A news broadcast caught my attention recently. The announcer mentioned stores such as Best Buy and Kroch's & Brentano's who were said to be losing business. An underlying theme was that if the public does not walk through the front door of a retail store, the store cannot make a sale. For some reason these companies are seeing less foot traffic.
Competition for land-based businesses comes directly from the internet. As soon as a person searches for a product on the internet, their web browser usually displays several sites along with selling prices of the product so a shopper can instantly make a purchasing decision. Shippers such as USPS, FedEx or UPS offer one and two day delivery so the buyer has his purchase quickly delivered to his front door without leaving home.
Profits can be made either by selling one item at a high markup or by selling several items at a low markup. Land-based businesses depend on the amount of buyers located in their local area. They can only expect to sell a limited amount of products and must sell at a higher markup in order to stay in business.
Internet sites can reach people worldwide. Instead of a small pool of local customers, millions of potential customers can view their websites. As example, a locksmith friend on the West Coast has a website where he sells safes. According to him, website safe sales remain brisk. Progressive locksmiths can be found on the internet who are already furnishing hard-to-find key blanks, keys cut by code and even selling antique locks which have been gathering dust on the shelf.
Sales of new products on the internet is competitive. A comparison of one example pushbutton lock product showed that internet sellers were making a 5% profit between their cost from a distributor and the price they were charging on the internet. If 25 or 50 units per month can be sold that is still money in the bank.
Maybe someday 75% of our income will come from internet sales. Deliveries will be made by robot helicopters and electronic lock service calls can be wirelessly repaired by a few intelligent keystrokes on your computer. It is closer than you think.
