Retail, in the eyes of the everyday customer

The About Us page is where you tell the World why your store is THE place to buy.  PediPed is a manufacturer of children’s footwear and what I like about their About Us section is that it targets humanistic, methodical and competitive shoppers simultaneously:

The video story style appeals to humanistic shoppers, the chaptering format appeals to competitive shoppers and there is enough content here to answers all questions of methodical shoppers.

I can see why you love your online shop but what would happen if it vanished for 30 days?

Would customers bombard you with concerned emails?  Would they start “save the store” campaigns?  Or would they forget about you and find another site?

For many young Christians C28.com is THE place to buy clothes that celebrate their relationship with God.  It matters to them.  It is a part of their life.  It makes them happy.  If C2:8 went away for 30 days their customers would take significant action.  Would yours?

Stage 1: The big bang.  Somewhere in the early 90’s technology emerged which allowed people to inexpensively launch digital neon stores.

Stage 2: The long tail.  First shops to open for business catered to customers left out my mass retail.  There was now a place (2bigfeet.com) where men with extra large feet could shop in leisure.  Chris Anderson would later coin the term “The Long Tail” to describe this market.  And while online shopping was the biggest disruption in retailing in the last century only early adopters were using it at this point.

Stage 3: Rule of the technologists.  Shop owners quickly discovered a seductive equation; traffic = sales.  They hired geeks to device strategies to pull customers straight from search engines.  Geeks love boiling things down to a formula and naturally took to SEM and SEO.  But they aren’t marketers and the stores they created looked awful.  Luckily, shoppers were so glad to discover hard to find items they forgave woefully poor shopping experiences.  This is one reason stores with designs like this…

…pulled in thousands of monthly hits.

Larger multi-channel retailers were still avoiding the web because they viewed it as cannibalization of their other channels.

Stage 4: Unchecked growth.  Once you reduce something to a reusable formula someone is bound to exploit it.  We now had enterprising companies like CSN Stores which were running hundreds of specialty stores.  Each had a finely crafted exterior but ran on the same engine.

Stage 5: March of the elephants and birth of peer to peer review networks.  Eventually the Best Buys of the world started investing serious money online and brought in their product photographers, brand marketers and catalog circulation specialists who helped convert the first wave of mass consumers.  Mass consumers had a totally different value system, they came looking for recognizable brands, expected great service and shopped around like crazy.  The adage “bring them in, the sale will happen” no longer applied.  Many ecommerce pioneers adapted to the new environment but most stubbornly held on to old ways.  Market movements are inefficient and the old venus fly trap still lured enough to keep the old model alive.  But, for the most part, tables had turned and veterans with their SEO/SEM automating technologists where finding it hard to pull in mass consumers.  Don’t get me wrong, they were still making serious money, it’s just that they were used to so much more.

During this time another event took place that exacerbated the pain of the veterans; peer to peer review networks.  You see, mass consumers want to know what other mass consumers are doing and services like Yelp!, BBB.org and epinions.com allowed them to share experiences.  The veterans who had invested so heavily on bringing people in now had another fire to deal with.  Back in the day power of word of mouth (WOM) was faint so poor service didn’t have any real downside.  But WOM magnifying networks have shifted power to the customer.

Stage 6: Contraction.  This is happening at the present time.  Here in the US we have twice as many retail stores as are needed by the population of the country.  I believe the number is even more skewed online.  As a result there are fewer consumer dollars per etailer to go around.  On the flip side inexpensive automating strategies have been exploited fully and the only way to generate disruptive growth now is by investing money on specialists.  Etailers are so used to the idea of clear ROI that hiring an expert who charges $150/hr but does not give explicit guarantees makes them nauseous.  Like I mentioned in an earlier post many etailers are addicted to the unsustainable 200% growth story.  I predict a big contraction is on its way and 30% of online stores in business this morning will cease to exist two years from now.

Stage 7: The Numerati.  Stephen Baker’s book with the same title dives deep into the subject but the summary is that the Numerati is a select group of people with equal skills in mathematics, psychology and marketing.  These super crunchers are redefining traditional customer segmentation models and designing new ones that better define consumers.  The future belongs to agile companies that are constantly testing assumptions about customer behavior and have structural flexibility to adapt to new discoveries.

I consider myself an astute student of retailing so was surprised to discover a very cool concept I knew absolutely nothing about.  The name of the company is The Unclaimed Baggage Center.  Unfortunately, they don’t retail online but you must go check out unclaimedbaggage.com and see their press coverage here.

Retailers are working extra hard these days.  On my afternoon walk I saw two guys standing near the station selling $3 Jamba Juice smoothies out of a white box.  I know Jamba Juice wants to drive sales but I think this is a penny wise pound foolish strategy for three principle reasons:

– Brand dilution: I thought the unique selling proposition of Jamba Juice was that one could walk up to the counter, order a smoothie and have the juice expert prepare it right in front of us?

– Authenticity: How do I even know if this is a legit setup? The guys were wearing Jamba Juice tee-shirts but there was no specific branding on the box itself.

– Price point: Is $3.00 for a Jamba Juice smoothie too high or too low? The only people who could really answer this are Jamba Juice regulars.  So, in effect, this promoted price means little to non-customers.  The whole idea of setting up a stand on the street is to get non-customers to try your product once.

