Are Online-Only Retailers Doomed?

It’s a widely held viewpoint that e-commerce is the channel retailers should be funneling most of their resources and thought into over the next five, 10, bazillion years. And pure e-tailers, the thinking goes, are already ahead of the game—unfettered by the overhead of running physical stores.

At least one retail pundit disagrees. New York University Stern School of Business marketing professor Scott Galloway said on Bloomberg News Monday that “pure-play e-commerce doesn’t work,” citing Amazon’s recent foray into brick-and-mortar, along with faltering financials at Net-a-Porter and Gilt, and mass layoffs at One King’s Lane.

Courtesy Amazon

Inside an Amazon warehouse

Digital retailing may experience the most growth in the next decade, but multichannel businesses are the future, Galloway concludes. “This is where the puck is headed—people want access to products everywhere,” he said, citing Coach, Burberry, and Warby Parker as brands getting the mix right.

“They’re going to outperfrom companies that have weak digital. When you are stronger digitally, your in-store sales go up. This is the crossfit of business.”

Galloway’s forecast is predicated on the physical store adopting more of a warehouse operations model—allowing consumers to order products online (or check inventory for their local store) then pop down the street to pick it up.

With their spartan interiors, tablet-wielding employees, and wall-stacked products, Apple and Warby Parker stores—to name two successful multichannel retailers—already feel like mini warehouses. Both offer online inventory searching and ordering, actions meant to culminate at a consumer’s local store. 

“What’s more convenient than ordering [a product] from Amazon and getting a yellow tag on your door,” said Galloway, “is to bomb to the store down the block and get it.”

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JCK Magazine Editor