There’s a pretty good read in the Economist this week on ‘making it click‘ that convincingly makes the point that the Internet presents little opportunity for retailers. This is an over-simplification of the point of the article. The author also discusses opportunities to for traditional retailers to use the Internet and mobile in innovative ways to support their business, but overall it seems like the web is not a home for traditional retailers to make huge profits.
Terry Lundgren, the CEO of Macy’s, claims this isn’t true and that ‘omnichannel’ retailing will remain the future. He contends that catalogs, then tv selling, were both supposed to kill off retailers but never did.
Mr. Lundgren makes some good points, but dis-intermediating traditional retailers from the manufacturing chain is exactly what the Internet is made to do. People go to retailers because they can scoop up a bunch of brands and products from a single location. This value proposition falls apart when moving from one store to the next is a click away. I believe Amazon and Google Shopping are slowly proving this out.
I also think there are two contrary ideas when thinking about the web and retailing:
- There’s no point in having retailers if manufacturers can reach customers directly through the web because there are no opportunity costs associated with moving from one environment to the next, however
- There is still significant value in curating selections for customers and presenting products in an environment that helps them make good decisions. This was previously the roll of the publisher, but the current online advertising ecosystem doesn’t sustain great content.
There are billion dollar ideas buried somewhere in this sea change. I think Pinterest is the closest to making a real play in curated commerce an I’m excited to see where it goes.