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Old-World Retailers Discover the Internet

Aug 23, 2017

When regional retailer Hibbett Sports recently trumpeted that it was launching its first ever e-commerce site, investors were unimpressed.

What they saw instead was a too-little, too late, me-too move that won't help fix its sales free-fall anytime soon, especially since rivals like Dick's Sporting Goods have a years-long head start in collective shopper data and cultivating online business. Hibbett's shares fell 30% that day.

Chart shows e-commerce sales as a share of all retail sales 

Hibbett is only one case of being late to the party: other, far more larger chains, like Costco and Michaels have dragged their feet about e-commerce to a less dramatic extent, assuming their businesses were relatively "un-Amazonable." That is true for some retailers but e-commerce is less crucial for them: Take T.J. Maxx and other "off-price" chains which only get 1% of sales online. Their 'treasure hunt' business model and unpredictable inventory at close-out chains makes e-commerce too difficult and is not what the shopper experience is about anyway.

But before you rush to judgement, consider—sometimes it pays to be fashionably late: J.C. Penney offered in-store pickup of online orders years after Macy's and benefitted from its rivals' growing pains. E-commerce offers lower margins that regular retail for chains that do both, so being slower can pay off, lest companies just jump on the latest, shiniest new thing. Today 90% of retail is still done in stores (even though that figure is dropping by a percentage point a year).

The lesson? It’s never too late to add e-commerce. But retailers should refrain from breathlessly boasting about tweaks to an app or how many stores can fill online orders—those upgrades are table stakes, it takes much more to win the game.

Related: How Macy’s Plans to Fix Its Beauty Products Business

A version of this article appears in the Sept. 1, 2017 issue of Fortune with the headline "E-commerce Better Late Than Never."

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