Click Frenzy was never going to live up to expectations. The ignorant media shrill was that this was going to save retail – when retail is doing fine actually. The spin recycled by media outlets was that the deals were going to be exceptional.
The long game in retail is about value. Retailers don’t build a value proposition around price (ask Gerry Harvey), especially price managed through a site than cannot manage to keep its virtual doors open during the peak period.
The long game is about reflecting your point of difference through product range and customer service. One reason we are having a bumper (and early) Christmas season is exclusive (and good margin) products.
Retailers relying on a service like Click Frenzy for their future face uncertain times.
Shoppers who connect with your business because of a price proposition are harder to get back than shoppers who connect because of what and how you sell.
Could not agree more Mark – absolutely spot on. And as on line retailers are quickly finding out, slender margins and the cost of postage and handling make for a pretty competitve environment. Even the biggest and best, Amazon, has seen their 2 to 3% profit margin slip into the negative. And they have made a rod for every other on line retailer by offering free delivery. Surely delivering an individual package to an individual home cannot be a cost efficient way of distributing product.
Retailing, whether on line, or bricks and mortart will always come back to the points you identify… value and a unique sales proposition….and of course doing that in way that delivers a sustainable profit.
Yes James! Consumers get sucked in by free postage. There is no such thing. A box costs money to send and someone pays for this. Either the retailer through lower margin, the consumer in the price or a supplier through a lower margin.
To be fair, Amazon may not be the best example of an online model. Their business model is very mixed and they have a history of large investment in ventures that they expect to have future pay-offs. Their model is not the typical online retail model.
There are plenty of retailers that have built a successful online proposition around price. One of the best collective examples is EBAY. There are many thousands of businesses that compete using EBAY as their online store front – the site actively encourages consumers to price compare.
Free postage is what it is. Naturally someone covers the cost, but the impact of that offer on the business model differs for each sector. An online home-electronics retailer is going to have a more difficult time absorbing the cost of free postage when their profit margins are not huge and products are large and heavy. Comparatively, an online fashion or jewellery retailer may have much more room to move with margin and postage costs minimised by smaller, lighter product. Smart online retailers are more likely to be using a free postage offer as a tool to drive up the average basket size.
I would be surprised if there are any successful online retail operations where price is the only USP (except maybe specialised clearance/bargin websites such as Groupon, Catch of the Day, etc).
I dont know, everything I hear about on line retailing seems to point to price as the driver. Not that this is a bad thing.
As you say, EBAY allows the consumer to price compare so clearly price is a major factor.
I understand that on line retail is here to stay and that a portion of the market will sit at home for (another) 3 hours in front of a computer screen to find a bargain.
All that means is that bricks and mortar retailers have to have an online presence, and something really really compelling to encourage people to turn off the computer, get up out of the chair, and experience the sensory wonder that is the analogue world.
Easy to say, hard to do. And one thing is for sure. A newsagent that looks the same today as it did in 1960, aint going to do it.
Does channel nine have a vested interest in online shopping malls? We seem to be bombarded with online deals no better than shopping malls every A Current Affair edition.