Amazon and online selling is going to change everything negatively for traditional retailers who do not learn how to be successful in retail online or refuse to adapt.
If your retail business is not prepared to adapt with the rapidly moving online economy, your business will be doomed to fail.
I know that is a bold statement. But I truly believe that. With the recent Amazon purchase of Whole Foods, I can see the writing on the wall. The big players, like Amazon, are acquiring established businesses and taking market share. With increased market share, comes more consumer options to buy products online, search for the lowest prices, and often, they don’t have to pay for shipping AND they get next day delivery. That spells disaster for traditional brick and mortar stores.
Evaluate your product mix and learn how to be successful online by being different
For retailers that sell commodity type products that can be purchased anywhere, both at brick and mortar and online stores at lower prices, they should be very concerned.
More and more people are turning to the web to buy retail products
Let’s say you love a specific meal replacement shake that you have for breakfast everyday. You found out about this shake by visiting your local retail grocery store. You tried it and now want to use it everyday.
You have two options for purchasing your meal replacement again…
- Go back to the local brick and mortar store
- Go online and shop for the meal replacement shake for the lowest price
My assumption, and it is happening a lot now, consumers are turning to the web. With growing popularity of buying programs like Prime from Amazon, consumers gets free shipping and often in metropolitan areas, they also get next day delivery.
How can traditional retailers compete online?
The changing retail reality can either be terrible or a tremendous opportunity for traditional retailers with brick and mortar stores. Retailers that ignore online shopping and do not adapt will go out of business. Those that see opportunity, and adapt to change, will succeed and excel.
Selling commodity products online that are not “different from the next guy”, will fail in the long run.
At the end of the day, consumers looking to buy “apples to apples” products, only want the lowest price. You will never be able to offer the lowest price if you are a traditional retailer.
Product exclusivity is the way to compete
A great way to compete outside of having the lowest price, is to sell an exclusive product. This is the key way retailers will be able to survive and thrive into the future.
If retailers choose to ignore exclusivity, and choose to compete with the Amazons and the Walmarts and offer low prices and operate on low profit margins, eventually this will end poorly. They will lose.
Traditional retailers need to look at the products they currently sell, and ask themselves, should we sell these items? Are there many other retailers selling the same items? If yes, retailers need to look at ways to have a competitive advantage. One way is to offer exclusive products or manufacture, market and sell their own exclusive products.
I work in the natural health product industry. The shift to online consumer buying is a reality. In my business, we saw this reality a few years back. So, we decided to be proactive and formulate and market our own line of unique products. Our products can only be purchased at our brick and mortar stores and at our online assets like our eCommerce store.
There are many benefits to doing this. Our items are inelastic, in that they can only be bought from us. We determine the price. The market doesn’t determine the price. We are able to determine our branding and how to market and distribute them. This puts us in the driver’s seat.
My advice to traditional retailers is to continue to offer value in their physical stores that cannot be offered online. Customers will always want superior customers service. I also recommend that items offered be somewhat exclusive or completely exclusive.
Sell specific items that have limited distribution and train your staff to sell them well. This will keep customers coming back and will solidify your brand (your store and staff) as superior. Again, providing superior customer service is where you will succeed. Big box stores cannot compete there, and online shopping can be a difficult medium for providing personalized customer service.
So to recap, to compete with the Amazons of the world, I would suggest either selling exclusive items in-store or online.
There are so many advantages of to this this. Why spend all your time building someone else’s brand? At the end of the day, they will win and you will lose.
In today’s retail environment, traditional retailer need to be cognitive of the changing business environment and adapt. If they do not, they will continue to be vulnerable to market conditions that are no longer geographical, they are global.
Global distribution of products is a positive for progressive retailers. If the exclusivity strategy is achieved and a new business model comes to fruition, the benefit of selling products to a much larger market can be a game changer for them.
The topic of eCommerce business is vast
We are still in the infancy stage. Moving forward, many retail businesses are going to be taking a very close look at moving their current business to the web in one way or another. I also think that eCommerce will always be changing. Business owners and their teams will need to be ever evolving and take advantage of new technologies and become more efficient in the business of online retail.
I also believe, like traditional brick and mortar retail, online business will evolve and that there won’t be a specific way to “do it”. Business owners need to invest in their online businesses. They need to have key team members in place that allocate their time to ensuring that the new business runs optimally. This includes production, marketing, design, warehousing and distribution.
Take a serious look at your current business model. Can your product mix improve? Can you market and sell an exclusive product? How are you going to capitalize and take your business into the future online?
I would love to hear your thoughts on this topic. Please leave your comment below.