Ecommerce has a disconnect problem. The ease of pressing “ORDER” is diametrically opposed to the real-world effort that goes on when you transact with a retailer.
In a brief article, Forbes’ Retail’s Future: Open-Air, Curbside, And Data-Driven by Investing writer Greg Petro maps out some of the overlooked, but unavoidable consequences of ecommerce replacing brick-and-mortar retail operations.
Will e-commerce kill bricks-and-mortar? “I think it’s exactly the reverse,” says Adam W. Ifshin, founder and CEO of Elmsford, New York-based DLC Management Corp. DLC owns and/or operates more than 300 shopping center and mall assets. He notes that while Amazon’s net product sales surged in 2020 (36 percent), so did fulfillment costs (45.5 percent).
Any physics student will tell you with certainty that to move an object from A to B requires energy. Lots and lots of energy. And, energy ‘ain’t cheap:
By some estimates, Amazon’s shipping costs are 18.5 percent of net product sales.
Ifshin says such a pure e-commerce system is unsustainable and the concept of pick-up in store and curbside, “is here to stay.”
Shipping has always been the ugly fact that no one talks about — until they realize they’re facing bankruptcy. Digital marketers seem to forget that shipping costs a lot. Like a shit ton. So if you’re trying to compete in an open market with razor-thin profit margins, you’ll soon realize that FedEx is eating your lunch.
Amazon (and others) know this and recognize that it is a prohibitively expensive block for even large retailers. So multiple hybrid “solutions” are attempted; Amazon Locker, their horribly executed alliance with Kohl’s, and start up “return services.” It’s with a small smile that I’ve read that Amazon is quietly opening its own physical shops.
What has been your experience with managing shipping and return policies? Leave a comment below.