Can A Business Go from Solely Ecommerce to Adding Retail Stores?

[WheelsRCool]

So I have been thinking. Plenty of businesses that are retail chains have created ecommerce websites as well. However, I have not really seen any ecommerce brands create physical retail stores.

I was wondering, is there a specific reason for this? Could a big ecommerce business do something like this, or is it just not viewed as logical, because stores have things like overhead, staff, etc...which would cut into profits...but then again, opening stores could increase profits, could it not...?

Although then again, I am not sure. For example, take Newegg.com, the big computer products ecommerce business. Newegg, just as an ecommerce business, has revenues of around $3 billion.

That is the revenue range of many of the biggest chain stores already. For example, Dick's Sporting Goods, with their HUGE stores (about 400+ of them), makes about $4 billion in revenues. And Payless Shoes, with 4,500 stores, makes about $2.7 billion in revenue.

So I mean we see why perhaps adding physical stores for a bigger ecommerce business might not make sense.

But would it undercut their online profits, or just add to them, is what I am wondering.

Let's take Zappos. They have revenues of around $1 billion last checked (I know they broke the $1 billion mark).

If Zappos was to open up multiple Zappos-branded stores, would this only add to their revenues, or undercut their online business? There's also the numbers problem.

Going back to Payless Shoes, Zappos, an ecommerce-only business, has around $1 billion in revenues thus far; Payless Shoesource, a chain, has revenues of about $2.667 billion, with 4,500 stores, as said. That would mean over 1,000 stores just to hit another $1 billion in revenues if you were Zappos, if you wanted to add more revenues from physical stores. That's also a heck of a lot of employees you could probably avoid through just sticking solely to the ecommerce operation I'd imagine.

On Wikipedia, it says Payless has around 27,500 employees. Zappos has 1500+. If you guessetimated that 1500 employees are needed for Zappos's $1 billion in revenue, then to get to about $3 billion like Payless, that could mean maybe 4500 employees in total (1500 x 3), which is still significantly less than 27,500.

Hmm...maybe I just answered my own questions, but I mean if chains feel they can add to their operations by adding ecommerce, perhaps ecommerce could add to their operations by adding physical stores too.

 

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