Retail Day
Retail Week, today
An unfashionable view
We talk a lot about the remarkable growth of online retailing, and with good reason. Asos today turned in the sort of performance that most retailers can only dream of, and is the model of a pure-play etailer that has a fantastic brand and terrific reach among its target audience. Nick Robertson and his team are doing a terrific job and are always one step ahead of the game.
But there’s another side to the coin. The other day I was talking to the CEO of one of the UK’s very biggest retailers, who was saying that his business has been through a very serious debate internally about whether it should continue to sell online at all. Why? Simply because the cost of doing so didn’t add up for them.
That’s why some retailers like Morrisons have decided against selling online, and why there’s such confusion about how Waitrose is going to make free delivery on grocery work. Online is incredibly convenient for customers, but that convenience comes at a price for retailers.
In the end the retailer which was weighing up ditching its site decided against, and to make the site work harder as a marketing channel. But while it may be an unfashionable point of view, no retailer can afford to commit to run a channel which loses them money indefinitely.
on May 13th, 2009 at 1:50 pm
I have just got in a debate with the rest of the office over online grocery retail. Despite the overwhelming praise for the systems available on Tesco and Sainsburys etc. we were split on whether we believed the online grocery market is profitable. I made reference to the above article but was hit back with Tescos last year profit on Tesco.com.
Do supermarkets generally make money online as the only articles I can seem to find refer to 2003 where companies were making a loss online?
Any feedback to stop the debate would be mostly appreciated!
on May 13th, 2009 at 3:29 pm
The supermarkets don’t like to talk about this, but my understanding is that none of the grocery operations make money online yet, with the exception of Tesco. Ocado has talked about making a profit soon, but hasn’t yet delivered one.
on May 13th, 2009 at 3:39 pm
Thank you for your quick response. There are still several people arguing this point!