[shalmanese]

I don't know if the economics of this make sense but it's always seemed to me that the logical end goal of this is that brick and mortar stores should refocus as marketing arms of manufacturers. That is, they should price goods basically at cost such that they're economically indifferent to whether a sale is made or not but charge manufacturers a significant sum for shelf space and promotion.

Lots of goods genuinely do require an in person experience to evaluate whether to buy but can be had cheaper online. What ends up happening is that people go to the stores to handle the goods & chat with the salespeople, then later buy online. In effect, B&M stores have been giving a huge, inadvertent subsidy to online stores the entire time and I can't help but imagine that's what's really crippled their businesses.

I think perfumes will be one of the early indicators of how these new business models will play out. The entirety of the experience of a perfume is how it smells and that's something impossible to convey online. At the same time, all perfumes of the same brand are guaranteed to be chemically identical and shipping costs are a minor part of total costs so it's perfect as an online good.

[va_coder]

"In effect, B&M stores have been giving a huge, inadvertent subsidy to online stores the entire time and I can't help but imagine that's what's really crippled their businesses."

True, but on the other hand online stores subsidize B&M too. I've often looked at the ratings on Amazon and then bought something at a B&M because I wanted it right away or wanted an easy return, if needed.

[shalmanese]

I imagine the cost of developing and maintaining an online review system is relatively trivial in the overall scope of running an online business. Your example is just online vs B&M competing on their own merits. OTOH, it costs real money to hire knowledgable salespeople and real estate for attractive displays.

I don't know if this is a causal relationship but I noticed companies drastically cutting back on the quality of salespeople around the time online shopping became big. This would make sense economically as stores could no longer capture the full economic value of good service. OTOH, for vertically integrated stores like Apple, the incentives are aligned and the quality of staff is noticeably higher.