Retail | John Winning

High drama at Winning HQ

It’s been 24-hours of high drama at the Appliances Online and Big Brown Box headquarters… with a fire breaking out in an underground substation between our two offices and 200 people being evacuated.

We’ve even made the news quite a few times in the past 24 hours… with the fire triggering a power outage, a threat to nearby residents and flats and massive traffic delays around the Eastern Suburbs of Sydney.

Having a fire breaking out in our main office was a great way of testing our disaster minimisation system, which thankfully stood the test. The main thing is that everyone is safe. The encouraging thing is that our sites didn’t go down at all, and our technology divisions ‘mission critical automation’ came into fruition. Unless you were in the office watching smoke billow out from a sub-station beneath the ground (or following us on Facebook), you wouldn’t have had a clue we were being evacuated.

We were able to leave a message explaining there was a fire for people who called in, and checked messages with a mobile phone and responded quickly to enquiries. We also had a message on our website explaining why the phone lines were temporarily down. Special thanks must go to our dedicated staff who stayed back until midnight to help ensure no deliveries were missed and all customers were aware of what was happening with their orders.

Today, we are still without power however our office, yet everyone is working using back-up power supply thanks to ActiveAir.com.au. The main thing is that everyone is safe. Unfortunately the fire did result in the death of a fish who sadly did not survive carbon dioxide being blasted into the building to put out the fire, and a few egos were checked when some of our staff wearing the Appliances Online uniform of a black hoodie were questioned by police who thought they might be ransacking the building.

We send our best wishes to two people who were taken to hospital yesterday and wish them a speedy recovery.

Some amateur footage of the scene from yesterday is below.

By: John Winning

02-05-2012

Company, Marketing, Online, Retail

The great pricing debate

I was warned against purchasing BigBrownBox.com.au from Thorn Group, with my peers telling me that the world of televisions, home entertainment systems and sound equipment was the place of a great pricing war, where once sound marketing strategies were being held hostage to diminished margins and loss-leading products. I was told the AV market was home to a war with no winner in sight, a land where many businesses died well before their time.

Yet I purchased the digital assets because I believe there is a place in the market for a business willing to service consumers’ needs – where a service (over the cheapest price) model would come up trumps.

It has been widely reported that electronics retailer JB Hi-Fi has slumped to a three-year low, after the chain cut its full-year profit outlook because rampant discounting has damaged margins.

Are you honestly shocked?

When your tag line is “Always Cheapest Prices” it should be no surprise they would continue to discount against other retailers to the point of not being profitable. Price has become the only trick left as many businesses swap knowledgable sales personnel for a cheapest price guarantee.

JB Hi Fi is not the only store with this cheap pricing mentality - other reputable brands stand by similar slogans and fellow online retailers even use words such as ‘cheap’, ‘discount’, ‘cash’, ‘negotiate’ and ‘price’ in their taglines.

I find these kinds of promises troubling – particularly those that incentivise negotiating or paying cash. They suggest a consumer will pay too much if they don’t negotiate – and many shoppers would rather not.

We love dialogue with our customers, but we’d much prefer to be educating them about a product and having them assured that we’ve set a competitive price to begin with. There’s something quite aggressive about ‘haggling’, and it’s not likely to result in a great experience between retailer and customer. We’re more aligned with the “Everyday low prices” angle in this regard, to borrow another retail catchphrase.

Many businesses have put everything into having the cheapest price instead of innovating and building up their retail options and investing in customer service.

In contrast, while our prices are competitive, a cheap price proposition is not our core business driver. Customer service is what sets us apart and helps us stay profitable. We have invested in expert AV sales staff, warehouses, trucks and drivers, and have $2 Million of Big Brown Box products in stock around Australia to provide next day delivery to most metropolitan areas.

I’m well aware of the conundrum: cheapest pricing devalues a customer service proposition, yet consumers deserve the best price available. Therefore we have a best value guarantee in place for people who ask for it but it is not overt, and it is not our core business driver. Our best price guarantee also includes the fact our delivery is free, and before price-matching we ensure we are comparing apples with apples. Consumers also deserve to have their products delivered on time, with an Australian warranty and after sales service – which is what our business offers.

We absolutely refuse to use loss-leader tactics to attract people to our site. Retailers who do this also use price to upsell customers to higher price products with greater perceived value. Customers are pushed to sale in haste, without having done the right research and end up going home with the wrong product. We know this because these customers come to Big Brown Box, Appliances Online and Winning Appliances for their next purchases looking for genuine customer service and advice on buying the right product.

