One might think of Amazon / E-Commerce / Retail as a Predator / Prey ecosystem.
Amazon eats E-Commerce and Retail.
E-Commerce eats Retail.
Therefore, what could Macy's possibly do to survive?
If you view it that way your answer to the Macy's question becomes very interesting!
Amazon eats E-Commerce and Retail.
E-Commerce eats Retail.
Therefore, what could Macy's possibly do to survive?
If you view it that way your answer to the Macy's question becomes very interesting!
Now, this series of statements makes common sense, but it also yields a ton of geeky math, doesn't it?
In the real world, I used this logic and modeled the results in two specific cases.
The first time was in 1999 ... I was able to demonstrate that e-commerce would gobble up the traditional catalog channel at Eddie Bauer. Nobody would believe that at the time, so the analysis went nowhere.
I also used the logic and equations to demonstrate in 2001 that e-commerce would gobble up the traditional catalog channel at Nordstrom (and would do so within 3-4 years).
Nobody believed the outcome until about 2004, when it actually happened.
Nobody believed the outcome until about 2004, when it actually happened.
Then we shut down the catalog division and direct-channel sales increased and profit increased significantly.
So yes, the equations work and have practical real-world applications.
So yes, the equations work and have practical real-world applications.
The equations tell us why the omnichannel thesis is sooooo highly flawed.
What happens, of course, is that e-commerce gobbles up retail. When you have multiple channels, a channel becomes a predator (e-commerce) and a channel becomes prey (retail).
When a channel becomes a predator (e-commerce), it voraciously consumes the prey (retail).
The only way to grow retail, then, is to rapidly increase customer acquisition within the retail channel. That's your only choice.
The only way to grow retail, then, is to rapidly increase customer acquisition within the retail channel. That's your only choice.
However, from a financial standpoint, as e-commerce eats retail Management decides to close retail stores and invest instead in e-commerce.
Guess what?
This starves retail, and in the long-term it starves e-commerce because retail dies too fast to feed e-commerce.
Guess what?
This starves retail, and in the long-term it starves e-commerce because retail dies too fast to feed e-commerce.
This is why you end up with the "Retail Apocalypse" and you end up with Malls dying.
In other words, the response from "the industry" is to contract retail at the very time when you must expand retail customer acquisition.
You do the opposite of what is necessary.
In other words, the response from "the industry" is to contract retail at the very time when you must expand retail customer acquisition.
You do the opposite of what is necessary.
And when you do the opposite of what is necessary, you end up with the highly failed omnichannel thesis that led to the retail apocalypse.
