We’ve seen how Ghost Kitchens have started to change the face of restaurants. Ghost Kitchens are essentially restaurants with no physical space for customers which means they are delivery-only restaurants. And in fact, some Ghost Kitchens will actually support multiple online-only restaurants from the same location. The economics of Ghost Kitchens are very different than traditional restaurants. Obviously their cost structure is lower because they can use less expensive space, but also their orders tend to be more tightly distributed around mealtimes (think 12PM for lunch, 6PM for dinner). In the immediate aftermath of the pandemic, as restaurants were forced to close their dining rooms, every restaurant became a sort of Ghost Kitchen, at least temporary.

We’re starting to see the model of no storefront move into other areas. Take, for example, Gorilla, a grocery start-up in Germany.

Founded by Kağan Sümer and Jörg Kattner in May this year and operating in Berlin and Cologne, Gorillas delivers groceries within an average of ten minutes. Unlike gig economy models, it employs riders directly and is emphasising its ability to get fresh groceries, along with other household items, to shoppers at very short notice and at “retail prices”. The idea is that the startup can address a large part of the groceries market that falls outside of a weekly bulk shop.

As TechCrunch reports, there are others (Diji and Weezy) who are building out similar services elsewhere in Europe. In the U.S. we have goPuff. These services are focused on the type of things you might buy at a convenience store. Or that you might run to the grocery to buy when you only need that singular thing.

Gorillas CEO Kağan Sümer says that mass supermarkets, including their delivery models, are designed so that the consumer organises their grocery shopping around the needs of the supermarket and supply chain, rather than the supermarket being designed around the needs of the consumer…bulk purchases are super served…all of the supermarket infrastructure is shaped around bulk purchases…our hypothesis was that people would appreciate it and shift their interaction with groceries to more on demand purchases

The internet is conditioning us to expect very quick, nearly instant, delivery. We’re already there with video on-demand and this will only become more pronounced in 2021 as studios close the windowing between theatric release and streaming release. Amazon has conditioned us to expect quick delivery of many things. We expect our Uber or Yelp to arrive quickly (and we want to track it while en route). We expect our meals to be delivered quickly. Those expectations will likely carry into other categories. Basic groceries and convenience store items make a lot of sense. But thinking outside of this, there are likely numerous sectors that will be pushed towards near-instant delivery models by competitive forces and consumer expectations.

Several years ago my oldest son bought himself an iPad mini. Recently he received his first iPhone and as a result has been using his iPad infrequently. At the same time, my seven-year-old wants to buy an iPad and so his brother offered to sell him his iPad for $250. Over the last two or three weeks my seven year old has been debating if this is a reasonable price and we’ve discussed checking secondary markets like eBay to determine if it is in fact a good price or not.

Several days ago my seven-year-old asked my 11-year-old if he would discount his iPad for Black Friday. After several minutes of questions and a little bit of implicit prodding, my 11-year-old acquiesced by reluctantly agreeing to discount his iPad mini $50 on Black Friday.

As you might guess we spent a lot of time talking about technology trends and around this time year Black Friday is a frequent topic. Well, it has officially entered our every day vernacular.

Yesterday I posted a few thoughts and my predictions for Apple’s fiscal Q2 results.  Here’s my follow-up with some additional thoughts on the market implications and where we go from here.

I had predicted Apple would sell around 37M iPhones in the quarter. Consensus was calling for 38.2M. Apple blew away not only the consensus estimate but every estimate in the panel. 43.7M is a huge number given expectations. I’ll discuss the implications as I see them below.

The consensus estimate for iPad sales for the quarter was 19.3M. I predicted 17M and there was only one estimate from the panel of forecasters below mine. The actual figure was 16.3M – about 15% below the consensus estimate and about 4% below my forecast.

