TJ Maxx and Other Low-Price Retailers Get Into E-commerce
Low-price retailers like TJ Maxx and Off Fifth, owned by Saks, Inc., have a difficult time with e-commerce.
Since they're dealing with odd-lots and sometimes limited quantities the online retail process can be complex and expensive. E-commerce is not for the weak of heart and not the weak of wallet, if you're doing it on your own.
TJ Maxx is one of a number of low-price retailers are now weighing the costs against potential profits and deciding it's time to make the investment. Analysts at Avondale Partners believe that T.J. Maxx can quickly reach annual sales of $1 billion. That's a lot of odd lots.
The computer upgrades are not cheap. Last year, TJ Maxx spent $200 million to acquire online Sierra Trading for its tech and experience in e-commerce. Saks is spending $95 million over three years to upgrade Off Fifth's retail capabilities.
Hudson's Bay Co. saw the potential e-commerce value in Off Fifth last year when it bought the larger company for $2.9. That's a serious investment.
TJ Maxx hopes that the market is more mature and that the technology is better this time around. It gave up its last attempt in e-commerce in 2005 having lost $15 million in the process. With the market more mature now and mobile devices beginning to expand access to online shopping almost anywhere, retailers across North America and the globe are weighing up their e-commerce options.
If you don't have the odd $95 million in your coffers to build your own system, Capacity LLC is there to help. We can apply our capabilities not only to resolve your challenges but also to take advantage of the opportunities that can get you to the next level. We can walk you through it and help you to fly over the potentially painful patches.