Internet Retail: Not A Good Idea?

The McKinsey Quarterly reported most pure Internet retailers will not turn a profit, considering recent research into the Web retailing structure. According to the report, e-retailers generally lose money with each sale, since products are often low-priced, and the expenses of getting the product to the customer are often much higher.

In order for e-retailers to profit, the study claims, they would require average orders of $100 and 25% gross margins. The conclusion: e-retailing works best for the big, brick-and-mortar retailers who only supplement their existent presence with Web-based retail.