Why category leading brick and mortar retailers are likely the biggest long term Covid…

I sometimes think that investors do not appreciate how large and rapidly growing the e-commerce businesses at some of these category leading retailers are. Wal-Mart’s digital revenue in Q2 was an annualized $42 billion, growing 94% — faster than Amazon. Best Buy’s digital revenue in Q2 was an annualized $19.4 billion, growing 242% — faster than Ama... See more

Perhaps the simplest way to express what has happened during Covid is to note that Amazon has actually lost share in e-commerce during Covid. The largest e-commerce share gainers in most categories have been category leading physical retailers as well as the DTC businesses of most brands.

It doesn’t matter how clean and well lit your stores are and how friendly and knowledgeable the employees are if the stores are in the wrong place at the wrong cost or they don’t have the right products at the right prices.

Beyond an erroneous belief that e-commerce was unprofitable which kept them from investing in e-commerce, brick and mortar retailers struggled online for cultural reasons.

Every category leading physical retailer will have a 3p marketplace. These 3p marketplaces will benefit from integration with the stores in the sense that many new DTC brands will not sell on Amazon, but will happily sell through other 3p marketplaces especially if they are attached to a fleet of thousands of stores and the owner of the 3p marketpl... See more

And almost none of these critical functions mattered online.

Brick and mortar stores also enable BOPIS (buy online pickup in store) and the in-store return of items purchased online, which consumers value. Economically, BOPIS will always be cheaper than same day delivery and large numbers of consumers are highly cost sensitive.

The future was always going to be omnichannel. Pundits have been prematurely predicting this for many years, but it is finally happening. There is a strange belief in certain circles that the future will be e-commerce only and that brick and mortar stores have no value.

Amazon’s retail business may actually be disadvantaged long term by Covid due to more intense long term competition as thousands of SMBs have taken advantage of services from Wix, Shopify, etc. to go online, category leading retailers are investing online like never before and brands are investing in their DTC strategies — all at the same time that... See more