The E-commerce Poison: Why Your Online Shop is Successfully Killing Your Local Business

The E-commerce Poison: Why Your Online Shop is Successfully Killing Your Local Business

Most independent retailers open an online store because they are afraid of being left behind. They see Amazon growing and think: "I need a website to survive." But for a small business with three employees and a physical shop, a website is often a hole in the bucket where all the profit leaks out.

You think you are expanding your market. In reality, you are likely subsidizing strangers across the country with the money earned by your loyal local customers. Selling a product for $40 in your shop leaves you a clean margin. Selling that same $40 product online often leaves you with pennies—or a loss—once you account for the hidden costs.

The Math of the Digital Trap

Let's look at a "napkin math" scenario for a small boutique. You sell a pair of shoes for $100. The cost of goods is $50. In your physical store, that $50 gross profit covers your rent and staff. Now, let's look at the online sale of that same pair of shoes: