Braintrust Query: Why You Should Abandon Having an Online Retail Store
Through a special arrangement, presented here for discussion is a summary of a current article from the Retail Doc blog.
With the struggling economy, I hear a lot of independent bricks and mortar stores saying they need to build an online store. The image is millions of people perusing your products, shipping to exotic locales like Pacoima, Paris or Peru; a website delivering the amount of customers you lost in the last two years with low overhead.
Here's the reality: major brands are segmenting visitors to their websites by person; they are tracking where you the customer went to customize their banner ads and even which page you will see when you return. They have a valuation for each consumer relative to each SKU. They know how the consumer will react, to which offerings and when, how fast they'll shop and what percent they'll have to eat in returns.
They can connect the dots of a customer's age and past purchases with other online sites, household income and spending patterns. They know what the consumer zoomed in on, what they reviewed, with whom they have social media influence, and what they researched on a page but purchased on another. They can track back their online wardrobe purchases from the past six years and build a virtual closet of what the customer owns.
How do I know this? At the National Retail Federation's Big Show, Nielsen said it tracks 5.55 million transactions a day worldwide and it slices, dices and resells that information to major online sites.
Here's the point, if you can't be as committed as Amazon, Best Buy, Toys "R" Us, and the big boxes to deliver a seamless experience, then don't tip-toe around it. Oh and one more thing: to build fans, many of these big guys are selling merchandise online at a loss. Take a look at today's price for Sarah Palin's Going Rogue. List price is $28; Amazon has it for $9.98.
The easy money online has passed. If you want to have an online store presence, you need to invest the money to be at least as good as the big boys. Just like an independent coffeehouse has to be at least as clean as the local Starbucks, with a speed of service no slower and with a product at least as fresh, you have to meet the competition's standards just to be in the game.
If you can commit to making your site vibrant - not just a discount place but also offering unedited reviews of your products, number of items in stock and online chat - have at it! A better use of your money is to make your website a draw to customers, then give them a reason to come into your store so you can stand out, sell more and develop a relationship built on something other than low price.
Discussion Questions: Is the e-commerce technology gap between independent retailers and major retailers too wide? What should independent retailers be doing with their websites in order to compete?