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Retailers Increase Profit Margins on Ecommerce Orders

Stores Hone Ecommerce Strategies

A number of large retailers have blown past earnings expectations recently. When consumers began to feel more comfortable shopping in-person in the spring, sales surged due to pent-up demand. However, analysts are also seeing another trend which may be more long-lasting.

Retailers are finding ways to widen margins, particularly through ecommerce sales. Many retailers struggled to make the rapid shift to doing business online in the early days of the pandemic. But now they have developed strategies to help boost profits from online sales, including shipping online orders from stores and offering curbside pickup to save on delivery costs.

Dick’s Sporting Goods Surpasses Expectations

Dick’s Sporting Goods (DKS) reported earnings earlier this week. The company smashed Wall Street expectations, causing its share price to hit an all-time high. The retailer’s sales were up 21% compared to a year ago. Even more impressive, its profits surged almost 80% compared to a year ago.

Dick’s Sporting Goods’ CFO said that profits from online sales are now close to profits from in-store sales. This is partially thanks to the fact that the company has set up ways for customers to pick up their own online purchases at stores.

Target’s Ecommerce Approach

Dick’s Sporting Goods is not the only retailer developing strategies for making online sales more profitable. Target (TGT), which gained considerable market share during the pandemic, has also raised its profit margins on ecommerce sales. The retailer has achieved this, in part, by fulfilling over 95% of its second-quarter sales in stores.

Retailers have dealt with significant challenges and uncertainty over the past year and a half. They have found numerous ways to adapt to new market conditions. They will need to continue to be adaptable heading into the fall due to questions surrounding economic recovery, Delta variant cases, consumer confidence, and other factors.

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ABOUT Meg Richardson Meg Richardson is a writer specializing in markets, technology, and personal finance. She loves breaking down seemingly complex ideas and making them readable and interesting for everyone. She holds an MFA in writing from Columbia University. When she is not writing about finance, she enjoys running in Central Park and drawing cartoons.

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