Brick and mortar: the real enemy Internet Marketing for Internet Retail : The Preston Blog

Brick and mortar: the real enemy

Filed under: internet retail, marketing |

Consider your competition
Most internet retailers tend to view other internet retailers as their main competition. In some industries this is more obvious than others: for example, if I am making travel plans online then I am probably going to check out a few online travel sites such as Expedia, Hotels.com, Orbitz, etc. An online travel service probably does not compete on a large scale with an offline, full-service travel agency.

Some industries have more offline competition
When you get into industries such as computer equipment and consumer electronics, however, it is very common for consumers to consider online competition as well as good ol’ brick and mortar retailers such as CompUSA, BestBuy and Fry’s Electronics. While all of these companies have an internet presence the majority of their sales take place in the offline world. And when it comes to the majority of retail spending in the US, these chains still have the lion’s share.

Competing on two fronts
So most internet retailers are typically stuck fighting two battles - they want to convince online shoppers to buy from them rather than another online retailer and they want offline shoppers to consider buying online. The first goal is obvious - if you are actively marketing your website you are continually competiting with other online retailers. Whether your company offers superior customer service, lower prices, fast shipping, cheap shipping, more visibility or any other consumer-pleasing benefit, you are competiting for a piece of the existing pie. There is nothing wrong with this and to be successful on the internet it is essential. It is, however, a zero-sum game - if there are a hundred million dollars spent on the internet per year in your industry then you are competing for your piece of the existing pie.

When you compete with offline retailers, however, you have the opportunity to make the internet retail pie bigger - thus it is no longer a zero-sum game. I love seeing online stores offer free shipping because it takes away one consumer-barrier to buying online and helps even the score with offline retailers - I recognize that it is not the same as walking out of the store with a product, but it helps narrow the gap.

Try to make shopping online as easy as shopping in a store
I like to shop online and offline - there are some products that I feel safer buying in a store while most of my purchases are made over the internet. Here are some things that internet retailers can do to make the internet shopping experience as pleasant as shopping in a brick and mortar retail store:

1) Free Shipping As mentioned before, offer free shipping. Many consumers feel like the majority of the savings on the internet are blown on shipping. Either build shipping costs into your margin or, if you sell low-margin products, offer free shipping over a fixed dollar figure, such as a hundred dollars.
2) Live chat When shopping at a traditional store you have access to salespeople that can help you find what you are looking for. Offer a live chat option staffed by an employee that can answer questions and help upsell people. Check out Sewell for a great example of using live chat. Note that one employee can handle several customer interactions at the same time.
3) Make your return policy clear Most brick-and-mortar stores I frequent have generous return policies. In my experience most online retailers do also, but sometimes they are hard to find on a company’s site. Recognize that your abandon rate will be high if people don’t know if they can return a defective product.
4) Publish a toll-free number and have employees handle inbound calls This is very, very important if you sell big-ticket items or items that people are likely to buy in bulk - shopping, online and offline, is all about trust. In the world we live in we have a lot of trust in local retail stores because if something goes wrong we know where to find them. In the online world, however, consumers tend to be skeptical of new companies. If a customer is ordering a high-ticket (aka high-consideration) item, they will likely want to speak to someone to build a degree of trust with your company - obviously this should be encouraged.

Recognize your advantage over a traditional retailer
I have talked a little about the advantages that offline retailers have, but online stores also have their own set of unique advantages. Here are a few of them:

1) Lower carrying costs In order to be taken seriously a traditional store typically has to have a very large inventory in stock. An online store can have a very lean inventory - in fact, there are many stores that don’t stock any of the products they sell! Typically consumers don’t care as long as they receive their merchandise within the promised time-frame.
2) Open 24 hours Most offline retailers find it prohibitively expensive to be open 24-hours a day, seven days a week. By the nature of the internet, however, customers can shop an online store any time of day or night. This is a big advantage for on-the-go people who may not have time to get out to a store or customers living in a rural area.
3) No geographic limitations If you own an electronics store in Provo, UT, you will probably not sell much merchandise to a customer on the East Coast for obvious reasons. The internet, however, makes the distance between buyers and sellers a minor inconvenience.
4) Scalability Internet-based companies can do more with a limited amount of space than a brick-and-mortar because they don’t have to worry about displaying products for customers. Also the relatively inexpensive overhead associated with leasing a warehouse versus prime retail real estate offers pure-play internet retailers the opportunity to scale more easily than a traditional retailer could.

In conclusion, keep in mind that you should not only entice customers to shop on your site as opposed to your internet competition, but also give them a compelling reason to shop online rather than off. Consumers do a lot of research online for offline purchases - give them a compelling reason to give their credit card to you and they may never make it to the store.

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