#CommerceMonth: Online sales vs in-store sales

The digital landscape is booming, but now that it seems possible to do and buy almost everything online, what's happening to our counterparts out there in the 'real' world?
© Denis Raev – 123RF.com
Many people enjoy online shopping and the opportunity it provides to avoid long queues and hours of shopping. What I’m curious about is, is what this means for the retail salesperson...

The rise of e-commerce

E-commerce and all things digital continue to grow, with a reported 30% year-on-year growth in the retail sector since 2009 in South Africa, which was four times that of physical retail in 2010 (30% vs 7%). In an article published by Memeburn, it is reported that e-commerce currently accounts for 1% of the country’s retail sector as a whole, with a value of between R6-7bn. Much of this growth is reportedly due to younger generations being more comfortable with making purchases online, allowing the online environment to increasingly turn traditional retail strategies on its head. Some factors influencing the growth of the uptake of online shopping could include security concerns with credit card fraud being a real threat, and a lack of knowledge.

Personally, I’ve noticed the malls grow ever so slightly quieter, especially over the festive season which has always seen dramatic amounts of shoppers. Most major retailers have a presence in the digital sphere and there has been a progression of online retail platform launches over the years, such as Zando in 2012, Mr Price online in 2013, Incredible Connection’s online store in 2013, The Foschini Group in 2014 and the merger of Kalahari.com (founded in 1998) and Takealot in 2015 which drew much attention.

Is e-commerce ‘stealing’ commission?

So what does all this mean for the average sales consultant working in the physical retail environment? According to my knowledge, retail outlet employees usually either earn a basic salary, or a flat rate plus commission. Now the first option wouldn’t really come into play here because there’s not much the e-commerce industry could do to influence these salaries, unless of course it impacted the number of employees needed in a store. Those earning commission are the focus of this article. With online sales increasing, surely it has an automatic effect on the number of sales made in the actual store, which would then cause a decrease in the amount of commission a salesperson makes?

What’s more interesting is when I tried to get some sort of idea of how much the online sales of a certain well-known retailer contributes to the company’s bottom line, the manager refused to give me any information whatsoever – he wouldn’t even tell me if their online sales were doing well. Maybe that information is too confidential to disclose, but it just made me feel like they had something to hide. Anyway, the point isn’t to out retailers that are making more money thanks to online sales eliminating the need to pay staff commission (oops), it’s just to get people to think about the fact that making purchases online, as convenient as it is, could potentially be taking away somebody’s bread and butter at the end of the day. I’m not even being dramatic when I say that. It’s really that serious, and simple.

Social impact of e-commerce

Let me make one thing clear: I am not opposed to the use of e-commerce at all, in fact I am a regular online shopper and I find it extremely convenient. But while I enjoy browsing and buying items digitally, I don’t limit my shopping to online only. I am well aware and conscious of the benefits, such as the convenience of shopping from the comfort of your own home, and the fact that it allows those who do not have access to transport or the required facilities, the opportunity to make otherwise impossible transactions online. The downside is that it can be very addictive; it increases the possibility of creating debt/more debt, and of course the fact that purchases made online may directly detract from sales consultants’ commission earnings.

Having worked in the retail industry myself, and knowing people who currently work in the retail industry and who earn based on commission, I can tell you that they are certainly feeling the effect of e-commerce on their pocket and it definitely has an impact on morale too. If nothing else, I hope this article will make others more mindful of their decisions as consumers.
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Read more: Commission, Angie White