The growth of eCommerce – totaling roughly $334BN in 2015 – is the driving force behind retail sales, despite being less than 10% of total sales. Up from just over $91BN since 2005, it is doing much to dislocate and upset the retail world we know. Many brands that existed just a few years are gone, and many of those still here are shrinking their physical footprint.

However, this disruptive force is making waves in other areas.

After comparing the promise of  eCommerce vs eAdvertising ($350BN vs $60BN), Social Media platforms are now pivoting to create ‘Social Commerce’ platforms:

  • Pinterest has had early success with ‘Buyable Pins designed to convert their 100MM users into shoppers, not just browsers.
  • Online resale marketplaces threadUp, Poshmark and The RealReal have emerged to help people empty out their closets and drawers to sell ‘unwanted’ clothing.
  • Combing money transfer functionality and social storefronts within Facebook Pages gives businesses opportunity to set up virtual stores.

So, one could easily argue that the physical world has been overtaken by the digital in a Matrix-esque manner. But, a ‘reverse trend’ is emerging that may shake up the world even more…

Digital is becoming more physical.

Some early examples of what this looks like today:

  • Wayfair, the online-only retailer who has changed how people buy furniture, is innovating again…by launching an “old-fashioned” paper catalog sent via “old-fashioned” snail mail.

  • Both Modcloth and Bonobos, leaders in the online apparel and accessories market, have tested “pop up shops”. In fact, Modcloth just hired several brick-and-mortar executives to explore opening physical stores.

  • It was not only leaked that Amazon (the one time killer of book shops) plans to open as many as 400 physical stores, but there has been confirmation that their second physical store is now being readied.

Retailers are rapidly accelerating their use of digital innovation to brick-and-mortar locations. Improved technology (virtual reality, beacons, RFID tags, dynamic pricing, etc) has led to better shopper analytics and in-store offerings. We are starting to see significant movement on one of the last great challenges of digital and mobile advertising: online to offline attribution. Able to derive digital-driven, real-time insights will allow smart retailers to better close the gap between offline and online customer experiences.

“Digphy” – a term to describe the blending of digital to physical – is certainly a trend that will not only be fascinating to watch, but more importantly, it can fundamentally change the relationship between seller and customer – something that (if done right) will benefit both.