Total Device Growth
One of the most telling charts from my slide deck (see below), is the year-over-year growth in total device volume. It was 0.6% last quarter and 0.7% this quarter. Despite incredibly strong iPhone numbers, total device growth is near zero for a second consecutive quarter. In other words, revenue growth has come because of compositional shifts and not because of aggregate unit volume growth. While I haven’t heard others tout this figure, this is at the heart of Apple’s needed growth strategy. They are a hardware company (at least for now) that needs to growth unit volume.

Apple grew revenue by roughly $2B in the quarter from the year-ago period. This was nearly all driven by iPhone sales which represented $3.1B in revenue growth. The decline in iPad sales during the quarter resulted in a revenue loss of $1.1B. iPod revenue declined by about $500M while revenue from iTunes increased almost that amount. iPhones now represent 57% of total revenue while the iPad share declined to 17%. The share of revenue derived from iTunes increased from 8% to 10%.

But Apple’s quarterly results are more than just an iPhone story – they are a China and Japan iPhone story. Total revenue from China increased $1B from the year-ago quarter – representing about half of the total revenue gains. Revenue from Japan increased $800M. Revenue gains from China and Japan represent 93% of the total revenue increase from the year-ago quarter. Japan’s share of overall revenue grew by 21% from the year-ago quarter while China’s share of revenue grew 8% for the same period. The total share of revenue derived in the Americas declined by 3%.

I wrote yesterday:

To beat consensus, I think Apple will need to have shipped more lower-end models (4S and 5C) during the quarter. This will show-up in the average price of iPhones sold during the quarter. But it will also point to traction in emerging markets – places like China and India – so I think Apple will tout this fact if it materializes. Geographic expansion is how most large companies grow (think Coke and Pepsi) and Apple will need that within their arsenal in addition to any new product classes (read: wearables) or service sectors (read: streaming services, mobile payments) they might enter over the next two years.

And the results tend to suggest this. The average price of iPhones sold during the quarter is down 6% from the prior quarter. The geographic revenue figures combined with the strong iPhone unit volume results suggest the quarter was defined by iPhone sales internationally – though not all were emerging markets.

My prediction for iPad sales were not only directionally correct but also the most accurate of any forecaster in the panel of forecasters. Yes, Apple attributes much of the decline in iPad sales to channel inventory shifts, but those channel inventory shifts are driven by changing demand. I wrote this yesterday about the tablet market:

Lower tier and lower priced tablets have continued to gain momentum as the market has matured. These tablets are getting better and in an expanding set of use cases are “good enough.” Moreover, tablet ownership in the US is approaching 50 percent. Households are holding onto tablets longer or buying secondary and tertiary units for the household.

I still believe this is an accurate portray of the current tablet market. Moreover, Apple faces tremendous competition in the Chinese tablet market from white box Chinese manufacturers. Given that much of Apple’s revenue growth in the quarter came from China, I imagine Apple struggled to grow tablet sales there while at the same time tablet sales were likely declining in other markets (especially the US) for the reasons mentioned above. At the same time, the average price of iPads sold during the quarter increased about 6% from the previous quarter suggesting to me that Apple is potentially gaining a stronger grasp of the high-end tablet market while at the same time conceding share of the overall tablet market (the classic Innovator’s Delimma at work).

Ben Thompson argues to not “give up on the iPad” and while I think his arguments are generally valid, I think they are potentially misplaced. I believe more innovation will “appear” in the tablet market as the device segment continues to mature and new use-case scenarios are born.  Academic research suggests it takes something like 7 years before the productivity gains of a new device are realized. We are still squarely in the experimentation stage of devices. But I would question Ben’s assumption of the iPad singularly as opposed to the broader tablet market. As I mentioned, secondary and tertiary use-case scenarios might not call for a high-end (read: high price point) tablet.














Here are some historical slides that I’ll update once the results are in later today. 

