>The same is not true for many other types of goods, such as clothes. Shops are performing a useful function in letting consumers see, touch and try what they buy.

I used to feel the same way, but now I feel that this experience is highly overrated. If I could get away with buying all of my clothes on Zappos and Amazon (especially Zappos!), I would. They have plenty of pictures so that I know exactly what the clothes look like. Reviews from other users tell me more about the quality than I would be able to discern by simply handling the clothing in a store (e.g. how well it holds up to wear and tear). If an article of clothing doesn't quite fit right or if the color is a little off from how it appeared online, free two-way shipping solves my problem quickly and easily. Even in the cases where I have to exchange an item because of size or color problems, the total experience still requires way less time and effort than a single trip to a brick-and-mortar store.

The only reason why I think that brick-and-mortar clothing stores might survive against sites like Zappos is that most of the women I know (especially my wife) really enjoy the experience of shopping for clothes. Then again, I used to enjoy browsing electronics stores the same way, but I sure don't miss it anymore. Also, the aspect of clothes shopping that my wife seems to enjoy most is "getting deals:" using complicated combinations of sales, specials, and coupons to knock the price down as far as possible (in other words, to pay a price I would consider sane). It's not the only thing she enjoys about clothes shopping, but it's a very big part. If online clothes prices were to get sufficiently low, they would become such a "great deal" that I think she would be unable to resist. This process has already begun: she buys most of our daughters' clothes, and an increasing percentage of her own, online now.

And this is destroying your local retail market. Eventually, once all of the mom and pop shops are pushed out, we will be left with nothing but big box places that do their best to bone the consumer at every turn.

It is simply not possible to eek out anything more than a lower-middle class living owning a retail store any more. Honestly, it is pretty sad to watch. There are a lot of small, local businesses getting hammered away by these retail giants and are almost powerless to stop it.

There's a lot of innovation in technology for online fitting of shoes and clothes.

There's a company using the kinect to create a virtual mirror so you can see how clothes will look on you. There's a company that asks you the model and size of a shoe that fitted you great ,and enables you find great fitting shoes online.There's a similar company for jeans. There's a company that ask you a few measurements and show you how a wearing the clothing item will look on you. They built a special robot that generate many human forms, and used it to photo the clothing item in all available sizes.

There are also business solutions to this. Zappos, for example solved it simply by a great service and a great return policy.

Amazon is just betting those solutions(in clothing and elsewhere) will be "good enough" , not perfect. I think it's a reasonable bet.

Zappos has just about solved this problem for me though. They realize that people want to try on shoes and clothes, and so they offer free shipping and free returns, and if you're a VIP member (just ask and they'll give it to you), everything ships with next day delivery. So, if I see a few pairs of shoes I like, I'll order them all, receive them the next day, and ship back the ones I don't like. It's great.

What does Zappos do with returned shoes? Do they resell them at a discount? They must anticipate higher returns for shoes than online retailers selling books and music.

I'm pretty sure they just restock them and sell them at the same price. They only accept returned shoes that are unused.

Shops also enjoy _insane_ margins on clothing relative to any other retail line (except maybe cosmetics.) On average, 50% of the retail price is markup by the retailer. Clothing has a lot of issues that make in harder to sell (in particular, the need to carry a range of colors and sizes for each product makes inventory less efficient) but that's not enough to justify those kinds of margins. It's an industry ripe to be picked off by more efficient operators.

I'm not so sure this is true anymore. I know many people who have practically become addicted to websites like Milanoo, vastly preferring them to the experience of shopping in a store. Issues of fit are reduced by providing detailed measurements instead of vague, inconsistent sizes.

Certainly this isn't as universal as it is for books, but it shows that perhaps the aversion to buying clothing online isn't quite as complete as we assume.