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For retailers, the failure to keep pace with Amazon comes at a cost. So does catching up.
This chart from AlixPartners says it all.
The consulting firm analyzed five years' of financial reports at 20 publicly traded retailers that break out their online sales. Collectively, these firms' digital revenues grew from 10.5 percent of the total pie in 2012 to 15.5 percent in 2016.
However, as these chains' online sales moved higher, their profitability trended lower. Their earnings before interest and taxes (EBIT) fell to 9 percent in 2016 from 10.5 percent in 2012. That wiped out almost $1 billion in EBIT from those 20 retailers alone, AlixPartners said.
The results were even more dire for department stores and specialty shops, which experienced the largest decline in their operating profits, the study found. Wall Street hasn't afforded bricks-and-mortar chains the same leniency when it comes to fulfillment costs.
"Retailers should, of course, continue to adapt," AlixPartners' Shawn Ashworth and Alexa Driansky said in the report. "But they should also be aware that the move online comes with many expense pressures that they will need to offset to keep profitability healthy."
Indeed, retailers have little choice but to invest in their online businesses. Digital revenue shot 15.1 percent higher last year, reaching 8.1 percent of all retail sales, according to the Commerce Department.
Some are finding ways to make online more profitable. At this month's UBS Global Consumer Conference, Nordstrom said its online margins are "a few hundred basis points higher today than a few years ago." The company expects digital margins to continue improving, saying they could surpass those at its physical stores this year.
AlixPartners' results echo the findings of a recent study by JDA Software and PwC. Those firms' research concluded that only 10 percent of 350 global retailers they surveyed are making money fulfilling orders that touch both online and the store.
"It can be difficult to compete with Amazon when it has been focused more on sales and market share growth and cash flow generation than margins and profits," Moody's analyst Charlie O'Shea said.