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Bankrupt brands get second possibility online

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Investors are shopping adult broke retailers like Wet Seal, American Apparel, and The Limited, and branch them into e-commerce pureplays, The Wall Street Journal reports.

The wish is that, by stealing a weight of their earthy footprints, these companies will be means to reestablish themselves as digital-first brands with distant leaner operations.

The retailers might advantage from reduce costs of offered online, according to Onestop Internet, a association that provides digital commerce solutions. Onestop claims it is cheaper for companies to sell online, even with a compared accomplishment costs. On average, it says, a tradesman could make a $45 profit, or take a 30% distinction margin, on a span of jeans offered during $150, nonetheless a same span of jeans during a brick-and-mortar store might usually transparent a 16% distinction margin, or $24. That’s since room space and accomplishment is many cheaper than store lease and payroll — warehousing and accomplishment would cost $5 for a $150 span of pants, while payroll and lease would time in during $45.

To make this plan effective, companies and investors need to act fast to relaunch brands while business are still interested. The acquirers need to fast sinecure new designers and manufacturers, and prepared placement networks for home deliveries, to keep a opening between store closures and online reboots tight. For example, investors Gordon Brothers Group purchased Wet Seal in March, and sole off register and sealed a remaining stores within a month. It’s now rebooting a retailer’s production processes and skeleton to free online in a tumble — only a short seven months later.

However, online-only is a proxy repair for many retailers, as many investors see omnichannel as a many viable long-term solution. Gordon Brothers skeleton to sell Wet Seal brands in dialect stores eventually, a plan that Juicy Couture’s owner, Authentic Brands, executed in 2013. Giving a code a earthy participation by dialect stores is important, as 90% of sell sales still start in-store in a US. This will concede struggling brands to reap a advantages of a earthy store, but a high costs compared with storefronts.

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