A few years ago, in the middle of Net hype, I was on an airplane and was asked by a gentleman, “Do you think web commerce will eventually kill off mall-style shopping?” Turns out, many retailers were also asking themselves the very same thing. My answer then, and now, is that people will always prefer shopping in person to shopping online.
So why have so many successful retail chains poured so much money into web commerce, you ask yourself? Although the web can’t put stores out of business yet, it does have a few lessons to share with offline retailers.
People Like People
The first lesson for retailers to revel in: The best interface of all is person to person. Though the web is great at automating searches, comparing prices, showing photos of products, detailing specifications, and so forth, it is not comparable to having your questions answered by a sales rep, or better still, getting his or her honest opinion on a purchase. When all is said and done, the sale still boils down to, “Should I get the blue or the green?” And web sites still can’t answer that question.
One smart web retailer told me he thought his web site was doing great only to learn that after he added a toll-free number at the bottom of every page, online sales rose by 30 percent without any additional promotions or investment. Why? Because his customers had someone there to help them close the sale. Lack of personal help is still the biggest problem online retailers face and the biggest potential advantage for offline retailers.
People Don’t Trust Strangers
When it comes to spending their hard-earned money, people like to know that a) they are getting a good price; b) they are getting a good product; and c) they can change their minds. The web proves this over and over again in spades.
Back when the web first became explosively hyped, many people believed that it had the potential to be a true open market. Entry costs were low, anyone could build a shop, and thousands of choices were sprouting up. The market would become virtually frictionless and price driven, right? Wrong. As the web overflowed with retail choices, customers fell back on the big-name stores that were familiar and comfortable.
Let’s use the analogy of buying a red sweater online. Your initial search finds around 300 sweater options, including prices and photos. Because you can’t touch the sweater, try it on, or be guaranteed that it’s returnable, you type in “www.gap.com,” where you know the company’s sizing, its prices, its quality, and that you can always return it at the real store 6 miles from your house. You may not realize it, but your decision was just based on the Gap’s successful branding and recognition efforts. Because you’re so overwhelmed with too many choices, you turn to someone you trust. And why do you trust them? Because you know them.
The extreme variety on the web has taught consumers to be extra wary of return policies, guarantees, pricing, credit card theft, privacy, and unfamiliar brands. Addressing security concerns is one solution. I’ve noticed that smart stores are starting to take notice and apply web practices offline. They post privacy and security policies at their cash registers. Branding is another essential part of the solution. The medium that once was predicted to be the death of big brands has actually reinforced branding as a trust-building necessity. Smart sellers in any medium will take note.
Service Above Price
The web was originally predicted to be the world’s first frictionless market, meaning every consumer would have endless options and perfect information, so transactions would fluctuate toward the lowest price. But that hasn’t been the case. Most consumers are apt to spend more in a local, trusted source that provides extras. Economists can act befuddled, but it’s human nature: When people are already in spending mode, an extra dollar or two is a small price to pay for decent customer service.
Web sites that try to compete on price alone in a consumer space have failed, reinforcing my trust and branding theory. Additionally, sites that offer any level of extra customer service — freebies, content, live 24-hour help — do better, even if their prices are higher.
One sports retailer I’ve worked with has proven this in spades. She sells kayaks and big-ticket equipment at full suggested retail prices, but she comes out fine in a sector in which discounting is de facto. How? She hosts an active online community. She answers any and all questions, whether or not they are product- or even store-related. She has Olympic-caliber experts on hand to answer questions and give tips. When customers call in with questions about orders, she remembers them by name. She sponsors a number of local and national events, and every customer is invited to come to her retail store for free repairs and lessons. The level of service at her site is actually better than what most local brick-and-mortar stores could offer, so she competes just fine against other retailers and beats her online competitors easily.
The best thing about the web is the depth of choice and information that it offers. Smart retailers will compete against the web by offering just as much knowledge and flexibility. The worst thing about the web is the lack of personal, tailored help and real, hands-on interaction. Smart retailers will do the web one better by offering what the web can’t — person-to-person service.
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