Speaking at the Barclays Global Consumer Staples Conference this week, Coca-Cola's executive vice president of North America Sandy Douglas, spoke about e-commerce, and the the e-commerce image problem. The key quote was this:

"When we think of e-commerce, we tend to think of the pure play guys. But the clicks are looking for bricks and the bricks are looking for clicks.

And so, I would really say to the investment community, don't count out the brick retailers. They're moving fast. They have significant assets and they're working to serve the shopper. And don't think of e-commerce as a channel. It's a way for consumers to research, to buy, to experience brands and then, ultimately, to have them have fulfilled."

-- Sandy Douglas, Coca-Cola

It's rare to see traditional retailers, or manufacturers get it.

The categorization of traditional brick-and-mortar retailers on one side, and online retailers on the other is outdated. The brick-and-mortar vs Amazon battle is overused. The focus should be on modern retail.

In China Alibaba has recently unveiled plans to transform 10,000 mom-and-pop stores into a network of Tmall.com outlets, allowing customers to shop online, pick up packages, even apply for an Alibaba loan. "Behind every digitalized Tmall shop, there is synergy to be achieved (via Alibaba’s platform) on supply chain, branding, sales services, etc. (These stores) will not just be a retail end-point, rather a new starting point to observe user behavior," said Lin Xiaohai, vice president of Alibaba. Alibaba's eventual goal is to scale it to over 6 million stores, and their rival JD.com is working on a similar strategy with plans to open 1 million stores over the next five years.

Given the view that marketplaces are infrastructure companies, and not retailers, them starting to expand offline makes a lot of sense. Even Amazon is starting to make their first steps. It is unclear what is the end goal of the $13.7 billion Whole Foods acquisition, or how many more books store Amazon is yet to open, but they will all somehow fit into their infrastructure system. And while all of this is happening, Walmart is starting from the other side, having one of the largest networks of warehousing, and stores of any company, trying to find a way to make online experience use it. This is "the clicks are looking for bricks and the bricks are looking for clicks" Sandy was referring to.

Often when things grow from nothing to dominate the market it takes a really long time for mindsets to get used to it. For example, social networks and the internet. They too get categorized as two separate things (ideas). But today social networks is the internet. Many companies make this mistake every day, and will eventually find themselves out of the picture because their missed it. In many countries for example, less so in the west, companies no longer have websites, but instead have a Facebook page, or a WeChat page. These are the equivalents of a website in 2017.

Mobile web took years to be treated as just web. For years websites would have separate, often limited versions of their main website. But then we all realized that it is all the web and mobile is just a different format. However to this day many websites are inaccessible on a mobile phone, with their owners clearly unaware of how their customers consume the internet. In the US mobile e-commerce is small, but growing fast, and online retailers making a call that "people do not shop on mobile phones" will struggle.

It's the same for retail. E-commerce is not a retail channel, because e-commerce is retail. Of course it is easy to categorize sales which were made on an e-commerce website, but it misses the bigger picture. E-commerce is a channel in a sense of where an order is placed, but it's a simplistic view of what a channel is. A lot of retail now happens with some parts of it done online (following brands, comparing prices), and some offline (trying on clothes, browsing books), but all of this is still retail.

We wrote more about this in Struggling Retailers Blaming Amazon Are Missing The Bigger Picture:

"The best way to look at this is that e-commerce as a whole is just one of the examples of modern retail. But it doesn't end online, there are many traditional retailers which have figured out how to become modern too. Our thesis is that retailers loosing out are the ones which confuse the growth of e-commerce as not part of the bigger shift in retail. Somehow it is forgotten that traditional retail still represents more than 90 percent of all retail. Amazon growth is a result (and cause) of e-commerce growth, e-commerce growth is a result (and cause) of modern retail. Amazon is the most visible example, but it's really part of a much bigger shift."

Maybe the next natural step is assuming that Amazon is not a channel either.

CEO of the recently-struggling Foot Locker said:

"At the premium end of the market, most of our customers don't work to just buy a specific product at the end of spring. They want that product to have a connection to an experience they find meaningful and want to participate in...For that reason, we do not believe our vendors selling product directly on Amazon is an imminent threat. There is no indication that any of our vendor's intend to sell premium athletic product a $100 plus interest that we offer directly via that service distribution channel."

Foot Locker's lack of sales growth would beg to differ. Many brands are going direct-to-consumer, for example Nike just recently committed to selling on Amazon.

Sometimes brands not only make products, but also want to control distribution. Some of the most recent successes like the Dollar Shave Club which came with a subscription model is a good example. But many who try to control how customers find them are making a mistake. Be it e-commerce, Amazon, or Facebook/Instagram/Pinterest shopping - it's all retail.

Share it:

Join the conversation on Twitter or Facebook.

You can also join our mailing list to get new articles straight to your inbox.