Don't Close Your Stores Just Yet

Is it Really Cheaper?
Storch said he can't help but laugh when he reads articles stating that online retailers are able to offer lower prices. Why? The pricing model is standard for all retailers, no matter the channel: product cost + supply chain cost + profit margin= consumer price. The cost to buy a product from a manufacturer is going to be the same for a brick-and-mortar retailer as it is for an online retailer (if it isn't, someone should contact the Justice Department, Storch joked). The supply chain costs are going to be significantly higher for an online retailer than a brick-and-mortar seller — Storch estimates one-and-a-half times to two times more expensive for pick and pack in the distribution center and 30 times to 40 times more expensive to deliver freight to a customer's home — so where's the profit?