Commentary

In Space, No One Can Hear You Scream

The story of e-tail is just getting interesting if Q4 sales are anything to go by. Amidst a difficult trading environment, we’ve seen e-commerce rebounding in numbers.

The top 25 retailing stars, as defined by Internet Retailer in their January 2002 issue, are a combination of dot-com survivors like Wine.com and Drugstore.com, as well as pure-play stalwarts Amazon and eBay – who have taken fine advantage of the bumbling incremental actions of the traditional giant retailers like Wal-Mart. But don’t cry for the Old Economy – niche representatives such as LLBean and Eddie Bauer are keeping these campaigners front and center. And there’s even place for a hybrid or two – in the form of KBToys (incorporating the company formally-known-as eToys).

What makes these e-tailers best of breed? Once upon a time it was price that separated the best from the rest, but today it’s not that simple. When did you last check Amazon’s prices against Barnes & Noble’s? When did you last compare the price you paid on eBay to the market price? Hey, you edged out your fiercest competitor, shopgirl154, so who cares, right?

It’s other characteristics like superior customer service, “perfect” information, succinct return policies and inventory always in-stock that makes a difference these days. No dirty stores. No apathetic salespeople. No long lines.

At its simplest level, an online storefront adds another channel to the already existing mix of bricks ‘n mortar stores, call center and catalog. The 2001 Multi-channel retail report reveals how multi-channel customers are more valuable than single-channel customers and more likely to become your most loyal and most valuable customers. In fact, those who bought online spend an average of $600 more than single-channel shoppers. In addition, online shoppers purchase from a retailer's store 70% more frequently than the average store customer. In other words, by presenting multiple means to purchase, the net result is multiple purchases.

The introduction of a web presence extends a retailer’s reach from a handful of stores in selected towns to a potential storefront in every home. Add to this the original selling proposition of being able to shop 24x7 in your bathrobe, as well as Faith Popcorn’s cocooning trend, amplified by the events of 9/11.

We need to recognize that e-tail is no longer constrained by the many obstacles we used to be faced with. Credit card phobia is steadily decreasing. Why? Simply because people are more comfortable purchasing online. This is due to a combination of consumers being more experienced (online tenure), the replacement of unknown dot-coms with more established and credible retailers, and on the analytical side, the realization that online success should not be measured only in terms of short term e-sales. Indeed, the clicks to bricks migration path is even more lucrative to the retailer in the longer term (echoed in the multi-channel study mentioned earlier.)

What about the other classic challenges?

“I can’t touch the merchandise” – Technologies like Viewpoint enable the user to interact with the product, and the zoom quality gives the consumer a really good idea what the fabric looks – and even feels like.

“I can’t return the merchandise” – liberal return policies make online purchases much more attractive. Many retailers are only just realizing that this is actually a win-win situation as they are driving traffic back into their stores (DUH!) Incidentally, this was one of Barnes & Noble’s major mistakes and an opportunity foregone, which could really have helped differentiate them from Amazon.

“I can’t try on the merchandise” – the jury’s still out on this one, although we’re getting much better at this, largely thanks to CRM and a combination of purchase history and artificial intelligence. On the one hand, Banana Republic Chinos is as Banana Republic Chinos does. On the other hand, a suggestion like ”these pants run a little small, consider the 36” based on previous purchases, would go a long way.

“I can’t talk to a knowledgeable salesperson” – I don’t know if you caught that laughable Office Depot spot which introduces Chuck somebody who’s title is “Office Machine Specialist.” I dare you to walk into an actual Office Depot and find their local office machine specialist. Please! Unlike this empty promise, the Net delivers expert sales advice at the click of a mouse.

The playing fields have been leveled and retailers that get it realize that integrating and aligning their real estate – both bricks and clicks – is a surefire way to gain and maintain a competitive edge. The consumer is not making a distinction between storefronts. Neither should we.

- Joseph Jaffe is Director of Interactive Media at TBWA\Chiat\Day in New York, where he works with clients including Kmart, ABSOLUT Vodka, Samsonite, Embassy Suites and Cunard. His primary focus is to highlight interactive's value and benefit in meeting his clients' integrated business and branding objectives.

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