Shopping For Data: The Truth Behind Online Costs
August 10, 2017 | Tom McGee | Forbes
The chatter around the diminishing future of brick and mortar retail got served up again in a misleading piece on the costs of doing business online.
This time, the narrative focuses on failing brick and mortar chains and their digital resurrection in The Wall Street Journal’s “Beyond Bankruptcy: How Failed Stores Come Back Online.” The article includes an infographic that slices up a pair of jeans to show the costs and profit for a pair sold in stores versus online. However, the math doesn’t add up, and the headline should actually read “Why Online Retailers Need Physical Spaces to be Profitable.”
Here’s why.
While the bankrupt labels cited in the Wall Street Journal may be contending with different costs compared to running physical stores, that doesn’t mean it’s cheaper to go online. A recent analysis by AlixPartners for CNBC showed that even when accounting for the legacy costs associated with online retailers, in-store purchases yielded higher profits than those of online shopping purchases– shipping from distribution centers, picking up in stores, and shipping from stores.