A few quick thoughts on the holiday shopping season:

November 1st marks the officially official opening of the holiday shopping season. This year we saw a tremendous number of promotions kick-off on November 1st. Walmart kicked off its campaign at midnight and Amazon launched its Black Friday Deals Store, offering “Deals of the Day” through Dec. 22 and weekly “Lightening Deals.”  Amazon is also allowing third-party sellers to participate in the holiday deals featured on the site.

Starting Early. Despite November 1st being the official start of the holiday shopping season, many retailers got an early start this year. BJ’s recently announced they were spreading deals across Black Friday week (and more than doubling the number of offers over last year).  Santas will be at Belk stores on Saturday November 16th for Santafest. Walmart and Kmart both ran their first holiday promotions on September 13th. But not everyone is supportive.  There is a Facebook campaign to boycott shopping on Thanksgiving.  And of course, retailers are opening their doors early on Black Friday.  Which has really become Thanksgiving evening.

True Start of Black Friday is 12:01 AM Thursday. Yes, retailers are opening their doors earlier.  But this year – for the first time – the success of Black Friday will be dictated by what happens online.  And retailers will start this at 12:01 AM on Thanksgiving.

A Social Push. Starting on November 18, Target began highlighting about 100 holiday products across all areas of its stores that have been trending well on Pinterest. BJ’s is launching a Facebook coupon program. Starting on November 22nd shoppers can vote on two different featured products and the individuals who voted for the winning product will have a coupon emailed to them.

Gift Guides. This year I feel like I’ve seen more retailers publish a gift guide. ToysRUs has long published their Great Big Toy Book (called the Great Big ToysRUs Wish Finder this year)Amazon launched an electronics gift guide.

Free Shipping.  The battle over the 2013 holiday is going to take place online.  According to a Shop.org survey from earlier in the year, roughly 35% of retailers said they offer free shipping all year, up from 23.1% a year earlier. Of the retailers not offering free shipping all year, 16% said they would begin offering it as a holiday promotion in 2013. A study from MarketLive finds 91 percent of consumers say they would take advantage of free standard shipping offers this holiday season. Lands’ End recently standardized their free shipping policy (to include all orders over $50) and many others are utilizing free shipping promotions.

Ad Previews. Over the past few years, Black Friday ads were leaked which caused retailers to issue take-down and cease and desist letters.  But retailers are quickly jumping on this bandwagon – releasing previews of their own ads.  Macy’s used Pinterest to provide a preview of items that would be included in their Black Friday promotions.  Historically retailers didn’t wanted their Black Friday circulars public until Thanksgiving Day.  Now most if not all retailers have released their Black Friday promotions two weeks ahead of Black Friday.

Flash Deals. Retailers are again using “flash deals” to promote timed deals.  Retailers are also holding some deals for last minute promotions – outside of their traditional Black Friday circulars. These were printed and distributed at stores at the Black Friday opening in past years, but increasingly I think they’ll be pushed through the retailers’ own apps.

Multiple Door Busters.  Earlier this year I predicted we’d see multiple door buster periods with earlier opening times.  That is exactly what is materializing.  OfficeMax will have doorbusters at 8PM, 11PM, and 5AM.  Walmart will have multiple doorbuster periods as well and is again publishing three different circulars.

Increase in Mobile. Recent research from Google suggests a 17% increase in overall smartphone shopping in 2013. Google also found one in four smartphone owners plan to use their devices to make a purchase — a 21% year-over-year increase.  Google expects mobile holiday shopping to increase on the weekends – especially the weekend after Black Friday. Cross Device: Google’s research found 80% of consumers will use more than one device at once while holiday shopping, and 84% will start on one device and finish on another. Shop.org survey of online retailers found 55 percent saying they are optimizing e-mail for mobile as part of their holiday marketing strategies. 45 percent will use smartphone paid search campaigns and 21 percent will utilize text message campaigns while 17 percent will use QR codes or other bar code scanning promotions.

