Thread by @minethatdata

1 - Pay attention to what retailers say about e-commerce sales over the next few weeks.

You saw, for instance, that Amazon was hiring 100,000 employees. That's what growth in e-commerce looks like.

What is going to happen in retail e-commerce will likely be different.

2 - In normal times (which seem like a long time ago) when a store closes, sales disperse.

Maybe 30% (plus/minus) of sales generated in the closed store are still captured ... usually 15% move online, and 15% move to adjacent stores in that city.

3 - Well, there's the high probability that those sales aren't moving to an adjacent store.

So you're looking at (hopefully) 30% of sales from the closed store to migrate to e-commerce.

Your mileage will vary.

4 - If 30% of closed store sales moved online, that wouldn't be the end of the world for my client base. If that happened for 2-3 months, they "could" survive.

5 - The problem, as you already know, is inventory.

Every retailer that closed in recent days as WAY WAY WAY TOO MUCH inventory. It's just sitting there.

That inventory has to go before the "brand" can move on.

6 - So when stores open up again, say in 1-4 months or whatever, all that stuff that is sitting there has to sell ... at fire sale prices.

What do you think happens to profitability when fire sale prices are in effect?

7 - So even if the disruption is short (say two months) ... you have to liquidate two months of inventory at fire sale prices.

And then you have the uncertainty of how much stuff do you order for the fall? That's a big puzzle, riddled with uncertainty.

8 - You can rest assured that the more uncertainty that exists ... the "more conservative" inventory buys will be this fall.

This will constrain demand that might have come roaring back if things were fine.

9 - So having a strong "omnichannel" value proposition created a temporary buffer ... very temporary ... you capture some sales via e-commerce in the short-term.

Smart business leaders aren't thinking at all about omnichannel synergies.

They're thinking Inventory.

10 - They HAVE to think about Inventory.

How do I get rid of stuff in an environment where I'm not allowed to sell it?

How do I order stuff in an environment where I don't know if I'll be allowed to sell it?

11 - As this dynamic ripples through the supply chain and the economy there will be major bumps.

You already read today that JP Morgan is expecting Q2 GDP to fall by 14%. Yeah, fourteen percent.

12 - We'll get through this. Maybe with a mini-Depression, maybe with just a blip on the radar.

Either way we'll get through it. We always get through it.

Smart people are working on the problem.

13 - If you are reading this, you are fully aware of what lies ahead.

You've prepared your whole Professional life to handle important challenges.

You're ready to move us through the next eighteen months. We'll come out on the other side better. We always do.