How Retail Is Evolving In An On-Demand Economy – Forbes
How Retail Is Evolving In An On-Demand Economy
It’s been widely discussed that Amazon plans to enter the brick-and-mortar retail game. This is ironic because it is Amazon that put many brick-and-mortar retailers out of business in the first place. Circuit City, Borders and Blockbuster all succumbed to the dynamics of e-commerce and companies like Barnes & Noble NE +0.99%, Sears and K-Mart aren’t too far behind. Big box retailers carry fewer product lines and holding inventory presents significant risks. Consider that in the last four years, cumulative sales of brick-and-mortar retailers shrank by $30 billion and as Jeff Jordan rightly points out, “these trends are only accelerating.”
In the past, brands would have to fight for shelf space and customer access and that gave power to the larger retailers. Today, anyone with a product and a website can build their own sales channel and that is creating enormous shareholder value for the digital players. This creates a new set of challenges for brands and retailers.
On one hand, building an online-only business has cost and distribution advantages. There is no need to invest in large amounts of inventory and you aren’t subjected to retailer buying terms or expensive overhead for rent. This is a large reason why companies like Bonobos and Warby Parker experienced success early on and why many brands looked to copy the online-only model.
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