Here is what I would have done:

— I would have made a nice little Jamba Juice banner, slapped Jamba Juice stickers on the box, slapped another sticker on the smoothie itself and given customers an authentic proof of purchase receipt.

— Instead of saying “$3 Jamba Juice Smoothies” I’d say “Pedestrian Special 25% discounted Jamba Juice Smoothies for only $3.00“

Jake is a huge fan of KuKuRuZa gourmet popcorn.  He discovered the site 3 years ago and started off by ordering their Variety Pack.  He enjoyed Caramel & Cheese Mix so much he bought it five times, thrice gifting it to friends and family.  Jake’s life time spend on KuKuRuZa.com is a very impressive $197.00 and we know Jake is not a bargain hunter because his purchase habits are not localized around special price promotions.  All in all, Jake is an ideal customer.

He has often visited the Butter & Sea Salt page and lingered long enough for us to know that the flavor catches his attention.  Unfortunately, Jake has never purchased it.  A 1 gallon bag of Butter & Sea Salt retails for $8.95.

The enterprising manager at KuKuRuZa sees that Jake has not bought in the last two months and executes a complimentary order of the 1 gallon Butter & Sea Salt bag accompanied with a handwritten note that reads “Jake, I am the manager at KuKuRuZa.  I wanted to thank you for being a loyal customer by sharing this complimentary bag of our delicious Butter & Sea Salt.  Regards – Robert.“

This is a hypothetical case study but imagine the impact it would have on Jake.  Sure we spent $8.95 plus shipping on a bag of popcorn but that’s pittance compared to how much Jake has spent with us.  This small investment could trigger word-of-mouth and Jake is bound to share his KuKuRuZa story when he speaks with friends.

Zappos.com loves selling all kinds of heels, and with two way free shipping customers love buying them.  But two way shipping is only free for the customer, for Zappos it means they lose money every time a return is made.  And it hurts.  Somewhere within Zappos’s corporate office there exists a black book and in this book there are two columns.  On the left are customers that actually buy more because of the free shipping carrot.  On the right are the habitual returners.  So far it’s all good because the money making column is significantly longer.  So far.

With the reality of slowing consumer spending it’s obvious the left hand column is shrinking but my hunch is recession has little affect on habitual returners because they have no disincentive.  I would argue the habitual returner list has not contracted much.  This recession is hurting Zappos more than it’s hurting retailers that charge for shipping.  The question is how long can Zappos hold its breath under water.  Zappos is one of the smartest retailers in the world so if anyone can come out of this it’s them.

I know Amazon.com owns a patent on “1-Click ordering” but what about their site design itself? Obviously Amazon.com serves as a great design inspiration for any ecommerce site but can I legally rip off their design?

This morning I came across an online store delphiglass.com.  This is not some small under the radar etailer, delphiglass.com is a vastly popular online store and according to Compete their site gets over 89,000 unique monthly visitors.  Here is where the story turns bizarre—

Amazon.com homepage:

Delphiglass.com homepage:

Amazon.com left navigation:

Delphiglass.com left navigation:

Amazon.com home button (mouse over):

Delphiglass.com home button (mouse over):

I tried to do some background work to see if this store is connected with Amazon but found no evidence.

And speaking of copy, check out:

Doesn’t humidi-pak.com look suspiciously similar to Apple’s older homepage? here, refresh your memory:

http://web.archive.org/web/20060106235740/www.apple.com/

An interesting product

I remember hearing about the bankruptcy of CompUSA last year but had not clue their assets (including real estate) were acquired by a company called Systemax which still operates 30 stores under the CompUSA name.  When CompUSA went bankrupt it made perfect sense to me but after hearing a CNNMoney interview of Gilbert Fiorentino (who heads retail operations) I’ve changed my opinion.  Gilbert sounds extremely smart and his vision for CompUSA is quite spectacular.  The idea is to create a Retail 2.0 environment where the retail store really has all the benefits of an online store, so instead of pulling away customers from newegg.com which is incredibly hard to do CompUSA is bringing the web experience to the traditional retail shopper.  Remember, in terms of size, online commerce is only 10% of all retail so there are a heck of a lot of customers who still prefer walking through sliding doors.  What gives me even more confidence in Gilbert’s plan is the fact that he was the founder of TigerDirect which you may recall is a major online electronics etailer.  With that kind of cross platform expertise CompUSA might just pull off a really interesting success story.

Some of the web concepts brought to the store include digital owner’s manuals, reviews, product tutorials, pictures and installation details.

Here is the video: http://money.cnn.com/video/?/video/news/2009/02/06/news.compusa.020609.cnnmoney

Related article: Retailers Fighting Back

Mint.com is an award winning personal finance site that helps 900,000 US consumers track their spendings, and they may have a valuable piece of data for retailers.  I know most retailers are very glum these days with the worsening market reports.  But we should listen to Mint’s CEO Aaron Patzer because he has access to hard facts.  Aaron’s message to all retailers: “your customers are spending $400 less each month than they were a year ago, have burned through half of their savings, and on average have taken on an additional $5k in debt.” This is nothing to rejoice over but it’s certainly not Great Depression bad.  Every retailer (online and offline) will have to work a little harder every month but if you can keep your existing customers and push just a little harder to get a few more conversions then you should be able to keep sales from going down.  Those that can hold on till next year will have a disproportionate advantage when consumer spending picks up and half the competition is out of business.  Hang in there.