The success of Appliances Online has led me to believe the recipe for retailing success is simple: If you put your customer into every business decision and think about how this will affect them, your retail outlet will have something its competitors don’t offer. What the AV world is lacking is customer service and expertise. When buying a TV I want to be able to ask someone about the latest technology and have them design a package that suits my needs – including a TV that is the correct size for the room it will be in, how the light of the room will affect visibility and how to get the best sound depending on where I live and the surrounding noise.

Yet many larger retailers have failed to recognise this, putting financial statements ahead of providing a wonderful retailing experience. They look at staff costs and make a move to cut staff numbers instead of investing in staff and their customer experience and cutting costs in other areas of the business. They also place the cheapest price as the key driver for business which means that over time margins have decreased so much they make serious profit downgrades.

In the words of Seth Godin:

It might be that low prices are the final refuge of the marketer who has run out of ideas and is left with nothing but a commodity.

Or it might be that organizing your business around lowering prices through efficiency, mass scale and smart choices is a powerful way to grow.

My guess is that both are true, but you better be really sure about which one you’re choosing. Hint: doing the second one successfully is really quite difficult, so if all you’re doing is writing a lower number on the pricetags, you’re probably playing the first game.

As with all my blogs, I am sure that many people will not agree with my views yet this blog is how I view the retail space. Feel free to comment and add your thoughts to the debate if you wish.

By: John Winning

15-03-2012

Company, Online, Retail

How agency brands can hurt our customers’ experience

As consumers become more inclined to voice disgruntled opinions on social media and other online forums, brands are left without a smokescreen or an excuse for poor customer service.

Impressing every customer is something we believe in at Appliances Online, Big Brown Box and Winning Appliances; as I mentioned in a post yesterday we often go the extra mile to reduce the fallout when things do go wrong.

Yet some brands don’t share our high standards towards customer service, and in doing so put pressure on their stakeholders – us.

In retail, proforma brands operate under a slightly different business model to most of the brands we work with; each brand allows retailers such as Winning Appliances and Appliances Online to act only as agents; the brands retain control of pricing, sales transaction and even delivery. This post concentrates on the customer service and delivery aspects of many agency brands… I’ll talk about other aspects in future posts.

The proforma brand arrangement is perfectly fine as long as each agency has the same duty of care with regard to their customers as we do. When done seamlessly customers don’t even know they are dealing with the brand itself rather than with us – often the only sign is that the brand appears on their credit card statement instead of the retailer.

Miele is an example of a proforma brand with exceptional standards of customer service – a standard which impressed me because this is a company that has been a wholesaler and has successfully adapted their brand to act as a retailer – not an easy change for such an old business. Miele deliver items with their own trucks, have a fantastic product range, and clearly communicate stock levels to the agents they deal with. Miele have a large share of voice and we almost never receive customer complaints from consumers who buy products via our retail store. The only issue I have with the Miele agency model is that they take away some of Winning Appliances service advantage in the market…

Unfortunately the same cannot be said for many other agency or proforma brands.

In January we conducted a sale across our three companies and many proforma brands let us down. Customers were left with a bad taste in their mouths as they had to call the agency brands instead of us and were placed on hold or ignored, promises weren’t kept, and products weren’t delivered on time. Many proforma brands made us look bad –– those who don’t deliver goods with their own trucks usually rely on third party transport options and many of these break items and some refuse to bring a product further than the front door, leaving the customer to install it. As part of our service offering we take away the old appliance and all the packaging to be recycled, but some proforma brands don’t offer all of our services. Simply put: they just don’t care about our customers as much as we do… in their minds we are the customer, not the people actually buying their products. Yet this thinking is inherently flawed.

Although we did everything we could in our power to ensure the fallout was limited and each customer was happy with the (eventual) outcome, it was often a frustrating experience. We received many emails and comments from customers on Facebook saying that dealing with proforma brands was exasperating and stressful. I’ve copied some of these emails below and have left them unedited but removed the names of suppliers. I don’t want to name and shame each brand – for obvious reasons – but the emails make it clear how brands can easily improve each customer’s experience.

The recipe is straightforward. Listen to your customers. Communicate with them as frequently as you need to. Have a customer support team manned with people who know about your product range. Don’t leave potential brand advocates on hold. Tell customers the truth so there are no surprises. Return calls and emails. Deliver goods when you say you will and let them know if there’s a problem. And if you say you have great customer support service, don’t let them down.

