Online shopping: why its unstoppable growth may be coming to an end

Many people probably assume that online stores are making a fortune, without all the costly bricks and mortar. But the reality is rather different. Many ecommerce activities are, in fact, unprofitable; if people had to pay the true cost of what they bought online, they would probably buy less. In fact, we think there is an inflection point approaching, when consumers will either have to pay more for online purchases or end up with fewer products and services to choose from. What goes up … Bogdan Vija  Let's start with the online retail leviathan Amazon, which chalked up record profits and revenues in 2018. This is great news for Amazon shareholders, but deeper scrutiny reveals a different picture. To begin with, most of the profit was not from retail activities. Amazon Web Services, a cloud-hosting business unrelated to ecommerce, generated more operating income than the company's entire North American retail operation-and with margins over five times higher. Even then, this was a much better performance from the retail division than in 2017, when the North American operating income was completely offset by international retail losses. In that year, Amazon's positive operating income was entirely thanks to the cloud-hosting business.