Leveraging Smartphones Apps. More retailers are starting to utilize smartphone apps, but I expect even more activity in this category. Toys”R”Us recently launched they Toys”R”Us Wish List Wizard, an app allowing parents to scan items they want in-store for automatic inclusion on a digital wish list.

Price Matching. Target expanded their price matching policy beyond the typical 7 -day window during this holiday season. Target will match prices for products purchased between November 1 and December 21st. Staples introduced a new price matching policy as well.

In-Store Pick-up. Target expanded their in-store pick-up program to all stores by November 1st. Best Buy and others continue to promote a multi-channel shopping experience.

Attacking Showrooming:  BestBuy is taking showrooming head-on in some of their marketing and commercial spots with the slogan “your ultimate holiday showroom.”

Parlay Momentum. With a late Thanksgiving and fewer shopping days, retailers are making a big push to carry the momentum of Black Friday into the remaining holiday shopping weeks. Last week Target released their Black Friday preview ads circular. Target is offering 20% of one shopping trip between December 1st and December 7th if you spend $75 or more on Black Friday.  Target is opening at 8PM on Thanksgiving so most of their traditional Black Friday shopping will shift to Thanksgiving Day.  To keep up momentum they are encouraging shoppers to return on Friday and spend at least $75 which in turn will give them 20% off a shopping trip in the following week.  If successful, Target will turn one shopping visit into three.

Here are some great stats on how marketers are approaching the holiday season.

An all-digital world accelerates commerce. As “things” become digital or as physical non-digital things gain a virtual and digital identity the speed at which they can move approaches the speed at which digital things can move. This all results in the speed of commerce for both digital and non-digital things accelerating.

In a digital world everything is for sale. Airlines are now starting to auction off upgrades. Professional sports teams now sell seat upgrades during the game. The list goes on.

In a digital commerce world things also approach infinite divisibility. You could imagine eventually prices for upgrades become a function of the intensity of the game or other elements at any given moment. The price of upgrading seats is essentially repriced every minute.

Because prices can change constantly, market operators can ensure that they are always priced at the market-clearing price – always just selling out.

Kraft Foods recently worked with Intel to develop a vending machine capable of making product recommendations based upon your demographic make-up or other details. The vending machine uses a camera mounted on the front of the vending machine to identify characteristics such as age and gender though could eventually monitor a host of different characteristics. Recommendations showing positive correlations to identified characteristics provide another example of ways in which digitizing information accelerates commerce.


While in Seattle last week, I was able to visit the CityTarget between Union Street and Pike Street. Target announced their CityTarget initiative in the summer of 2012 and the first stores opened on July 25, 2012 in Seattle, Chicago, and Los Angeles. Stores in Portland, New York, and San Francisco would follow later that year. The Seattle store is incorporated into the bottom three-stories of an existing residential building. It is interesting to note that the story directory is actually hung outside the main door.

The average CityTarget is between 80K and 100K feet compared to the average Target store at about 135K square feet and the average Super Target at about 175K square feet. The suburbs have become saturated with retail and demographic shifts are driving both millennials and retirees into urban settings. As a result a number of retailers are responding to these shifts by moving to the city in search of growth. Their approach is often small footprint stores, lower shelf heights, and simpler in-store signage. These are driven by consumer demands to be quick stops.  Retailers are also highly customizing their product assortment based upon the narrow radius that they likely serve. The Seattle CityTarget for example is in a residential area that also has a high concentration of tourist traffic.  As a result, some of the first products I encountered in entering the store were Seattle-related souvenirs.

