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

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.

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

And almost none of these critical functions mattered online.

While allowing advertising to dictate the buy box was immensely effective at increasing their take rate (anyone who believes this is actually advertising is confused — Amazon is just increasing their take rate and calling this dynamic advertising), this may end up being a very profitable short term decision that creates significant long term pain. ... 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.

Brick and mortar stores significantly lower online CAC by improving marketing efficiency (higher click through rates, higher quality scores for ads). Consumers are more likely to trust a brand they have seen in the real world. Ironic in a world where “CAC is the new rent” that one of the best ways to lower your online rent, i.e. CAC, is to pay rent... See more

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

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.

Many of the perceived Covid winners such as e-commerce, videogame and streaming media companies have simply been pulled a few years forward into a future that was inevitable. Their destiny did not change. The future for those businesses simply accelerated whereas the future for category leading “brick and mortar” retailers has changed dramatically ... See more

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