Why retailers are becoming E-tailers

By Kalena Jordan kalena@high-search-engine-ranking.com 10th October 1999

You may have noticed a plethora of big name Australian retailers recently launching or announcing plans to launch brand new web sites. Freedom Furniture, Cue Design, Country Road, Liquorland, Angus & Coote/Goldmark are all jostling for position in Australia’s e-tail boom.

If you’d asked these firms 12 months ago if they were interested in going on-line, it’s likely most of them would have told you they were taking a “wait and see” approach. Led by outspoken Gerry Harvey of Harvey Norman, some big retail chains were sceptical of the value of developing web sites both because of the expense and the possible demise of business to their bricks and mortar stores. If you’d asked them six months ago, you’d have found their attitude had changed to “we know we need to get on the Internet, it’s just a matter of time and money”.

Now it seems the time is right for many of these retail businesses to make a move. They’ve seen the success of small firms setting up shop on the Net and they’ve witnessed the blind faith manufacturers like Compaq have shown by bypassing retail distributors and opening their own e-stores. They know their potential on-line markets are already being eroded and are responding quickly.

Some, it seems, are responding too quickly. All of a sudden they’re in such a hurry that they don’t think about the real opportunities and fail to develop a sound Internet strategy. Whether retailers decide on a basic “brochureware” site or a full e-commerce portal with shopping cart functionality, scalability is key. Some of the latest sites may look sensational, but often there has been no real thought put into their ultimate purpose, target market or future development. By not matching site goals with their overall business strategy, actively promoting the site or researching who their target on-line market is, these retailers are risking a huge investment of time and money. And unless their web site is designed to grow and develop in line with the changing business requirements, retailers could be left with a very expensive lemon.

So what are the major considerations for retailers moving on-line?

· Brand is everything – Well known off-line retailers have a distinctive advantage when moving on-line. Unlike Internet start-ups, they already have strong brand awareness and a huge market, they just need to inform customers of their new on-line channel and give them a good reason to go there. Their bricks and mortar customers will be familiar with the product/service offering of the company, and providing the new site meets/exceeds customer expectations and integrates well with their bricks & mortar stores, it should be successful.

· Price is not – No matter how well it’s disguised, a rip-off is still a rip-off. Just because it’s more convenient to buy on-line, if it’s going to cost the same as or more than the off-line version once shipping charges are added on, the customer won’t bother. Retailers should take advantage of the internal cost savings of Internet retailing by passing them on as discounts or freebies to the customer. On the Internet, word of a bargain travels fast. Here is an ideal opportunity to grow the on-line brand and gain repeat customers.

· Data tracking and CRM – The Internet provides an ideal medium for the “acceptable” collection of customer preferences and purchasing behaviour. Given the personalised nature of web browsing and on-line shopping, customers don’t seem to mind giving out more specific details of their product preferences and interests. It seems they prefer visiting sites that are “tailored” to meet their individual interests. They also don’t mind Amazon.com style suggestive cross-selling. Retailers need to grab permission-based marketing opportunities to gather as much data about their customers as they can – and more importantly – give them what they are asking for.

· Shop hours are 24/7 & marketplace is global – Unlike their off-line stores, e-tailers are open 24 hours a day, seven days a week. They are also opening their doors to billions of potential customers worldwide. Unless e-tailers are willing to respond quickly to all email inquiries and on-line orders, customers will go to their competitor’s site a few “clicks” away. E-tailers need to ask themselves questions like: Can inventory cope with 10 bulk orders at once? Will we pay for delivery to Zimbabwe? Can we take orders in foreign currency? They should take e-commerce very seriously and ensure their infrastructure can meet demand or else delay on-line transaction ability until it can.

· Interactivity is king – After the novelty of having their favourite retailer on-line has worn off, customers will be looking for sites that not only provide the goods and services they want, but those that can keep them entertained or informed as well. The power of “portals” – web sites that act as global “marketplaces” for information about and access to particular goods, services or industries – is not to be denied. But e-tailers don’t have to create portals to keep customers interested. How about adding a chat room, an on-line game or a bulletin board to the site? Giving users of a product/service access to each other is a powerful way to build a “virtual community” around a brand and a base from which to build loyalty campaigns.

· Promote, promote, promote! – Just because they have done the research, built and launched what may be the world’s best web site, doesn’t mean e-tailers will have customers beating down their virtual door. Professional search engine registration and announcement of the site launch via on-line and traditional off-line marketing and advertising channels is critical to getting “hits” on the site. Companies need to include their site URL on all corporate stationary, branded material, signage, advertisements and promotional merchandise. They need to consider implementing a direct marketing / P.R. campaign or a special advertisement to inform customers about their new site. They should train their sales team and other staff to promote the site at every opportunity. For on-line promotion e-tailers can hire professional Internet marketers to develop banner ads and email newsletters or negotiate portal partnerships or reciprocal link agreements for them.

There will probably always be retailers that will resist the web wave, refusing to develop an Internet strategy for fear of the unknown. But with the current e-tail boom and the Internet dramatically changing the way the world does business, the stragglers will soon be forced to sit up and take notice.