You enter the CityTarget at the street level where the checkout aisles are. I didn’t spend much time exploring the full store, but instead proceeded to the third floor where the electronics section was housed. Here are a few things I noticed:

  • Obviously like the rest of the store, the electronics footprint was smaller than that of a regular Target
  • The section appeared to be staff by two dedicated sales associates
  • There was a greater assortment of mobile/portable devices
  • Many of the items appeared to be lightly stocked compared to what one might expect at a full Target. Probably not surprising.  But it felt some of the items were stocked just enough to satisfy impulse replacement purchases or perhaps to show “in-stock” in online checks for consumers checking online
  • I received Lytro through my pre-order when it first launched. I haven’t tracked its retail presence and was surprised to see Lytro not only stocked but also occupying an endcap. I wouldn’t be totally surprised to see this at a traditional Target, but was surprised to see it in a CityTarget
  • I probably didn’t get enough photos, but there was a pretty large assortment of cases and other accessories
  • The camera section was actually much larger than I thought it would be – especially given the weakness the category is currently experiencing. This could be to catering to the tourist traffic.
  • The demo areas mostly worked well.  There were several audio-related demo areas (soundbars and blue-tooth speakers).
  • Screen sizes for the TV assortment were definitely on the small-end given where TV sales are currently tracking and the size segments experiencing the most rapid growth this year. It might make sense that an urban location would stock “smaller” screen sets but this is likely supported by sales data over the last year from this specific location.  With 50″+ TVs experiencing the strongest grow rates this year it would be difficult to not run with that and stock larger screen sets but the store appears to have made an explicit decision.
  • Headphones continue to do well – especially models at $100+.  Beats new neon MIXR models commanded an endcap and an entire aisle was dedicated to headphones.
  • Apple had strong presence – especially given the small footprint of the entire electronics area.
  • The other large area within the electronics section was the audio category. Bose had a large presence as did Sonos. There was dedicated space to speakers, clocks, and docks. I would expect small household appliances to do well in urban stores and docks and clocks seem to fit this mold well.
  • There was a relatively large number of wireless audio options.  I expect this category specifically to be one of the big winners over Holiday 2013.


Apple released quarterly results for their fiscal third quarter yesterday.  While a tremendous amount of ink has been spilled dissecting every ounce of the most recently concluded quarter as well as pontificating about the implications, I thought it worthwhile to look back over the last 15 quarters to see if any insights might be gleaned. Here are few nuggets:

On Unit Volumes

Apple reports quarterly unit sales for iPhone, iPad, iPod, and Macs.  All, but iPhones experienced a unit volume decline in the fiscal third quarter on a year-over-year basis.  iPhone sales were up 20 percent on a year-over-year basis – driven in part by international growth. Mac sales were down 6.6 percent – the third consecutive quarter of year-over-year declines. Sales are off about 4.5 percent over the last three quarters. iPad sales slipped 14.2 percent on a year-over-year basis – the first quarter to experience a decline in sales. Apple suggested the decline was primarily driven by tough year-over-year declines.  As the chart below illustrates, the iPad sales growth on a year-over-year basis has been slowing over the extended time period as the product category matures. Growth in the second fiscal quarter was 65 percent on a year-over-year basis. Even comparing 3Q13 unit volume to 2Q12 unit volume shows a growth rate of 23 percent. iPod sales declined 32 percent on a year-over-year basis and have been in decline since at least the close of 2010.

One Average Selling Prices

Because Apple reports both unit volume and revenues for the segments for which they provide breakout details, one can also look at changes in realized prices over an extended period of time.  Beginning in the fourth fiscal quarter of their 2011 fiscal year, Apple changed slightly how they report revenue for the four hardware categories for which they provide a breakout. While they had previously included product specific accessories in the reported category revenue (ie iPad accessories in the iPad category), they stopped doing so with the first fiscal quarter for their fiscal year 2012.  The prior inclusion of revenue for these accessory categories essentially inflates the average price (because it increases reported revenue without a corresponding change in units sold) so take that into account when looking at average price information.  With that said, year-over-year information for the last three fiscal quarters is a like comparison. For the fourth fiscal quarter of 2012 Apple reported results in both ways.  The average iPhone price is about $18 less under the current method and the average iPad price is about $27 less. I believe these figures also provide a rough estimate of the dollar value of accessories purchased by consumers.

