Not long ago, it seemed as if the days of brick and mortar stores might be numbered. Hot new web businesses were wiping the floor with more traditional stores. Think Zappos, Netflix or Amazon. But now things are getting weird.
Sucharita Mulpuru, a retail analyst for Forrester Research, said start-ups like these are learning that the economics of e-commerce change over time. Mulpuru said new brands typically pay "customer acquisition costs" for their brand to show up in web ads and searches by internet browsers. But as customers become harder to find, this cost can rise from around $20 per new customer to $50 or more.
"So if what they’re paying for is awareness, they're probably finding that it makes just as much sense to just plop a store in some really high traffic area where people are in a mindset of shopping – like a Soho – and they’re likely to get as many useful impressions that ultimately lead to future traffic on their site," Mulpuru said.
Listen to New Tech City every Wednesday morning at 5:50 and 7:50 a.m. on WNYC 93.9 FM, AM 820 and New Jersey Public Radio or subscribe to the podcast on iTunes.