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Tuesday, 24 February 2009

eCommerce Supports Bricks & Mortar

Why are Bricks & Mortar (traditional retailers) worried about selling online?

Over the last few years we have built and deployed websites that sell products for many traditional retail businesses some with just one shop and some with hundreds. After the dust settles the general comment we hear is "why didn't we do this earlier". We have found that the online sales model can work for any retailer if they are willing to embrace new ideas and make some concessions. The main concession, if you can call it that, is to take the online stores seriously and treat it like a real store in most ways. The big exception is that it is open 24/7/365 and as a retailer you still have to be prepared to process orders even when your other stores might be closed. But once the processes are established and the objectives defined then there are no major issues. The benefits:

  • Open 24/7
  • More business exposure
  • Greater geographic and demographic reach
  • More channels and at a lower cost base
  • Compete with the pure eTail model
  • Better customer service
Why now?

Well why not.

You can sell anything online. We have had retailers tell us that "my product is too difficult to deal with online". The truth is that you can sell anything online but it may mean making a few changes. As an example we have a customer who has a butcher shop and they have now been successfully selling online for a year. It is at www.themeatboutique.com.au and they were overwhelmed by orders over Christmas 2008.

The statistics are with us.

There are around 1.8 million small businesses in Australia of that there are over 200,000 retail outlets in Australia. Less than 50% have a website that can promote their products or services and less that 10% have an online store to sell products.
Many traditional retailers see the Internet and selling online as a conflicting channel to their business. So there is a great deal of reluctance to allow products to be sold online. However the reality is that today more and more there is a search and buy attitude. This can best be seen is some basic statistics collected by Nielsens Netratings looking at how products are found online:




Traditional retailers are behind the 8-Ball when you look at worldwide trends. So often a new online only start-up may be able to capture market share and attention away from the the traditional businesses. But rather than see online as competition the traditional business owners need to embrace these channels and new opportunity for their business.


Traditional Retail vs eTail Only Values

When a new online retailer starts up there is an immediate belief that the look and feel of the website and the number of products in the most important focus.

Those that last the distance find out (sometimes very quickly) that is not the case. The issues are all about the visitor access and customer satisfaction these are paramount if you want to build up a return customer base.

Once a sale is made the fulfilment and follow up are important to good customer service.


Promoting Your Business

Promoting an online business can be expensive and again newcomers believe that you get found by Google and you just make sales. Search Engine Optimisation (SEO) and Search Engine Marketing (SEM) have become a critical part of being successful. Being found online is not difficult but getting the results that you require takes both time and money.
So it is all about having a quality customer base and promoting your business.

What the traditional retailers already have is a quality customer base and they know how to promote the business through that customer base. Often this is done by word of mouth, mail drops and direct marketing. Just by promoting the website on all the current marketing material can result in immediate visitors and buyers.


Online Retail is Growing

Australian online spending will grow by about 5.5% annually for the next five years, from $15.1 billion in 2007-08 to $21.2 billion during 2013-14 according to research firm IBISWorld.

In the USA Internet Retailer Magazine reports etailing has grown from $8 billion in 1998 to $156 billion in 2008 and is expected to reach $1 trillion in 2020 a third of all retail.

At the same time sales from traditional retailing are flat and in some sectors falling. So it is clear that there is an opportunity for the "bricks and mortar" retailers to embrace a new channel to market.

What makes this so sensible and easy for the existing retail business is that they have the stock, infrastructure, fulfilment and business processes already in place.

Moving to an online sales model has no downside and a great deal of upside to the business.

Some of the issues.

There are issues that you need to address when you want a mixed eTail and Retail business.

Logistics is important but in general most retailers already have a successful fulfilment process that works. So unless it is broken don't change it. Offer the simplest shipping method and in Australia that is by Australia Post eParcel. It will work for packages up to 20kg. If you are in the perishables business (meat, food etc) then offer delivery in a known geographic area.

Payment online is simple and you can accept credit cards safely using a payment gateway like eWAY or PayPal. But you can also offer pickup and pay in store. There is nothing wrong with ordering online and pickup and pay.

Some retailers have an eftpos machine and want to get credit card details and process them manually. Do not do that, it is not PCI (www.pcisecuritystandards.org
) compliant and it is not safe in any way. So get an online merchant account, talk to you ecommerce provider and some recommended payment gateways. Or go and investigate PayPal as an alternative.


Will your online store effect your traditional store?

Short answer is NO. All the experinces we have to date show the opposite. Having products online enhances sales in the bricks & mortar store and can improve your image and reach. By promoting your webstore on search engines and via shopping comparison engines more people will find you and all your stores.

You may find selling online easy and more effective than traditional retail but the final model can be mixed online and "Bricks & Mortar".
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