The adjustment for Wayfair—and a number of other online sellers—is due in part to a slowdown in e-commerce from the early months of the pandemic. The online share of U.S. retail sales hit a peak of 15.7% in the second quarter of 2020, declining to 12.9% in the fourth quarter of last year, according to the U.S. Census Bureau. Meanwhile, shoppers are hitting the malls again: As of March, foot traffic at indoor malls was up 16.6% from a year earlier, according to Placer.ai.

Those slowing growth prospects shed roughly $80 billion in combined market value from online pet retailer

Chewy,

Wayfair and online crafts marketplace

Etsy

since their respective peaks. That is roughly four times the combined value of department-store stalwarts

Macy’s,

Nordstrom

and

Kohl’s.

E-commerce sellers have other challenges to overcome. It is becoming more expensive to lure in new online customers as advertising costs increase and organic search visits for shopping decline. Google organic search visits to retail and consumer goods sites fell 14% in the fourth quarter of 2021 compared with a year earlier, while search visits for travel have increased 41%, according to marketing agency Merkle.

This puts pressure on retailers to spend more to make sure their ads appear before consumers.

Facebook

parent Meta Platforms said the average price per ad increased 30% year over year in its first quarter.

Chewy is facing these hurdles. In fiscal 2019, it spent roughly $148 in selling and advertising expenses per net new customer. By 2021, that figure had ballooned to $424 per net new customer and in 2022 is expected to reach $505, based on consensus estimates polled by Visible Alpha.

The so-called customer acquisition cost looks less scary if one excludes spending on “retention” marketing for existing customers and takes into account gross new customer additions, not the net number. But even after taking in those nuances, the broad picture remains the same: Chewy’s acquisition costs were roughly $120 per customer in 2021, a 44% increase compared with 2019, according to estimates from

Seth Basham,

equity analyst at Wedbush Securities.

“The cost of customer acquisition has gotten pretty high online because e-commerce has already cherry-picked the customers that are most likely to shop online,” said Mr. Basham. “There’s that natural limit.”

Contrast that with

Petco,

a pet retailer which generates most of its revenue in its stores. Petco spent roughly $170 of advertising per net new customer in 2019, but that figure declined to $64 per net new customer in 2020 and then to $60 last year. Petco said in its recent investor day presentation that because of its store footprint, it is able to offer same-day delivery that is cheaper and faster compared with pure-play e-commerce. It is remodeling its stores to grow hands-on services such as veterinarian care and grooming services, which can’t be provided online.

There are far more examples of bricks-and-mortar retailers adding e-commerce than the other way around. But the broad track record for profitability isn’t great for e-commerce, as variable expenses such as shipping costs and processing returns can quickly add up. As online penetration of retailers’ sales more than tripled between 2012 and the first three quarters of 2021, margins on the basis of earnings before interest, taxes, depreciation and amortization halved, according to an AlixPartners study of publicly listed retailers with annual revenues exceeding $1 billion.

Because online retailers have already attracted highly online shoppers, stores could serve to attract a different type of customer. As Bank of America analyst Lorraine Hutchinson puts it, “many different people walk by stores.”

Of course, if the intention is to acquire new customers, those stores will have to be located in prime retail corridors, which is not cheap. Still, while online advertising costs have gone up, retail rents have gone down. In New York City, for example, asking rents at prime retail corridors declined by an average of 11% in the first quarter compared with a year earlier, according to data from

Jones Lang LaSalle.

Some direct-to-consumer brands which started out as online sellers have continued to add physical stores, citing better profitability. Eyewear brand

Warby Parker

plans to open 40 new stores this year, while footwear maker

Allbirds

plans on 16 to 17 new locations. While neither company is profitable on a whole-company basis, both have indicated that margins are strong within their stores. Ms. Hutchinson, for example, noted in a November 2021 report that Allbirds’ physical stores have earnings before interest, taxes, depreciation and amortization, or Ebitda, margins of 20% to 25%. Warby Parker has said that it is on track towards reaching its targeted Ebitda margin of 35% for its stores.

When the company opens a new store, that geographical market sees revenue growth of over 250% on average in the first year of the store debut, Warby Parker Co-Chief Executive Dave Gilboa said at the company’s last earnings call in March. That resonates with what Macy’s has found:

Adrian Mitchell,

Macy’s chief financial officer, has previously said that digital performance is stronger in markets where the company has stores. The department store giant has delayed most of the remaining store closures it had earmarked in 2019 to maintain physical presence in many markets.

Online retailers’ success in the physical world might, in part, depend on how much of the consumer wallet they already capture. Small direct-to-consumer brands, after all, have a lot of room for growth—whether that is online or through stores.

For

Amazon,

which already has high market share, the foray into bricks-and-mortar retail hasn’t made much of a dent. Revenue at its physical stores—which include bookstores, as well as grocers such as Whole Foods and Amazon Fresh—declined last year compared with 2018.

In any case, for Amazon the physical stores serve a larger function: They are also avenues through which Amazon tests out new services—such as the “just walk out” technology—that the company can license out to third-party retailers. Its new clothing store that is slated to open in California—Amazon Style—will use technology that allows customers to add items to the fitting room through an app.

Moving from a variable cost-based business to one that adds fixed costs will add different kinds of pressures, of course. It could involve more capital expenditures, so returns on capital could suffer in the short term, notes Mr. Basham, who also says that operational challenges could be more significant in physical retail. Given that many bricks-and-mortar retailers are seeing persistently depressed valuations, they may strike more partnerships, business combinations or other kinds of tie-ups such as real estate deals with online players in the years to come.

Retail, in short, is about to get a lot less bifurcated. Some of the most successful merchants will be those that understand how to bridge the worlds of bricks and clicks.

Write to Jinjoo Lee at jinjoo.lee@wsj.com