The economics of online retail is hard:
While conventional wisdom holds that online sales should be more profitable, because websites don’t need the pricey real estate and labor necessary to maintain a store network, many retailers actually earn less or even lose money online after factoring in the cost of shipping, handling and higher rates of returns.
For retailers that outsource their Web and fulfillment operations, costs can run as high as 25% of sales, industry analysts said.
Kohl’s Corp. says its profitability online is less than half what it reaps in its store.
Wal-Mart Stores Inc. says it expects to lose money online at least through early 2016 as it invests to build its technology, infrastructure and fulfillment networks.
Target Corp. says its margins will shrink as its online sales grow.
Best Buy Co. said faster growth on its website will weigh on its profitability at the end of the year.