Retail, in the eyes of the everyday customer

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According to UPS the Package was delivered on 1/9:

Considering FTD.com gets 2.1 Million visitors a month I would say this is a pretty big problem.

The common lesson in the new web 2.0 explosion has been that viral ideas trump good ideas almost every single time. Flickr, YouTube, Myspace and Techcrunch have all benefited from this; neither of these were the first to introduce an idea and yet they ended up completely dominating their respective services. So while retailers have been slow to innovate on the web all is not lost. Retailers need to build compelling online experiences that truly differentiate. If they do it right they have a chance to indulge in some serious land grabbing. If they do it wrong they would have permanently locked themselves in the house of pain.

One of the larger furniture retailers made a serious attempt at selling online. They failed and stopped. While on their website I noticed a message from the CEO that explained the discontinuation by blaming it on high costs of processing returns. Yet again, here is a retailer that’s reacting to the symptom. Instead of digging deeper to find the cause of the high returns the company found it easier to just permanently dismantle the project. I mean, what extra incentive does an online shopper have to incessantly return things as compared to someone who shops at the store?

Traditional retailers (across every single product category) have done so poorly compared to their younger online cousins that it’s not even worth discussing.  The domination is so complete many seem to have stopped trying altogether.  But in the retail world ‘real experiences’ still matter and retailers own the ‘real’ part of the equation.  Multichannel retailers with online stores need to look at it as a way to both preserve existing customers and attract new ones.  The objective is to create widgets that play to the retailer’s strengths.  Retailers like Circuit City have features like buy-online-pickup-in-store and and it would be hard for a pure-play online retailer like newegg.com (which is an Internet Retailer top 10 company) to steal a customer accustomed to Circuit City’s innovative widget.  This is how all retailers need to think.

Nordstrom is one of the few retailers that have managed to grow quarter over quarter.  We don’t know what portion of their $7 Billion in revenues comes from online sales but this channel is definitely growing.  I was quite surprised to learn a whopping 3.5 million people visit nordstrom.com every month.  As CEO I’d be just as interested in traffic details as revenue numbers from the site.  One has to look at both measures to get a complete picture.

One of the cheapest ways to try out new alternatives is to present both to customers and then just observe how they use them. Case in point:

AirTran is offering the option to use a pull down and a calender interface. Now, if only they looked at their logs to see that 90% of people dont use the pull down.

The whole point of innovation is to improve a solution. Sometimes new innovation creates a whole new ecosystem and sometimes new innovation renders the incumbent obsolete. Take for example television and the Internet. Video on demand exists on our set top boxes and also on the Internet. However video on the Internet can be tagged and searched and this is not possible through a set top box. Cable television can either add this feature right now and save its customer base or loose it forever with the commercialization of IPTV. This is the same challenge faced by retailers, at the present time they look at the Internet as merely being another channel for sales but with mutually exclusive innovation there could be a tipping point which might change the brick and mortar retail game forever.