Exploring the Space and Place Concept

With the rising trend of Internet based sales and ecommerce branding exploding in the last few years, a new term in the business world has been developed; going from "place" to "space." In this reference, the term "place" refers to the physical location of the retail store in the physical world (that being here on Earth). The term "space" on the other hand means the location of the business on the virtual world (the Internet or World Wide Web). With the rise of Internet based companies, many physical retailers have discovered that they need to adapt to the ecommerce sale industry just to keep their own market share. With this adaption being done, it is referred to businesses having a transition from place to space.

From the fourth quarter of 1999 through the third quarter of 2003, Internet based ecommerce sales climbed from 0.7 percent of total retail sales to 1.9 percent of total retail sales in the United States. That is a growth of almost 200% in market share for the Internet sales force in just four years! It was predicted that by 2008 nearly thirty percent of physical store sales would have been researched and influenced by consumers' first checking on the Internet for sales and information about the product prior to the purchase.

The reason that so many businesses have gone to the Internet is the severely reduced overhead expenses that physical place stores have to deal with. An Internet based company can be run by one person sitting in their living room without the costs for buildings, utilities, employee payroll, insurance, and product creation. Many sellers have found their way to sites like Ebay.com that allow anyone in the world to sell almost anything from their home or office in a virtual setting for fees far below the typical cost of doing business. With average ecommerce fees based mainly on sales percentages, the cost to start and run a business on this type of site can easily stay below $100 a month (not including an average sales fee of about nine percent after a sale is made). The point here is that simply having a store online has minimal if any overhead. This leads Internet sellers to be able to pass the savings on their overhead to their customers by reducing the sale prices of their products to less than local retailers can charge.

For a typical physical store to secure market share they need to close the gap between place and space selling practices. For example, if the store location has a television on sale for $1000 and the Internet sites can sell the same model for $700, then the store's website needs to offer the same model on their site at a more competitive rate and have it available for pickup in a local store. Some chains have started to offer concepts like Wal-mart's "Site-to-Store concept. In this concept, a consumer can shop the products they want from their website, pay for them online via credit card, and come to the store to pick them up in a few days. What's happening here is that the company is selling products online that are stored in regional warehouses (lower overhead costs) and only sending product to the local store with its regular shipment after the product has already been sold. The customer may have to wait a few days to get the item at the lower rate, but more consumers are realizing the value of this concept each day!

The recent rise of Internet based sales has created a movement for physical retailers to migrate to ecommerce to regain control of their market share. The advantage of this process is the much lower cost of overhead resulting in lower sales prices online than possible in a physical store. Wal-mart is just one of the many companies that have made this successful transition.