NEW YORK — In the drive to capitalize on increased Internet traffic and online demands from consumers, retailers may not take the time to consider their image with Wall Street investors or consider the long-term impact that online campaigns can have on overall financial health.
In an Oct. 12 panel at Shop.org’s annual summit titled, “The Wall Street View of E-Commerce and Multichannel Retailing,” Matthew Fassler, managing director of Goldman, Sachs & Co. noted some things companies should consider when moving or growing their online business from an investor perspective.
“Wall Street rewards companies that make the most gains over an extended time frame with minimal risk,” Mr. Fassler said.
With this in mind, healthy online growth is a balancing act between understanding ROI, growth and the predictability of market forces.
Mr. Fassler advised the delegates that before taking your business online consider if your retail category is suitable to online shopping, the move’s impact on operational cost and the possibility of leveraging fixed assets with online investments.
He also suggested to the audience that they consider the impact a centralized distribution will have on your category, the competitive dynamics and existing barriers to market online today and whether the move is being made to prioritize profit or company position.
Also speaking to the financial state of the e-commerce retail market was Piper Jaffray & Co.’s Safa Rashtchy, managing director and senior research analyst.
He warned against the rising cost of customer acquisition, particularly through search costs, which could in the long term outweigh the benefit of other low operation costs online.
“I’ve heard the use of search be compared to cocaine,” Mr. Rashtchy said. “You buy it and it’s cheap. You keep buying it because it works very well. But costs go up because you begin to rely on it to drive your business.”