By: John Winning

05-03-2012

Retail

Video: Sky News Business Interview with Peter Switzer

By: John Winning

01-03-2012

Retail

Pirates and planes: group buying surprises me twice

Just a few days after I hit out at daily deals, two of the most prominent group buying sites further exceeded my expectations of the industry in two very different ways.

Cudo ships out pirated e-Books

Firstly, Cudo had a complete shocker, offering 4,000 pirated e-books with the sale of a $99 e-book reader. The NSW Department of Fair Trading are on the case, and the Minister, Anthony Roberts, wasn’t buying Cudo’s excuse that the merchant is at fault.

It’s most alarming that this deal made it online when you consider that Cudo is owned by two companies who should know a thing or two about copyright themselves: Channel Nine and Microsoft.

Last year they even took a swing at a daily deals aggregator who was trying to promote them. That’s right: they made a copyright claim against a website that was helping them make sales.

That’s another scary thing about this space – it’s raised so much interest from the marketplace and media that all types of businesses are venturing out of their primary models to get involved: the result is that groups like Cudo are formed: businesses that don’t fully understand copyright and are playing in markets that are far too large for trial-and-error.

Scoopon rises above Air Australia crash

But it wasn’t my intention to take another stab at the industry, in fact it was the more positive group buying story of the week that really got my attention.

As most of you already know, Air Australia landed for the last time recently, leaving about 4,000 travellers stranded overseas and a debt of up to $90 million.

The company had forward-sold about 100,000 tickets – $36 million worth. 3,600 of those tickets were purchased through deals site Scoopon in May and August last year, and 64 of those customers were among those stranded in Phuket when Air Australia went down.

Scoopon reacted quickly, appointing a representative on the ground in Thailand to organise alternate plans for travellers stranded there.

They are now offering a refund to their other customers who haven’t yet flown, all at their own expense. Scoopon have estimated the expense to their business to be up to $1 million. Investing in customer service, however, could be one of their best moves yet.

Loyalty in the deals arena

Earlier this week I wrote that one of the main challenges facing the industry is that there’s no reason for loyalty: any site can offer a deal from any merchant, it’s in the favour of customers to keep an eye on multiple deals sites at once, and value, or perceived value, is one of the few variables between a good deal and a bad deal.

Maybe I’ll be proven wrong after all.

When Cudo’s selling pirated e-books and the other deals sites are being slammed by customers on Product Review and other forums, maybe top customer service will prevail.

Maybe the maturation of this model will see some groups, like Scoopon, commit to customer service and reliability, not just the savings.

When I put it like that, it actually sounds like a business model that might have some longevity and eventually gain loyal customers.

By: John Winning

28-02-2012

Retail

Am I the only one that thinks group buying is a fad?

I’m going to come right out with it: I don’t like the deals space, and I don’t think it’ll be around in the longterm.

It’s hard to take a knock at daily deals without expecting some backlash: the consumer support for the channel, in some cases, is so strong that you’ll quite often see deal customers evangelising the industry – particularly when commentators like Rocky Agrawal and others were leading the charge against deals last year on Techcrunch and other prominent media.

So while I expect there’ll be those that disagree, I want to be clear: I am not arguing that the offers aren’t, in many cases, great deals – for consumers, at least. Neither am I saying that consumers aren’t having great experiences. While a lot of posts argue that consumers are underwhelmed when redeeming offers, I don’t believe that’s always the case.

What I do believe is that group buying won’t – cannot – always be as big as the hype. Nor do I believe that it’s a great business model.

The sites are able to source great deals at the moment, while the interest and media support around the space remains lively, but it won’t always be the case: the benefits, for merchants, simply aren’t great enough in the current format. While deals could work for some merchants, the deals sites have been slaves to the race to acquire and satisfy consumers that are demanding more and more value – thereby butchering repeat opportunities with merchants as they convince them to run deals that simply aren’t profitable.

Many people – myself included – have run deals and sold plenty of stock for very little margin and massive headaches. Actual, returning customers were probably outnumbered by the sales calls from other group buying sites that followed. I soon wished I’d never run it in the first place. I am yet to find a vendor that enjoys a healthy relationship with a group buying site.

The other problem is that the big sites want more stock than most suppliers carry: they want 2,000 of a single popular model and they want it at nearly cost price. No one has that much stock to clear of anything decent and, if they do, it’s because they’ve realised demand to sell it at the price that suits their business and the marketplace: not a price dictated by a group buying site trying to knock off their competitors with the most heavily-discounted deals.

