Flip the debate to realise opportunity

27 August, 2012 Company, Marketing, Online, Retail

I’m bored of the sensational debate created by many traditional retailers and journalists where online is pitted against bricks and mortar retail. Hyperboles including ‘cannibalise’ ‘death’ and ‘extinct’ are bandied about to describe the impact online has had on many physical stores, in an effort to create an environment where the two can’t coexist symbiotically.

This article recently published in Connected highlights this limited view of the issue. Unfortunately the journalist did not contact us directly about the article, but if they had we would have given the facts. At seven years-old Appliances Online is one of Australia’s oldest online appliance retailers. We are a pureplay online retailer with a national distribution network and a strong emphasis on customer service. Having served more than 200,000 customers I would argue against the claim we are ‘unbranded’. Our connection to bricks and mortar retailer Winning Appliances, which has eight bricks and mortar stores in NSW and QLD is also not a secret, yet the brands cater for very different types of consumers – those who like the efficiency of shopping online for products usually required to be delivered the next day, and the other customer type who likes to visit a store and talk to a knowledgable sales person. I am CEO of both companies, and 432 employees work across the Winning Group. Big Brown Box, which is also indicated in the article, was originally launched by Thorn Group and the digital assets were purchased by Winning Online Group (the parent company of Appliances Online) in 2011. We kept the brand as Big Brown Box as it was already a recognised market entity and is differentiated from Appliances Online and Winning Appliances as it only sells AV products.

There are certain instances where the argument posed in the Connected article (“Are bricks and mortar retailers cannibilising traditional retailing by setting up unbranded online shops?”) is correct – particularly where online retailers adopt such an aggressive pricing strategy they cannot survive for the long-term. However it is also true that some traditional retailers have established online retail outlets that devalue the online space by providing a below-par experience to consumers. This exact example is not isolated to online, there have been many bricks and mortar retailers that have opened shops with the exact same strategy and failed to survive also. So to claim that this is an online strategy issue is just incorrect; it is just a poor business strategy that lacks creativity (I am referring to failed businesses that focus on nothing but price in general and am not isolating any business in particular).

Yet there is a larger issue at stake. These limited arguments obscure the fact there is large opportunity for traditional retailers to embrace online, with or without an online store, as opposed to hiding in the dark and hoping online retail is a trend that will soon pass.

I  dislike that retailers who have opened online storefronts are marginalised, as though we were all supposed to be united in ignoring the online marketplace altogether, leaving it open for newcomers. When, in fact, existing offline retailers, with experience and access, are best placed to create online stores.

Online retail, and other advances in technology including smart phones and social media, have provided consumers with a voice. Customer reviews and opinions on products provides a plethora of information for the consumer to help make the best decision for them, quickly.

As Forbes.com contributor Adam Ozimek suggests:

“The pre-sale services offered Amazon, in particular customer reviews, are usually of far greater use to me than a showroom when buying electronic goods. Sometimes when shopping for electronics I’ll make the purchase in the brick and mortar (so returns are easier and I can get it faster) while looking up the ratings of the product on my iPhone at Amazon.”

Traditional retailers should take advantage of some of the downfalls of many online retailers. Many offshore sites, and cheap product deals take weeks for the product to be delivered – whereas if traditional retailers adopt better pricing models and improve customer service they would be able to compete on a much more level playing field.

The time has come for traditional retailers to flip the experience – retailers should be differentiating themselves by creating a fantastic customer experience that won’t be able to be replicated online. If you’ve ever visited an Abercrombie & Fitch store, with its club-like shopping environment, you’ll know what type of experience I am talking about.

Online retail is to traditional retail what the printing press was to journalism.  It represents a tremendous opportunity for traditional retailers to evolve. For too long traditional retailers have been complacent – they have been inflating prices and countering this with poor customer service, driving consumers to look for other available options. The power of online should be embraced and encouraged in-store – traditional retailers could have readily available tablets to encourage customers to read product reviews, as well as implementing experiences you can’t get online such as cooking classes, product experts who take you through each product to show you its features, and even smaller tactics such as coffee on arrival.

There has been a seismic shift in power from the retailer to the consumer, but we must never lose sight of the fact the consumer should have always been the most important aspect of any retail decision.

 

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