Price changes over the last 15 quarters provide interesting insights into the evolution of these categories. Quarterly sales for iPod were down 32 percent from a year ago, 39 percent from two years ago, and over 50 percent from three years ago. At the same time, the average price has increased slightly (up 2 percent on a year-over-year basis).  While unit volume is down significantly, the units they are selling have a slightly higher price. This could simply be an iPod Touch story (raising the average selling price) – though the average iPod price is very close to the price of the iPod Nano. iPod prices remain nearly ten percent below their high.

Mac prices have actually been up for three consecutive quarters on a year-over-year basis and were up over six percent in fiscal Q3 – though they remain about 5 percent below their highest quarter. Conversely, iPhone prices were down roughly 4.4 percent on a year-over-year basis and have fallen for six consecutive quarters. Prices are down about 12 percent from their peak.

The biggest change in average price come from the iPad category where average prices have fallen nearly 35 percent from their peak. Prices were down 15 percent on a year-over-year basis in fiscal Q3 – consistent with recent quarters. This price story tells perhaps the richest story and highlights the evolution within this category. When iPad first launched, cellular connected tablets were a significant share of sales but as usage patterns became more solidified consumers came to learn more clearly how they would use tablets. As opposed to devices that you frequently used in a mobile-connected setting, they became devices that one uses more heavily in a static location (like a home or office) where Wi-Fi  is readily available. Wi-Fi networks have at the same time become more prevalent. Perhaps the long-run decline in price is also a story of consumers shifting more tablet activities to the cloud and therefore requiring less storage on their devices. At the same time Apple did most recently introduce a model with 128GB of storage. Price declines in recent quarters are clearly a sign of composition shift – as consumer adopt the smaller screen (and lower priced) iPad mini.



For many tech categories, new models were historically announced at the beginning of the year and then brought to market in the Spring period (March/April). I think some if not all of this timing was driven by the need to sufficiently inventory the supply chain in advance of the holiday season.

A few years ago I did an analysis of the seasonality of sales for consumer tech products. The results surprised me. The fourth quarter represents about 27 percent of total annual sales volume – the most of any quarter – but significantly less than what I would have expected. I also found that new product categories are heavily dominated by the fourth quarter. Regardless of when they are announced or when they ultimately hit retail channels, a new category will typically see well over half of its annual sales volume in the fourth quarter.  Over time, as the product category matures, sales in the fourth quarter move from 50%+ of annual sales volume to roughly 27%.

I think this phenomenon is driven by the fact that consumers like to both give and receive “new” tech products during the holiday season.  As a product category matures it becomes more heavily driven by replacement cycles – consumers buy a new one when the old one breaks.

This relationship holds across a number of categories and time periods.  I refer to it as the Law of Nascent Product Seasonality. Here’s a recent example.  Apple launched the iPad in April 2010.  They would go on to sell 14.79 million units in 2010, but 7.33 million would be sold in the fourth quarter.  Despite the category being well received, Apple still sold about half of their first year total sales in the fourth calendar quarter.

Supply chain dynamics are improving significantly. The world is becoming flatter and not only can goods be moved quicker and more seamlessly around the globe, but so can ideas and the marketing messages of these products.

Take for example the Xbox Kinect.  It was launched globally in November 2010 and would go on to sell 8 million units in its first 60 days on the market – laying hold to the Guinness World Record of being the “fastest selling consumer electronics device.” This is an incredible supply chain feat that is rarely given its due credit.

Historically announcement and release periods were months apart. While that is still the case for a myriad of products, it is equally not the case for a large number of products that are coming to market on the day they are announced or quickly thereafter.

