Women's Wear Daily

As Cyber Sales Boom, Profits Decline

The data science team at retail analytics firm DynamicAction dug into online sales and, for a second year, found eroding profits — despite record results. As analysts are forecasting online sales to see between 16 and 19 percent year-over-year growth this holiday shopping season, DynamicAction said its retail index revealed a “decrease in profit per customer,” which is “setting retailers up for a formidable challenge in 2020.” The report showed that profitability over the weeks of Black Friday and Cyber Monday “was down 4 percent compared to the same holiday period in 2018.” Authors of the report said the causes for the decrease “include returns, which have already soared 29 percent in the weeks of Black Friday and Cyber Monday compared to the same period in 2018.” Soaring returns are only part of the problem, though. DynamicAction said retailers also face a 33 percent increase in “marketing costs per order over the same two weeks.” The researchers said this is a “clear indicator that, despite holiday sales growth, retailers have yet to deal with the true financial impact of the season.” In the post-holiday period last year, retailers were saddled by an overwhelming number of returns, DynamicAction said, adding that it created a “retail vortex.”

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