The good news: our analysis identified some common trends among leading retailers and highlighted four imperatives that can point organizations down the path to profitability. Success will require a concerted, organization-wide effort. Retailers must now recognize a few truths: all growth is not the same unprofitable growth destroys value and healthy, sustainable growth should be the goal. Fulfillment costs, for example, can account for 12 to 20 percent of e-commerce revenues, squeezing margins and making profitability a mirage. For the majority, skyrocketing online sales have been accompanied by costs that have risen just as fast. Retailers that may have initially viewed e-commerce as a lifeline now take a slightly more negative view. This article is a collaborative effort by Jiamei Bai, Frances Fu, Rushan Guan, Steve Hoffman, Peeyush Karnani, Mihir Mysore, and Sarah Touse, representing views from McKinsey’s Consumer & Retail and Strategy & Corporate Finance Practices.Įighteen months later, online sales show few signs of reverting to prepandemic levels.
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