We have seen a shift as companies like Apple began to make more product release announcements in the Fall. Note how Apple’s announcements have change.  Until the iPhone 4S was released in October 2011, Apple had primarily released new models in the June/July time frame. The same is true for iPad. Only the iPod series of products have historically enjoyed a fall release.

iPhone releases
iPhone: June 29, 2007 (4GB and 8GB), February 5, 2008 (16GB)
iPhone 3: July 11, 2008 (4GB and 8GB)
iPhone 3G: June 19, 2009 (16GB and 32GB), June 24, 2010 (8GB Black)
iPhone 4: June 24, 2010 (16GB and 32GB), February 10, 2011 (CDMA), April 28, 2011 (White), October 14, 2011 (8GB)
iPhone 4S: October 14, 2011 (16GB, 32GB, and 64GB)
iPhone 5: September 21, 2012 (16GB, 32GB, and 64GB)

iPad releases
iPad (1st generation): April 3, 2010
iPad 2: March 11, 2011
iPad (3rd generation): March 16, 2012
iPad (4th generation): November 2, 2012
iPad mini: Novemeber 2, 2012

iPod Touch releases
1st generation: September 14, 2007
2nd generation: September 9, 2008
3rd generation: September 9, 2009
4th generation: September 8, 2010
5th generation: October 15, 2012

Following the success of Apple, other companies began making September launches and we saw in 2012 not only releases from Apple, but also from Amazon and others.  Even Microsoft released Windows 8 in the fall.

Today, speculation abounds that Google will launch their new Nexus 7 at an event July 24th and their Moto X at an event on August 1st. Here’s a full list of rumored upcoming launches. We are seeing companies like Google attempt to get in front of the back to school selling period as well as a slue of September release announcements.  And so with it August becomes the new September.


Yesterday Best Buy announced they were exiting Europe through the sale of the 50 percent stake in their European joint venture to their partner in the JV – Carphone Warehouse. The deal totals roughly $775M – 573M in cash at closing, $124M in common stock of Carphone Warehouse with a 1-yr lockup period, $39M in cash plus 2.5% interest paid on the first anniversary, and $39M in cash plus 2.5% interest paid on the second anniversary.

In November 2012 Best Buy held an Analyst and Investor Day I attended in New York City. When asked about International expansion, Hubert Joly had a very insightful response.  The typical mantra is international is where the growth is so if you want to grow you have to be growing into international markets and especially emerging markets. But Joly suggested instead one has to think deeply about what elements of retailing scale well and what elements don’t scale well.  I think he is exactly right.

Specific to BBY, Best Buy Europe was a net drag on annual earnings.  In FY11 the business lost $101M. But more generally, efforts like international expansion require focus and inevitably reduce focus on other elements of the business.  In retailing, international expansions don’t scale well. They have to be run essentially as entirely different companies.  That aspect has been a struggle for many retailers as they initially sought to open and expand their online business units. When they first entered the world of online retailing they treated online as a separate business than their core brick and mortar business.  Today retailers are beginning to think differently.  They are beginning to think about omni-channel approaches which should ultimately help them achieve greater scalability.  Some recent stats related to this from BBY:

  • 70% of BBY customers do research on bestbuy.com before buying in stores
  • 40% of bestbuy.com orders are picked up in stores

There is clearly a close relationship between what is happening online and what is happening within the confines of a brick and mortar store.  A similar relationship probably exists for most retailers. Consumers don’t differentiate and while there might be operational differences, retailers should also seek to minimize the differences they create between their different channels.  Digital generally scales well.

Retailers need to think more deeply about what scales well and what doesn’t scale well.

For my past holiday predictions and commentary see the following:

Holiday 2012: Part I
Holiday 2012: Part II
Holiday 2012: Part III
Holiday 2012: Part IV
Holiday 2012: Part V
Holiday 2012: Part VI
Holiday 2012: Part VII
Holiday 2012: Part VIII
Holiday 2012: Part IX
Holiday 2012: Part X
Holiday 2012: Part XI – What we Learn from Black Friday EDM Promotions

While we still have CyberMonday before us, the Black Friday weekend is coming to a close.  Most of the promoted items are known.  Here is my rough count of the number of different offers promoted over the weekend for the following tech categories: