Safa Rashtchy, a stock analyst who for several years has been at the forefront of covering Internet-based commerce, is resigning as managing director, senior Internet analyst at investment banking firm Piper Jaffray & Co.
Rashtchy will leave Piper Jaffray at the end of June. He adds that he will take off the rest of the year before deciding what to do next.
Rashtchy has routinely produced reports on the state of retail e-commerce and the market value of participating companies. In one recent report, he noted that the profit margins of publicly held pure-play e-commerce companies—which average about 14%, double those of traditional retailers—are beginning to get squeezed by rising customer acquisition costs. He cited paid-search marketing as a major contributor to those costs for many e-retailers.
At last year’s Internet Retailer Conference, Rashtchy contended that, unless online retailing companies have highly specialized products and a low cost of operations, they need economies of scale to succeed. "E-commerce is still a very attractive market, but you need either big scale and efficiency or you really need to stand out," he said. "But it’s more difficult to stand out, because search has made it very easy for people to find all types of merchants."
E-commerce is now a basic utility, and consumers have increased confidence in buying online, Rashtchy added. Shoppers also are more sophisticated, increasingly adopting comparison shopping and search and using online research with offline purchase, he said.
Rashtchy says e-retailing is entering a phase where it will become more tightly integrated as a part of multi-channel retailing, especially as consumers mix shopping online with searching on the web for local stores.
“I think online retailing will go through a major transition era, where the web becomes an important and an integral channel for buying, but not a separate one, as it is now,” Rashtchy tells InternetRetailer.com. “This will be especially driven by local search. The outcome will be many more opportunities, but also threats for some of the existing, happy players.”
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