The Mandatory Shift to Online Retail Is Negatively Impacting Brick and Mortar Businesses Without Online Capabilities

By Jordan French Jordan French has been verified by Muck Rack's editorial team
Published on June 10, 2020

Many businesses completed a seamless transition to offering their products and services to online retail when they had to close their doors in COVID-19. But some brick and mortar businesses that didn’t previously have online capabilities didn’t make the shift — and they’re paying for it in lost revenue. 

This comes on the coattails of a gradual shift from retail to online that has been occurring for years. CNBC noted that February 2019 was the first month that online stores (narrowly) outperformed general merchandise stores. The shift of businesses to online capacity is not just a trend or a temporary way to cope with social distancing regulations. It’s a shift that was happening with or without COVID-19.

Impact on Big Box Retailers and Discount Stores

Forbes reported that major discount retailers such as T.J. Maxx, Marshalls, and Home Goods have never had an online presence. The nature of their product supply made it challenging, since they sell extraneous inventory that didn’t sell initially, and have various and randomized amounts of each product. They simply never built the infrastructure to sell online and didn’t need to, then, they didn’t have time when the pandemic hit.

It was also reported by Forbes that other discount big box stores, such as low-cost grocery retailers Aldi and Lidl, don’t have any online capability either. The businesses are suffering as a result. The reasoning behind why other discount stores such as Dollar Tree never built out an online infrastructure remains true: their target customer usually uses cash rather than a credit card, and therefore didn’t shop online to begin with. Because of this, there’s virtually no reason for them to invest the time and money to build an online infrastructure, including a Google Knowledge panel, Everipedia page, or Wikipedia page, now.

Businesses that are just getting started, heed this call. Online capacity must be of paramount importance from the start, not only for ‘worst-case scenarios’ like the unforeseeable global pandemic but for the greater shift to online sales.

What to Do for Businesses That Need to Check IDs?

The switch also posed a problem for businesses that need one important in-person component to adhere to national law: checking IDs. For products with an age requirement of 18+ and 21+, a shift to online poses a significant risk of selling to minors. These businesses include liquor, CBD products, vape pens, and tobacco. The need for some form of a verifiable ID checker was met with a surge of technologies to help these stores move online confidently. 

One with seemingly novel ID-checking technology, AgeChecker, can be embedded into a company’s online checkout process to verify customers’ real age. It can verify an ID in just ten seconds, making it pain-free and convenient for customers. Companies can stay FDA-compliant and not lose potential online sales, which may pay off in the long run, even when social distancing guidelines are lifted. The ability to order alcohol, tobacco, and other 18+ or 21+ products online may change the game for businesses like vineyards that will now be able to ship products nationwide, for example.

Impact on Restaurants and Delivery Services

Consumers could see fewer and very different choices post-pandemic.

Delivery services like DoorDash, UberEats, and Postmates for restaurant delivery and InstaCart for grocery delivery are at an all-time high. According to the US Chamber and Apptopia, as of just March 15th 一 the week that shutdowns began to occur nationwide 一 there was an increase of 218%, 160%, 124% and 98%, for InstaCart, Walmart Grocery, Shipt, and Target app downloads, respectively, over the average number of daily downloads in February.

And while delivery services have never been busier, it may spell trouble for the restaurant business. A trend away from eating out has been slowly forming over recent years. Yelp’s data science editor Carl Bialik noted that the U.S. consumer interest for restaurants has fallen by 54%. With a choice between cooking at home or ordering in week after week throughout these month long shutdowns, it’s unclear how the re-opening of restaurants will impact the industry. Will consumers eat out more often, after so many nights at home? Or, will they remain cautious and stick to their new hard-earned cooking habits for several more months?

The full extent of COVID-19’s impact on businesses and online retail is yet to be determined. While early statistics are providing hints to the changes that are occurring, it will be a few more months 一 or even years 一 until the full economic impact of the pandemic is understood. A greater consideration is how businesses can ensure their online capabilities are up to par. COVID-19 or not, it’s a matter of long-term survival.

By Jordan French Jordan French has been verified by Muck Rack's editorial team

Journalist verified by Muck Rack verified

Jordan French is the Founder and Executive Editor of Grit Daily. The champion of live journalism, Grit Daily's team hails from ABC, CBS, CNN, Entrepreneur, Fast Company, Forbes, Fox, PopSugar, SF Chronicle, VentureBeat, Verge, Vice, and Vox. An award-winning journalist, he is on the editorial staff at TheStreet.com and a Fast 50 and Inc. 500-ranked entrepreneur with one sale. Formerly an engineer and intellectual-property attorney, his third company, BeeHex, rose to fame for its "3D printed pizza for astronauts" and is now a military contractor. A prolific investor, he's invested in 40+ early stage startups through 2021.

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