Retailers across the globe have long admired Amazon's evolution—from a first-party online seller to a third-party marketplace and service platform. But recent analysis from Bernstein shows that most attempts to replicate this shift have underwhelmed, both structurally and financially.

The RaaS Promise—and the Reality

The concept of Retail-as-a-Service (RaaS) has grown in popularity. Companies like Ocado in grocery, Zalando and The Hut Group in apparel, and Next in general merchandise have invested in providing software, logistics, and e-commerce infrastructure to other brands.

The idea: leverage existing assets and capabilities to generate new revenue streams without owning the end-consumer relationship.

But there's a catch—returns have been limited.

Why It Works for Amazon—and Not for Others

Amazon dominates over 40% of U.S. e-commerce and benefits from:

• Massive demand density

• Decades of investment in technology and logistics

• A highly fragmented supplier base

• Unmatched category depth and data scale

In contrast, competitors lack the CAPEX firepower and category breadth required to make the RaaS model viable.

For context:

• Salesforce invests $700 million annually in technology CAPEX

• Next spends only £50 million, and Zalando €80 million

Margin Pressures and Economic Limits

While RaaS offers operating leverage, it doesn't deliver high margins:

• Next's core branded sales have a 21% EBIT margin

• Its Total Platform RaaS initiative returns just 5% EBIT

The business is not asset-light, either. Providers don't hold inventory risk, but they still store and manage it, adding to operational costs.

Addressable Market: Smaller Than You Think

Bernstein estimates the European RaaS target pool includes just 60 apparel retailers with sales between €200 million and €600 million annually. That's a narrow client base for a high-fixed-cost model.

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