Looked at from a distance, the Top 1000 online retailers in North America had a terrific year in 2017. Their online sales collectively increased 18.5% during a year in which total U.S. retail sales (excluding items like cars and fuel rarely purchased online) increased 3.8%.

When you exclude online sales, the rest of the retail industry—stores, vending machines, door-to-door sales, mail order and everything else—only increased by 2.2%. And that was in the strongest year the retail industry has seen in years. The web accounted for 13.0% of total U.S. retail sales, excluding vehicles and fuel, up from 5.1% a decade earlier, in 2007. What’s more, e-commerce represented 49% of growth for the U.S. retail industry.

It would be easy to conclude from this data that online retailers are prospering and everyone else—particularly merchants that operate physical stores, are in trouble. But the reality is more complex.

For starters, it’s imperative to consider…

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