E-Tailing: The Karmic Battle Rages On

Bricks-and-mortar retailers once envied their Internet rivals. Now the worm has turned.
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    Retailers once looked at e-tailers with envy: Why do these virtual whippersnappers get to come in and lose lots of money to create the kind of brands and market share we've spent years building? Why did investors stock up on shares of the new profitless cyberstores and dis established retail giants?

    All that resentment seems to have built up a massive karma deficit for e-tailers. And this year, they have paid as investor sentiment flip-flopped. The new conventional wisdom holds that a click is no good without a brick, and that no strategy is worth trying unless it actually will make money for shareholders.

    As quickly as they became an investing fad, e-tailers have gone out of fashion. Even

    Amazon

    (AMZN) - Get Report

    and

    eBay

    (EBAY) - Get Report

    are down by a third or more since the beginning of the year, though they've held up much better than their peers. Truly getting the short end of the stick are now-defunct companies like

    Boo.com

    and

    toysmart.com

    , as well as badly cash-strapped firms like

    CDnow

    (CDNW)

    .

    In the middle are the rest of the e-tailers, some of which boast established brand names but will need to raise more cash before they reach profitability. In the meantime, retailers are still fighting back with their own e-commerce operations. The karmic battle continues.