If the future of retail is e-commerce, most retailers are doomed.
When it costs you more to sell an item than you make, you run out of money. And nobody is making any money from online shopping – at least not yet.
The pandemic tied the hands of so many retailers and brands that were forced to expand online offerings in the hopes of making at least some sales. But unfortunately, economic models don’t change because you are in a pandemic.
I’ve previously discussed the retail shipping wars with MarketWatch, highlighting how it’s becoming the norm for retailers and brands to shell out upwards of $120 to offer “free” overnight shipping. The retail shipping battle is driving down margins as major retailers absorb these costs to capture business. Last week, Reuters ran a story referencing recent data by RSR Research saying online orders cost retailers roughly 10-15% more than purchases in stores, where shoppers do the work of selecting items and transporting them home. The piece notes that their calculation does not include returns, which are more common with e-commerce purchases.