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Imagine going to a baseball game; say the Yankees. (Ok so I’m a fan.)
Jeter hits a bases-loaded home run.
As he crosses home plate they credit Posada for the game-winning homer.
You’d look baffled as you had just seen Jeter hit it out of the park and round the bases – and Posada happened to be off that night and wasn’t even in the stadium.
That analogy works when talking about how Amazon Is Looking to Turn Every Store Into Its Showroom.
While Amazon has always had an app, coupled with their free shipping, no tax in many states and reputation to carry about everything, they can snatch your customer away just as they decide to buy.
Amazon says the app is to, “compare prices instantly with Amazon.com and its merchants while on-the-go.” Like trust us, we’re just making shopping easier for everyone.
But it’s gaining them access to your retail customers, have them shop on their smartphone once they know what they want and have them leave your store empty-handed.
No borders.
Jeez, we used to avoid radios playing in stores in the off-chance a competitor’s ad might be heard. Now there are no borders and why some retailers feel such smartphone apps are trespassing.
Some pundits say this is the future as customers are choosing to use mobile and that you must develop your own (expensive) ways to connect to them. I’ll get to that in a moment…
Several mobile fans have taken to telling retailers to just “accept it.” Like this woman, the associate editor on Mobile Commerce Daily.
Such comments seem naive at best.
While bookstores are leading the news on this, there is a greater danger to premium retailers with higher priced name brand products.
Imagine… your #1 best electronics salesperson (your Jeter) is waiting on a customer for a system for his house. The commissioned salesperson takes about an hour to describe how it all goes together and what is needed.
At the moment the customer says, “I’ll take it,” he whips out his smartphone and says, “Let me just check Amazon.”
The woman in the clip above would have you believe the employee should then embrace the customer using his smartphone and get him to switch to the retailer’s app or mobile site.
Be serious.
The price the customer finds on Amazon is the price they will say is “fair.” Regardless that Amazon has no showroom overhead, CAM charges, etc as part of their pricing.
At that moment, the employee is thrown into a situation to either accept the price or walk the guy.
Why this is so bad for luxury brands
Most luxury brands have strict policies on who can sell their products and who can’t. A quick mobile search can deliver off-price, unauthorized reseller’s prices. Now the salesperson is forced to try to discredit the mobile site.
The number one reason a sale is lost is the lack of trust.
The customer will trust their smartphone more than a knowledgeable salesperson because we’ve so vilified the profession. This could result in customers who might have a problem with an online product who go into an authorized luxury dealer only to find out it is not covered by the manufacturer. Again a potential struggle ensues because they believe the “overpriced” retailer is just being difficult.
Customers will say they have a right to it.
Of course, they have the best of both worlds right now – free advice from knowledgeable salespeople and low prices.
Except businesses only exist to make a profit. A retailer risks knowing what products will sell by investing their hard-earned money – no matter the size – into real estate to show off the products. Some are best-sellers; most are not. They invest in employees to deliver a great experience. They spend money with other businesses as well. The risks they take are rewarded with profitable purchases that allow them to reinvest.
Disruptive retailing is the new norm from Amazon to Groupon and more.
They seem to be able to get your all for their business. It’s not a future that builds wealth for retailers but redirects it to a few.
And that employee, the #1 salesperson? How long will he be on the floor if he is not rewarded for his skills?
I’ll have more thoughts on the Amazon assault in a subsequent post. In the meantime, have you read my Manifesto: Bricks and Mortar Retail at Risk in the Digital Age?
If you’d like some help with anticipating and meeting these challenges in 2012, especially in regards to your retail sales training or marketing efforts, please contact me.
What say you?
Do you trust the Amazon app? Do you ignore it? Have you had to deal with it with customers? Please enter your comments below…
To me, there are two main issues:
1) What is competition? or who is my competitor(s)?
I can deal with a down-the-street competitor who carries the same lines as I do, or for that matter a dealer across the country. I know that they pay overhead – just like me – and of course the cost of inventory. Perhaps they got a discount on their inventory with a vendor’s “stock-up” or “free freight” promotion. Perhaps their rent is a bit cheaper than mine, but there are probably a LOT of similarities between us, including the costs of doing business.
I can also handle that they have a sale on blue widgets. But I have a rewards program, so it all pretty much evens out in the end.
In the supply chain we occupy the same rung on the ladder, and conditions above and below us in the chain are pretty much similar.
We’re on a level playing field.
Amazon, Big-Boxes, and others throw everything off. They’ve negotiated big savings (not just on inventory), and/or they avoid costs I must incur (like a retail space instead of just a warehouse). They have massive “volume” ability that I can never equal.
Their COGS are very different from mine.
So how do I compete with such a competitor? Wal-Mart was the big goliath, now Amazon, and in our industry it is/was catalog companies like Lakeshore. This is not a new issue, and it’s clearly not going away. So the question isn’t how to put Wal-Mart or Amazon out of business – something you used to be able to fathom with a local competitor – but how to deal with them.
Then there’s the whole issue of vendors selling direct. They REALLY occupy a different rung on the supply chain.
2) How do customers find me or my products?
These big competitors seem to somehow have a built in “betterness.” Just one example: If you type “Mix & Match Doughnuts” into Google, who comes up first?
Not me.
Top listing goes to Amazon twice. Clicking Google’s “Nearby Stores” says there are no nearby stores even though I’ve submitted my feed to Google.
Why isn’t it listing my store anywhere within the first 10 pages of listings? If I add “Learning Bug” I finally come up (first btw). That’s a lot to ask of the average customer.
The same can be said about RedLaser, theFind or others. theFind sorts results by “Best Result” but my price (if that defines better) is actually cheaper and I’m not even listed at all.
“Finding” a product or service in the age of Google or mobile apps just really isn’t working, and nobody seems to notice or care. I receive orders via our website from across the country, and I *KNOW* there are stores like mine much, much closer who cary the items ordered.
ALL the business for EVERYTHING is being directed to a very small group of very large retailers if you’re looking online (remember “mobile” is really just online on a really small screen).
So how does little local me rise above the noise? How do I get people to find me?
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Part two: It gets even stranger as you dig further.
A paint store that gets top billing to for a child’s toy, but they have NO idea what that product is (I called and asked if it was in stock when their website made no mention of anything besides paint).
A jewelry store that gets top billing for a language arts book, but identifies it as drop-shipping from a wholesaler in Alabama.
An art store company in Canada that has an entire “ghost” site for teacher supplies…
But to end on a positive note: long, long ago America left behind the neighborhood grocer, baker, and butcher style of shopping for bigger=better. In our region, it seems like local bakeries are becoming quite popular. And boy is their product BETTER! People are noticing. Perhaps Americans are starting to realize the value of a specialty store.