Some of my questions for the industry:

How long are four or five reasonably-large group buying sites going to be able to get great deals on large quantities of products that are actually in demand?

How much longer can they continue to source service-based deals that actually impress their customers? A quick look at some deals sites on Product Review shows the dismal reality.

How much longer will these sites retain the attention of deals customers themselves when there is no reason to remain loyal to any one site, and the ‘blast everyone’ email strategy is so ineffective and bound to cause fatigue?

When this same ‘blast-all’ tactic has created the need for aggregators (sites that collect all the deals, like The Dealer or Buyii), how can any one deals site own their own audience?

I may as well sneak in a few of my other gripes with the industry:

Anything which survives on being the cheapest in my opinion is destined to fail.
I am not aware of many group buying sites that make a fair profit, although plenty have a high turn over. That’s not enough.
With no reason for a consumer to be brand-loyal, the acquisition and retention costs of daily deals sites is far too high: it’s just too expensive to be one of the big players.
Other than the deal, no one is offering a great shopping experience, which our own experience and observations has proven is the basis for success.

Of course, many of these sites have received huge valuations – and Groupon has also recently floated (whether successfully or not, I won’t judge – but their share price certainly isn’t booming). So, certainly someone in the market sees a future in this space – and maybe with some tweaks, it could become a legitimate channel. For now, I’m still sceptical.

By: John Winning

23-12-2011

Company, Online, Retail

Why we don’t stop for Christmas…

This Christmas I’m working… 10 Appliances Online and Big Brown Box employees, along with their partners or friends, are spending Christmas Day manning the customer support centre. We also have some suppliers dropping in for the occasion.

Part of our commitment to customer service is that we are available 365 days a year, so we’re open from 7am to 11pm even on Christmas Day… There’s no rest for the wicked.

Sam, who’s in charge of all things fun in the office has put together a cooking roster and I’m looking forward to cooking a ‘mini turkey’* in our state-of-the-art kitchen in the office. We might even get our office keg working for the occasion.

It’s been a huge year for Appliances Online – and here are some of the highlights:

Growing our staff from 20 to almost 100 employees at Appliances Online,
Winning the ORIA award for Best Customer service and Best Site Design,
Re-launching Big Brown Box as an online destination for people in the market for TVs and AV equipment,
Becoming CEO of Winning Appliances and being the 4th generation Winning to be in charge of the family business,
Opening a warehouse in Perth to better service our friends in the West,
Jumping on the Team Korea boat which was sailing in the America’s Cup World Series in San Diego with my good friend Troy Tindill.

Merry Christmas everyone, look forward to catching up in the New Year.
* The mini turkey is actually a chicken. I don’t know how to cook turkey and am not willing to try my luck when cooking for 10.

By: John Winning

02-12-2011

Retail

Welcome online, Harveys

Harvey Norman bit the bullet and came online last month: “kicking and screaming“, as some noted.

The critics have already jumped on the story – The Australian, for example, predicting a profound ‘threat’ to advertising if Harveys cut their spend, which is estimated to be the second largest of any retailer in the country.

What’s been overlooked, however, is just what Harvey Norman can do for the retail industry by pursuing e-commerce.

Harveys will further validate e-commerce

Firstly, and most importantly for us, Harvey Norman will bring some of the outliers online: the last 20% or so of Australians (based on our recent research) who are still unsure about online shopping.

Nothing validates this channel like a goliath of traditional retailing making a complete turn-around. Love him or hate him, Gerry Harvey is a key personality in Australian retail – and much of the company’s success has depended on the trust offline consumers have placed in Harvey Norman and their offering.

If that can help quell some of the misplaced concerns about shopping online (security, ease of use, service), it’s good for the whole industry – not just us.

Ad spend will move online

Secondly, some (more) of that ad spend will be taken online, funding greater development in shopping portals and those web publishers who have already innovated online. As above, this is only going to widen the market further.

Sure, a reduction in local media spend could hurt traditional publishers, but these channels have been suffering for years for all the same reasons that Harveys has been: they’ve refused to innovate.

Competition is a good thing.

As retailers invest more and more in online marketing and their own websites, consumers can also expect greater things: pushing the whole industry forward. In the end, the customer wins.

For that reason, we welcome greater competition online. Having another large player in the market will help us focus our offering and further differentiate ourselves in the space.

