Bob Dylan by Alberton Cabello Via Wikipedia
Next week is Bob Dylan’s birthday. Born Robert Zimmerman, this chronicler of 1960s social change changed his name to Dylan after being influenced by Welsh poet Dylan Thomas.
While opinions differ around the musical integrity of his later work, his first few albums came out of nowhere with a sound so different, and lyrics so innocently cutting, that they became the anthem for civil disobedience and social change.
While most agree his 1965 album “Highway 61 Revisited” is the best, the previous record “Bringing it all back home” is my favourite. And I reckon the opening track “Subterranean Homesick Blues” is pretty near perfect.
Amongst the plethora of eclectic references in the song is the line “You don’t need a weatherman, to know which way the wind blows.” While he wrote it as an empowering line for angry young men and women abandoning the social and political paradigms of their parents, it’s also salient advice for retailers trying to future proof their business.
The latest retail shopping study from Nielson Online shows that almost half of all New Zealanders adults are now shopping online. Almost 1.5 million New Zealanders aged over 18 bought stuff online in 2010. While only seven per cent ahead of 2009, it was effectively double the figure of six years ago. (see http://nz.nielsen.com/news/documents/NielsenNewZealandOnlineRetailReportFINAL_TB1.pdf)
Not only is the percentage of local online customers increasing, so is the amount of things they are buying with the number of people purchasing four or more items increasing 25 per cent over the last year. So to take Dylan’s advice to heart, if you are retailing and want to future proof your business you are likely to be a mug if you haven’t at least started to migrate your business to online.
For some it’s an easy decision. If you have a limited range of products, physically disparate customers, an electronic database and transparent pricing, then moving to an online ordering and payment system is pretty much a no-brainer. However for others with huge inventories, poor stock management systems and customised pricing, it’s a nightmare.
One of the classic traps to fall into is the assumption that once you build a website for your business that customers will automatically go there. I’ve lost count of the number of websites I’ve seen companies build for large amounts of money, only to sit and wither. Big companies can afford websites which are effectively just a digital laurel wreath placed on the steps of corporate ego. Small companies have no such ability.
So a core question any widget-seller should ask themselves is whether they have strong enough brand, decent enough customer data and big enough marketing spend to attract sufficient traffic. A much cheaper option is to go where the existing traffic is, namely online portals and marketplaces, and sell your product on their platform. The downside of this is that your products will be listed alongside your competitors, so prepare to compete on price.
Assuming that you reckon you can get enough traffic to your website, the key question is how to put together your customer proposition. Oddly enough the traditional marketing notion of “the four Ps” – product, promotion, price and place – are a pretty useful place to start, particularly the first three.
In most cases it makes no sense to try and replicate all your offline products online. Instead focus on products that are easy to ship and unique enough not to have direct competitors at The Warehouse or Ebay. In addition to offering your regular products online, it may be that you can source particular lines at good prices, then offer these as online targetted specials. The beauty of this is that you can offer prices lower than you would in your store.
In terms of price it’s offline suicide to offer identical products online for less than you can buy them in your store. However to enable a level playing field consider offering free postage to mean the actual “in hand” price is the same. If you want to discount, then do it with the online-only specials outlined above, where you can tweak the elasticity between pricing, demand and revenue.
Lastly, when it comes to promotion there’s the holy trinity of search engine optimisation (so you appear on organic results), search engine market (so you show on paid results) and social media (so you show harness the strength of human networks). And don’t forget stunning customer service. Amazon in the United States and ASOS in the UK have immediate shipping and slick return policies, which results in powerful word-of-mouth promotion.
Beyond this the smart money is on marketing to your existing and new customers electronically. This typically takes the form of an electronic direct mail or EDM, but more recently it’s extended to the new generation of daily deal websites.
In a world where power has passed from the corporate to the consumer, retailers are foolish not to avail themselves of the same distribution network that their new global competitors use. As Dylan has also noted “you better start swimming or you’ll sink like a stone, for the times they are a-changing”.
