In the digital age, the ability of consumers to compare prices online, facilitated by a plethora of shopping bots, has revolutionized traditional retail. However, the question arises: is the lowest price all that online shoppers are after? The answer is a resounding no! Savvy online retailers have adapted to the new rules of e-commerce, incorporating comparison shopping into their own websites, while others have been slow to catch up.
A prime example of a retailer slow to adapt to the online marketplace is Home Depot. According to an article in the August 16 issue of Fortune, the company issued a stern warning to its suppliers selling goods online, essentially stating that if they continued to sell online, they would no longer be able to sell to Home Depot. The underlying fear for Home Depot is the prospect of customers bypassing them and going directly to the manufacturer.
Competing with Home Depot is no easy task. Stanley Tools, for instance, abandoned its e-commerce plans in the face of Home Depot's threat. Home Depot, after all, is one of the "category killers" that put countless small hardware stores out of business. As Fortune reporter Katrina Brooker pondered, "Who's to say that it can't do the same to pesky suppliers with dot.com dreams?" The answer: web shoppers.
Several factors come into play when considering the dynamics of online shopping:
Online comparison shopping is available at a multitude of sites. These sites promise "you'll never miss a sale again;" "40 - 60% off retail in 13 categories;" daily or weekly sales updates; and email bargain newsletters tailored to your shopping interests. Some claim to scan 50 million products. Each of these services is powered by shopping bot software. Some even provide shoppers with the ability to search, compare and buy in a secure e-commerce environment. The majority accept advertising, but a few, like Price Scan, claim to be unbiased and objective because they eschew advertising. Some online shoppers, no doubt, study the information on these price comparison sites before they make a buying decision. Then there is everyone else.
What makes a shopper decide that price isn't all that matters? Extraordinary service -- the very same quality that allows some stores to charge more for their items because they make shopping convenient, pleasant and reliable -- still can win over price. Superior service makes fancy cars, designer duds and luxury travel appealing. It also allows L.L. Bean, Nordstrom's, and a handful of other merchants able to charge more for their products than bargain merchandisers selling essentially the same goods. And great service is not going out of style any time soon.
In terms of costs, online retailers seem to have obvious advantages over bricks and mortar retailers. Traditional retailers need to spend $3 to $5 million to open a store. They usually can only pull from a 25 mile radius, meaning they need to make a fair margin. While online merchants can set up shop for less, and sell internationally, many have set prices so low that it is impossible for them to make a profit. Therefore, the good deals consumers now expect won't be sustainable over the long haul. Only the ones with the deepest pockets can hold out, and one begins to wonder why they would want to.
Retailers are dealing with online sales in different ways. Barnes & Noble made the mistake of not being first in their category to get online. Like so many other traditional merchants, they finally realized they could not afford to ignore the brand reinforcement of the Internet. Now they charge more for the same books in their bricks and mortar stores where overhead prohibits Amazon-like bargain prices. It seems they are betting that the instant gratification of talking to informed sales help and being immediately able to read a selected book in soft in-store chairs is worth a higher price. They may be right.
Meanwhile, like Amazon, a handful of online merchants realize that they need to emphasize superior service. Although low prices might bring a customer to a site, discounts along won't necessarily keep them there or get them to return. "We recognize we're a price leader, but we don't say to ourselves every day, 'Let's just slash and burn," says online electronics retailer NECX' director of operations Brian Marley. "I think it would be irresponsible for all of us just to compete on price, without doing the heavy lifting that goes into creating a value-added service," Marley told The New York Times.
One very innovative online approach comes from Fruit of the Loom, which provides not only its own t-shirts and underwear but also it competitors inside its e-commerce storefront. The company got 24 of the nation's top 30 t-shirt wholesalers in the $5 billion industry to commit to its electronic commerce platform. Fruit of the Loom provides consulting and software to t-shirt wholesales setting up online stores. The stores' customers then search for t-shirts from any number of manufacturers. Fruit of the Loom only demands that its products are the first replacement option offered when another company is out of stock. Online, a store that provides complete information from a variety of sources can be more valuable than a single site that provides only its own or partial information.
NECX lets customers compare their prices to other stores on the same item. Customers were comparing prices anyway, they reasoned, why not help them. The result? NECX is losing customers but making money. Sales are up 20% even though the comparison engine is the site's most common point of departure.
Still, bricks and mortar merchants have the distinct advantage of giving customers what they want when they want it -- an experience that can supercede low price. Online shopping, no matter how pleasant, cannot (yet!) provide the immediate reward of buying something and then wearing or using it an hour later.
There is a long way to go before Internet commerce shakes out. At this point I'm betting that at end of the road the lowest price won't be the winner.
WANT PUBLICITY FOR YOUR COMPANY? FORGET TRADITIONAL PRESS RELEASES! HERE'S WHAT WORKS NOW
Is your public ... campaign getting the results you want? If you're still counting on ... press releases to spread the word about your ... the answer is probably ... only a
How to Secure Media Coverage for Your Business
The first step to getting your business news featured in the media is understanding what editors and reporters are looking for. This article is based on insights from editors and reporters at some of the most influential media organizations in the United States. Their advice reveals that there's no secret recipe for securing press coverage—it requires effort, strategy, and a clear understanding of the media landscape.
The Most Detrimental Email Blunder
The approximately 200 digital newsletters and e-zines I subscribe to contribute to the 5,600 emails I receive monthly. However, I discard 90% of them without reading due to one frustrating reason: the message is concealed. This is the most detrimental mistake you can make in email communication.
