The Hidden Cost of Clicks

The Hidden Cost of Clicks
by Tim Laseter, Elliot Rabinovich, and Angela Huang

Charlottesville, Va., February 28, 2006 -- One of the painful lessons of the dot-com bust was that many online retailers never truly understood their operational costs. They did not recognize that there are hidden expenses associated with selling certain kinds of products. But survivors like Amazon.com learned early why some items, like books, make money online, while others, like toys, don't. The answer lies in grasping how product life cycles, packaging, and a host of other variables affect the cost-to-serve of each item. As online retailing continues its growth spurt, this concept is now more important than ever.

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