Is retail history repeating itself? The Atlantic takes an interesting look at how the history of Sears predicts Amazon’s growth. A retail giant that ships millions of products by mail expands into the real world through brick-and-mortar outlets, changing it forever. Does this sound familiar? It’s the year-by-year history of Sears. Given the current state of the Sears business, it’s hard to remember how disruptive the company was 100 years ago when it capitalized on a catalog business to establish a retail footprint.
In the decade between 1895 and 1905, Sears’s revenue grew by a factor of 50, from $750,000 to about $38 million, according to Alfred D. Chandler Jr.’s 1977 book The Visible Hand: The Managerial Revolution in American Business. (By comparison, in the last decade, Amazon’s revenue has grown by a factor of 10.)
Take a look at the Sears Roebuck & Company playbook as told by The Atlantic:
- Mail was an internet before the internet. After the Civil War, several new communications and transportations systems—the telegraph, rail, and parcel delivery—made it possible to shop at home and have items delivered to your door. Americans browsed catalogs on their couches for jewelry, food, and books. Merchants sent the parcels by rail.
- Sears was not the country’s first mail-order retailer, but it became the largest of its kind.
- Amazon started with books. Sears started with a single product category—watches—but grew to include a range of products, including guns, gramophones, cars, and even groceries.
- Sears marketed itself to consumers as an everything store, with an unrivaled range of products, often sold for minuscule profits.
- The company’s feel for consumer demand was so uncanny, and its operations so efficient, that it became, for many of its diehard customers, not just the best retail option, but the only one worth considering.
- The large and fiercely loyal base of consumers allowed Sears to gain more margin from manufacturers and wholesalers.
- Orders were fulfilled with massive warehouses. A central facility in Chicago had pneumatic tubes to send messages to various departments and assembly workers.
- After a successful half-century, Sears opened a store.
- For convenience, the first Sears stores opened in the company’s existing mail-order warehouses. But soon they were popping up in new locations competing with urban department stores like Macy’s and expanding into suburbs where land was cheap and parking space was plentiful.
- At the start of 1925, there were no Sears stores in the United States. By 1929, there were 300.
- Sears was not content to be a one-stop-shop for durable goods. The company used its position to enter adjacent businesses. For example, to supplement its huge auto-parts business, Sears started selling car insurance under the Allstate brand.
It’s uncanny how Amazon’s rise is so similar to the Sears expansion. Both companies use the same playbook focus on operations efficiency, low prices, and a keen eye on the future of American demographics.
Read the full story in The Atlantic.
Photo: via YouTube