websites and mobile apps and are programmed to “talk” or

communicate with a customer through voice or text in a relatively real lifereal-life manner

(Naveen, 2018). When you speak to a computer or app, the customer is using a chatbot. Chatbots

are very important and can assist the consumer with purchasingses the right product, checking

product availability, and purchasing (Naveen, 2018).

The second feature of AI that is impacting e-commerce is predictive sales, which is a

“deep learning” statistical programming methodology that uses algorithms to manage and use

very large data sets (Naveen, 2018). The importance of predictive sales is to measure the

customer’s behavior. Naveen use the example of “House of Cards” a has been a very popular

show on Netflix, which uses AI pattern learning techniques to figure out what viewers want to
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see. Predictive sales It also helps to provide data on what product will be in demand and how to

manage inventory (Naveen, 2018).

Thirdly, AI uses recommendation engines to identify their target audience (Naveen,

2018). Recommendation engines use AI algorithms in web searches that to record critical details

on about how a product is being searched. The recommendation engine then uses its finding to

determine what appeals to the customers searches (Naveen, 2018). Amazon is one the biggest

users of recommendation engines to find their target audience for the products they are selling.

They are able to process large amounts data because every transaction can be recorded and

analyzed using AI. (source)

The fourth aspect of AI that impacts e-commerce is warehouse automation, which is

major focus of e-retail businesses (Naveen, 2018). Warehouse automation describes a facility

where the tasks for storing, retrieving, and moving inventory for a company are carried out by

automated systems (Naveen, 2018). Naveen provides the example of China’s largest retailing

company, JD.com with Siasun Robot & Automation Co Ltd., who uses robots to increase

warehouse processes such as parcel sorting, packaging, and categorizing. Warehouse automation

also helps determine the trend of sales for a company and can increase the speed and efficiency

of operations (Naveen, 2018).

E-commerce is not just between a company and a customer, but between

businessescustomers. One of the biggest advancements for e-commerce has been business-to-

business or B2B. Business-to business commerce is trading or selling products or services

between businesses through online technology (Carter, 2018). This has been described as

wholesale trade. Overall it is used to improve the efficiency because transactions and ordering

can occur very quickly using e-commerce technologies, including AI for companies. Business-
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to-business e-commerce has exploded. According to Jary Carter, who is the Chief Risk Officer

(CRO) at WordPress and is the co-founder of OroCommerce, which was built for companies

selling using B2B“With business “e-commerce in the U.S. on track to hit $1.2 trillion by 2021.”

(Carter, 2018). One of the reasons to believe business to business commerce has grown is

because nearly half of the owners of these B2B companies are millennials who have grown up

with e-commerce and mobile devices (Carter, 2018). As the workforce continues to get Also,

buyers are continuing to get younger, companies will become they are also becoming more

dependent on e-commerce. mobile (Carter, 2018).

There is a lot research being conducted on the future of e-commerce. According to Jim

Budd, Chair and Professor, School of Industrial Design, Georgia Institute of Technology, brick-

and-mortar stores will remain important to the consumers. Items that need to be purchased

through a “physical experience” are still preferred to be bought in person (Budd et al). He gives

the example of buying glasses or a backpack. Many items need to be tried on or fitted before

making a purchase. Instead of going exclusively virtual, many companies have found new

technological innovations to improve the effectiveness of the in-store experience. Some of the

innovation means there will be less interaction between the customer and store employees in the

future. (Budd et al)

Dr. Carol Kaufman-Scarborough, PH.D. Rutgers School of Business, also believes that

brick-and-mortar stores will continue to thrive as they adapt to new technologies. She quotes a

survey that says 78% of shoppers prefer to shop “in-store spending six times more in brick-and-

mortar stores than online.” Many retailers offer “shop online, pick up in store” options. This

type of transaction avoids having to pay for shipping. It also allows the customer to see the

product before making a final purchase decision and 73% of people want to touch and feel their
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merchandise before they purchase the item. In-store sales often result in lower returns and more

repeat business. (Kaufman-Scarborough). In the future it will be very interesting to see how Wal-

Mart, who’s primary source of revenue is brick-and-mortar sales, still has the largest revenue of

any retail company in the entire world, will compete with Amazon.

This topic is real to me as I interact with e-commerce and new technologies all the time.

Many stores where I shop, such as Harris Teeter and Target, already have self-checkout

machines to reduce lines and make the purchase process move as quickly as possible. Especially

if I only have a few things to buy, I prefer using self-checkout. When I eat at certain fast-food

type restaurants, I can place my order using a computer instead of a person. This transaction

system seems to take half the time of ordering an item. I also use many of the apps such as

Venmo that have discussed in this paper. As long as these brick-and-mortar companies find

ways to make the purchasing transactions quicker and easier for the customers, physical stores

will continue to thrive with the e-commerce boom. For the companies who do not innovate and

are unwilling to change from what made them successful in the past, will likely fail and end up

like Circuit City and Blockbuster.

Based on this research, it is very likely that e-commerce will continue to expand and

change, especially with global economy. Innovation can be done in a virtual world a lot more

quickly and less costly than in the physical world. It is also true that nNearly all areas of business

and trade are being impacted by e-commerce. E-commerce will also grow because more

consumers have grown up with technology like iPads and cell phones. Although brick-and-

mortar stores will always exist, mMany traditional retail companies that have relied on brick-

and-mortar stores will have to change as welltheir process to be more technological and efficient.

If they do not change, they will likely go bankrupt or be bought by a company that is more
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technologically advanced. There will be a great major focus between the buying experience

versus only just the transaction. With the development of AIAI, e-commerce will become more

experiential, engaging, and personal for both the customer the seller. Regardless of whether you

will be shopping online or in person, interacting with a digital source is the future instead of

getting help from a person. As I enter the workforce in a few years, I will interested to see the

latest technology and how it will be used. Wring this paper definitely makes me more aware of e-

commerce and the future of Artificial Intelligence.

Works CitiedCited
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