Warby Parker launched in 2010 selling eyeglasses online. The founder loathed the idea of physical retail space, planning to cut out the middleman, eliminate the landlord and avoid long-term leases.

Today they have 200 stores in 36 states.

The founder of apparel store Everlane said he’d rather shut the company down than open a physical location. Five years later, the company opened its first store in New York City. He’s since said it’s impossible to be profitable without bricks-and-mortar.

What happened?  Three words, massive diminishing returns.  Online advertising costs have gone up a ton and this was before the pandemic, which only supercharged the saturation.   Not to mention rising shipping costs.

This shift to online-only adding physical space is in spite, and in fact partly causing of, retail real estate being very expensive these days – it hit an all-time high at the end of Q1.

The death of physical retail has been written many times, the pandemic most recently and during the 2015-2018 ‘golden age’ of digitally native companies, most of which now have physical stores.

And Warby Parker did research among their prospective customers and the number one reason people didn’t buy from them?  Yep, no retail store to try on the glasses.

The law of diminishing returns is undefeated.  As is the dated and unhip law of competing markets despite always being right – if there’s profit, enough new suppliers will enter to drive that profit to zero.

This phenomenon isn’t unique to digital.  Direct mail fundraising has costs going up and yields going down and the trendline is irreversible.  Face to face outside the US is no different – massively oversaturated.

Why do you think every non-US F2F agency is piling into the US, planting a flag to try and lay claim?   We’ll pollute these commons just as sure as I’m typing these words.

Being multi-modal (channel as proxy) helps.  It reduces diminishing returns and extends the life of a campaign. But the opposite of more can’t be less.  It must be less and better and better needs to include different.

Do your returns look like Warby Parker?  Time for new glasses.

Kevin