While retailers rush to increase their gross on-line sales, cost escalate.

According to Chain Store Age, The National Retail Federation reports that 20.8% of all on-line sales in 2021 were returned. Further, every $100 in returns has an average cost of $10.30 to the retailer. Returns are expected to rise in 2022 as retailers compete for sales with liberal return policies. In addition:

What is happening to the cost of warehouse space? It is rapidly increasing. What is happening to advertising expense? Cost of customer acquisition is skyrocketing. What is happening to transportation costs? Costs are escalating.

All these factors impact the bottom line and the return on investment. So, why does the race continue?

1. There is a follow the leader mentality that creates ‘me-to’ marketing. “Everyone else is doing it.”
2. There is a desire to show the media and investment community that management is at the front of the curve in their digital innovation. Management is constantly asked for their percentage of on-line sales instead of their ROI.
3. There is a ‘silo’ culture that wishes to justify the investment in people and technology by showing impressive sales numbers
4. There is the illusive promise that some critical mass will ultimately be achieved where all the costs will be justified.

On-line sales are critical to the success of today’s retail business. However, smart merchants will realize that not everything that can be done, should be done. Perhaps it is time for some revised strategies with more critical performance indicators.