After six years of 100% year on year growth, we’re confident in our service, that we’ll continue to innovate and will remain a leader in online retail – Harveys or no Harveys.

By: John Winning

15-11-2011

Online, Retail

No beer today: what Coles Online should learn from their pricing error

Beer-lovers across the country, including some sneaky Appliances Online employees, thought they picked up the bargain of the summer last night: cases of Coopers and James Squire beer for $15 and $16 each, respectively, from Coles Online.

OzBargain, Twitter and many other forums kicked off with discussion about the deal and the two products were out of stock within a few hours.

Today, however, Coles has refused to honour the sales, instead offering a $15 voucher, and the real social kickback is just warming up.

Angry customers are now posting images, limericks and taunts on the Coles Facebook page every few minutes and some beer-less commenters are threatening to complain to the ACCC. #occupycoles has outranked #occupysydney volume on Twitter and replies to @ColesOnline have spiked by 400% today, while the Coles ‘No Beer’ Online page has 500 Likes and counting.

e-Commerce and social media are both booming in Australia and, admittedly, the rules are still very faint – particularly for some of the larger players who are still rooted in the old world traditional marketing thinking. Most companies aren’t quite sure how to handle incidents like this, or haven’t put in place the right infrastructure and processes to avoid them in the first place. All the same, marketing, PR and business in general, are about being reactive and innovative: finding ways to make things work with what’s at hand, with what’s topical. Always thinking about the customer. That shouldn’t change online.

Coles Online had an opportunity to turn 4,000 customers (many of which were probably new to their online channel) into advocates for a relatively minimal loss/cost – probably not much more than the company will spend on TV advertising this afternoon.

I’d suspect that 90% of the avid beer consumers would have told their mates about how they snagged $16 cases of James Squire from Coles Online. Instead they’re now creating Facebook pages and Twitter tags to attack the company.

They’ll potentially spend far more on PR in the coming months than they’ve just lost as they try to promote themselves as the top choice for Christmas Shopping. They might have had, instead, dozens of news articles, forums and social mentions heralding them for looking after their mistakes, and their customers. Not to mention, they’d have been funding 4,000 barbeques across the country this weekend. I certainly know which type of press I’d prefer.

Coles Online Beer

Edit: I earlier referred to “about 4,000” people purchasing the beer offer, based on a discussion on Facebook. I’ve now removed this as the figure can’t been verified.

By: John Winning

14-11-2011

Retail

The state of bricks and mortar retail in Australia

I couldn’t agree more with this article in the Herald Sun ‘Problem is service not their department’.

Despite frenetic claims that the growth of online retail is crippling traditional bricks and mortar stores, I don’t believe the rise of ecommerce will be the death of the traditional in-store shopping experience.

It’s undisputed the state of online retail is booming… PayPal Australia Research indicates online spending will surpass $37bn by 2013 and that online retail growth in Australia is tipped at 12% over the next year*. At Appliances Online we have enjoyed 100% year-on-year revenue growth since we launched six years ago.

Yet despite the extraordinary growth of our online company, Winning Appliances, a business started by my great-grandfather 106 years ago, remains hugely successful. We attribute this to the fact we provide after-sales service and go above and beyond for our customers. This respect for the customer has been one of the main reasons we have survived through depressions, several wars and recessionary periods. While the global financial crisis has also reduced spending – marginally – Winning Appliances is tipped to grow at 15% in the next 12 months despite the bearish market.

Bricks and mortar retailing has faced many challenges over the years, and the current lull is a tremendous opportunity for retailers to get back to basics. It’s the opportunity of a lifetime for retailers to listen to what their customers want.

Appliances Online’s customers tell us they prefer shopping online because they can’t handle going into stores and being served by an incompetent sales person, probably working on commission. None of our staff work on commission, and sales men and women carry out thorough training on every product on the showroom floor so they are able to provide the customer with transparent and uncompromising advice.

Despite the extra cost retailers need to do everything within their power to make sure every person who either goes online, or walks into a store, is happy with his or her purchase long after the transaction has taken place.

Winning.com.au

John Winning, Founder and CEO of Appliances Online

High drama at Winning HQ

The great pricing debate

How agency brands can hurt our customers’ experience

Video: Sky News Business Interview with Peter Switzer

Why we don’t stop for Christmas…

Welcome online, Harveys

Harveys will further validate e-commerce

Ad spend will move online

Competition is a good thing.

No beer today: what Coles Online should learn from their pricing error

The state of bricks and mortar retail in Australia

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