Retail, rent and things that don’t scale

This post is by Benedict Evans from Essays – Benedict Evans

Morioka Shoten

Morioka Shoten

I generally think about retail as sitting on a spectrum from logistics to experience. At the logistics end, you know exactly what you want and retail’s job is to provide the most efficient way to get it. At the experience end, you don’t know, and retail’s job is to help you, with ideas, suggestion, curation and service.

Ecommerce began at the logistics end, as a new and (sometimes) more efficient way to get something. It’s not always more efficient – you don’t have your lunch mailed to your desk. Rather, the right logistics in retail is a matter of algebra. How much inventory is needed, how many SKUs, how big are the products, how fast can they be shipped, how often do you buy them, how far would you be willing to drive or walk, does the product need to be kept cold, or warm, what’s the cost per square foot – there are all sorts of possible inputs to the equation, and if you visualised them all you’d have a many-dimensional scatter diagram, that would tell you why Ikea has giant stores on the edge of town, why Walgreens has small local stores, and why you can buy milk on every block in Manhattan but not a fridge. 

The internet adds a new set of possibilities to that algebra. Amazon sells anything that can be stored on a shelf in a vast warehouse and shipped in a cardboard box. It doesn’t so much have ‘infinite shelf-space’ as (Read more…)