Marc Andreessen: "Category Specific Retail Chains Are Much Closer To Going Under Than You Think", Will Regret Internet Sales Tax (Video)

If the internet sales tax bill gets signed into law, web pioneer Marc Andreessen (co-founder of Netscape) thinks brick and mortar retailers will end up regretting it if e-commerce 2.0 companies "push distribution closer to the customer." Here's what he told Bloomberg's Willow Bay at the Milken Conference on April 30, 2013 (video below).

"The other thing the sales tax thing is doing is essentially motivating the e-commerce companies like Amazon to actually push distribution closer to the customer. If you're going to be charged sales tax everywhere, you might as well push distribution into every state. And it's leading to the arrival of same day delivery, which is going to be a huge shift in e-commerce coming up here."

Andreessen also believes that "category specific retail chains are much closer to going under than you think." He's not talking about Walmart (general purpose retailers), he's talking about "category specific retailers in areas like books - obviously Borders having gone under, video games, consumer electronics, clothes, shoes and accessories." He thinks there will eventually be "runs" on these retailers. Blockbuster and Borders already went under, so which co is next? Here are more quotes from Andreessen's Bloomberg interview.

"Well so this is the thing with retail. Retail is inherently highly levered because you have this huge fixed cost of the real estate and then all the fixed costs of the inventory. They're like banks, they're levered. And so, when you have a relatively small decline in revenue, you can go bankrupt very quickly. You actually have this thing that happens where you can actually be driven into bankruptcy fast because the banks that finance the inventory can pull the credit. And you know J.C Penney was on the verge of this a little while ago; Sears was on the verge of this a little while ago. You can actually have a run on a retailer. So we think what's going to happen to some of these categories is online will take away 10 or 20% of revenue and then all of the sudden the chains will go bankrupt. And then the online companies will be able to take 80% of the market. And that's why we're so bullish on these as investments."



How about some good news for the brick and mortar retailers via MultiChannelMerchant.com.

Brick and Mortar Retailers Beat Out Online Counterparts

NEW YORK, May 29, 2013 /PRNewswire/ -- As online retailing has become a force to be reckoned with in the retail industry, a close look at how brand equity varies for brick and mortar vs. online brands beckons. Measuring many online retail brands for the first time in the 2013 Harris Poll EquiTrend® Study shows that where EquiTrend measures the brick and mortar and E-retailer, or "E-tailer," sides of a single brand, the E-tailer side lags. The study, which assesses more than 1,500 brands across over 155 categories, specifically looks at key retail sectors including: e-retailers, hardware and home merchandisers and mass merchandisers.

With the growing competition from Amazon.com across all sectors in which it competes, brands like Target, Best Buy, Walmart and others are looking to understand how to better compete against this ubiquitous retailer. Results from the 2013 study show that many retailers have a way to go; specifically, for most brands measured, the local store outperforms its online counterpart. Retail brands with the largest gap between brand equity scores for their brick and mortar and their corresponding online brands include Target, Office Depot, Walgreens and Best Buy.

"There are many reasons why a consumer would choose to visit a location-based retailer over their online counterpart, including convenience, selection and immediate needs," says Lisa Mulyk , Vice President at Harris Interactive. "Most of all, shoppers tend to want to interact with the physical merchandise prior to purchasing it, and the 2013 EquiTrend data shows us that while consumers are shopping online, their brand experience when doing so tends to be lower than their in-store experience."

Related: Retail Expert Howard Davidowitz on Retail's Revolution (With Interview On Bloomberg TV, 2011)

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