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 growth. Amazon, which is a probably the best

example of e-commerce, has become the 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 Additionally, will traditional retail stores become outdated with the rising growth

of e-commerce?

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

expanding rapidly. 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 “transaction”
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(Orendorff). The benefits of both are why some traditional retailers are closing some stores and

why some e-commerce companies are opening stores. 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. (Keyes). 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).

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 local or regional level. WeDeliver was a Chicago based company that focused on same-day

delivery through the use of an app. 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 WIFI or a connection to data. You can be almost anywhere and have access to
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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). By 2020, it is estimated that 40% of e-commerce will be

made on mobile devices (Thimothy).

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

better to use a subscription-based company such as Netflix over a company like RedBox where

you have to drive to pick up and return a DVD. 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.

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

sent using email addresses that connect directly to banks. These apps even allow you to leave

home without having to worry about having cash or even a credit card. Financial companies like

Robinhood have developed apps that can be used to 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). China and India have much
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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). 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). 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 in the future (Orendorff).

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

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

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

sales, recommendation engines, and warehouse automation (Naveen). 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-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 purchasing the right product, checking product

availability, and purchasing (Naveen).

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). 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 see.

Predictive sales helps to provide data on what product will be in demand and how to manage

inventory (Naveen).

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

Recommendation engines use AI algorithms in web searches to record critical details about how

a product is being searched. The recommendation engine then uses its finding to determine what

appeals to the customers searches (Naveen). 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)
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The fourth aspect of AI that impacts e-commerce is warehouse automation, which is

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

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

automated systems (Naveen). 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).

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

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). 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. Business-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 “e-commerce in the

U.S. on track to hit $1.2 trillion by 2021.” (Carter). 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). As the workforce

continues to get younger, companies will become more dependent on e-commerce. (Carter).

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
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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

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
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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 nearly 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, many traditional retail companies that have relied on brick-and-

mortar stores will have to change their 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 technologically

advanced. There will be a major focus between the buying experience versus only just the

transaction. With the development of AI, 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.
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Works Cited

Budd, Jim et all. “Exploring the future of commercial retail.” Linkoping Electronic Conference

Proceeding. Linkpoing University Electric Press, 5 Jul. 2018,

http://www.ep.liu.se/ecp/article.asp?article=012&issue=150&volume. Accessed 19 Apr.

2019

Carter, Jary. “B2B E-Commerce Trends To Take Notice Of In 2018.” Forbes, Forbes Magazine,

15 Feb. 2018. https://www.forbes.com/sites/theyec/2018/02/15/b2b-e-commerce-trends-

to-take-notice-of-in-2018/#1e4584c47339. Accessed 2 Apr. 2019

Haselton, Todd, “Elon Musk: I’m about to announce a ‘Neuralink’ product that connects your

brain to computers.” CNBC, NBC Universal, 11 Sep. 2018.

https://www.cnbc.com/2018/09/07/elon-usk-discusses-neurolink-on-joe-

roganpodcast.html. Accessed 23 April 2019

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Joshi, Naveen. “4 Powerful Ways Artificial Intelligence is Molding E-Commerce.” Forbes,

Forbes Magazine, 5 Aug. 2018.

https://www.forbes.com/sites/cognitiveworld/2018/08/05/4-powerful-ways-artificial-

intelligence-is-molding-e-commerce/#3bfa94a74b11. Accessed 12 Mar. 2019

Kaufman-Scarborough, Carol. “Why the Brick and Mortar Store Still Matters.” Rutgers Online,

Rutgers University, 20 Nov. 2018, https://online.rutgers.edu/blog/brick-mortar-store-still-

matters/. Accessed 20 Apr. 2019

Keyes, Daniel. “Revisiting Business Insider Intelligence's 2018 e-Commerce Predictions - Here's

How They Turned Out.” Business Insider, Business Insider, 27 Dec. 2018,

https://www.businessinsider.com/business-insider-intelligence-2018-ecommerce-

predictions-2018-12. Accessed 19 Apr. 2019

Orendorff, Aaron. “Global Ecommerce Statistics and Trends to Launch Your Business Beyond

Borders.” Shopifyplus, Shopify, 13 Feb. 2019.

https://www.shopify.com/enterprise/global-ecommerce-statistics. Accessed 20 Apr. 2019

Rocheleau, Matt. “The full list of 138 J.C. Penney stores closing around the US.” The Boston

Globe, The Boston Globe, 17 Mar. 2017.

https://www.bostonglobe.com/business/2017/03/17/the-full-list-penney-stores-closing-

around/vhoHjI3k75k2pSuQt2mZpO/story.html. Accessed 20 Apr. 2019

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Spors, Kelly. “4 Startups Helping Local Retailers Offer Same-Day Delivery” American Express,

American Express Company, 15 July 2014 https://www.americanexpress.com/en-

us/business/trends-and-insights/articles/4-startups-helping-local-retailers-offer-same-day-

delivery/. Accessed 22 Apr.2019

Thimothy, Solomon. “The Future Of E-Commerce: Are You In Or Are You Out?” Forbes,

Forbes Magazine, 17 Jul. 2017, https://www.forbes.com/sites/theyec/2017/07/17/the-

future-of-e-commerce-are-you-in-or-are-you-out/#6099823237d8. Accessed 2 Apr. 2019